INDIVIDUAL CASE STUDY
Feasibility of the New Project
By 2011, there are 11 new hotels that will be developed in Klang Valley. These hotels consist of 5 stars and 4 stars hotels developed to solve the undersupply of rooms in Klang Valley. Do you think Klang Valley needs more 4-5 stars hotels in years to come? If you have the sufficient fund, what kind of investment that you would like to make in Klang Valley? If you still want to invest in hotel, where is the right location for you to start a 5 star hotel business?
1.0 INTRODUCTION
What we are being supposed to do while we are setting up to start new business in any industry? Firstly, we should do feasibility study about that industry, business and all things about that business. For instance, we require studying about market, financial, organizational, technical, economics and others. Feasibility study means to examine and do analysis about certain location, type of business and the difficulty happen when open the business. Starting this learning, we can find out more about that business and how that organizations resolve their problems to retain the operation and raise the gainful of business.
Moreover, financial feasibility is one of significant things require to examine before start any business. This is because from that revise, we are able to instruction about financial projection and capability that business to gain the income, profit and cash flow. So, form that we will know regarding availability accounting cost, budget, capacity the raw material, competitive, demand of customers and others. This is one of method to reduce the risk among invest in business and recognize how to supervise and resolve the financial crisis. Finished feasibility study is essential before invest and entry in any business because that information as references what nature business suitable to invest at that location.
Based on the case study above, after done feasibility study, we recognize Klang Valley is a largest area in Peninsula Malaysia which is Setapak, Shah Alam, Putrajaya, Puchong, Damansara, Kajang, Bangi, Sungai Buloh, Hartamas, Subang, Sri Damansara, Ampang and others. According to demographic analysis on Klang Valley population about the income level of people, majority of them have medium low, medium and medium high income level. Especially area Malay people which are at Shah Alam section 16 till 20, Kg Baru Subang, Sri Gombak have low income level. So, possibly this area not appropriate to build up 4 or 5 stars hotel because based on analysis income, most people at this place prefer to stay at home while school holidays. This is because they are budget their income for important things such as food, school children and bill.
Other than that, Klang Valley areas also have much type of facilities, especially at City Center, Damansara, Old Klang Road which is the facilities are transportation like Klang Valley Public Transport, hotels, restaurants, institutional such as universities, hospitals and schools, shopping complex and others. It will become one of reason people spend their money.
2.0 MAIN POINTS
Based on this case study, the developed 4 or 5 stars hotel will resolve the undersupply of room in Klang Valley, but not only 4 or 5 stars hotel can resolve this undersupply of rooms. I think 3 stars hotel also will develop to resolve this problem. This is because not all people have more money to stay at 5 or stars hotel especially tourists which is they maybe want spend their money for visit many place in Malaysia especially at villages to understanding and know about the many of culture in Malaysia. So, I think 3 stars hotel also will resolve and recover the undersupply of rooms at Klang Valley. In future, the budget hotel will set up in Asia. It will encourage the tourist and the families spend their disposal income to lodging at hotel during school holidays.
I think Klang Valley still need 4 or 5 stars hotel in years come because when the economic become more stable, many tourist will visit to Malaysia. From this case study, 11 new hotels will develop in this area. According to The Star, Goh Tian Sui, (2009) as CH Williams Talhar & Wong Sdn Bhd managing director stated that, with added the new supply of hotels in three to five years will not caused oversupply in Klang Valley. This is because when the economic will recover, many tourists will come visit Malaysia and the people which have high income also will spend their money to lodging at 4 or stars hotel with their families.
Other than that, in future maybe the Klang Valley will become one of the largest places to tourists come and spends more money at there. According to The Star, Jones Lang Wootton, (2009) as executive director Malathi Thevendran said that, the Klang Valley is a main economic centre of Malaysia. From the record, it is a largest number of guests in country which is in 2004 are 16.7 million guests and increase to 20.5 million guests in 2008.
According to The Star, Goh Tian Sui, (2009) stated that, from latest research, there will be an additional 297 rooms in 2009, 1,845 rooms in last year, 992 rooms by end of year and 553 rooms in 2012. The average price of hotels at the Klang Valley is around RM250 to RM600 per night. Moreover, the hospitality industries get strong supported by government. So, it help this industry will spread widely their business in Klang Valley and other places in Malaysia. However, this developed hotel should monitor and control because to avoid oversupply in long-term.
If I have the sufficient fund, I think I would invest my money in hospitality industry. I would like to invest in hotels for long-term investment. This is because more equipment, building and facilities for long term operation. The operation of hotel is not easy, need time to ensure cost, loan will get back from sales rooms. So, it enough time to planning the business until the hotel is become popular and also as a favorite hotel among the tourists when they come to Malaysia. Besides that, I choose this location because Klang Valley area is strategic location which is given higher income to country and also get strongly support by government. In future, maybe this area become popular to tourists and will generate more profitable.
Other than that, I choose to invest in long term because this industry will give more profit, generate the income level, and also open the opportunity to fresh graduate to get the job and built up their career in this industry business. So, when the tourist come to Malaysia, easy to them lodging any hotel they prefer because have enough supply of rooms and the room rate at hotels in Malaysia is cheaper compare others country. So, when I invest in this hospitality industry, it will return back with higher of revenue and will cover all the expenses during operation.
3.0 CONCLUSION AND RECOMMENDATION
As recommendation, I would like to build up a 4 stars hotel which is have own theme in Klang Valley. The location to build up my hotel in Damansara because at there have higher disposal income level and do not many of hotels. So, at Damansara do not have more competitive compare develop an City Center. I think I will choose to build the Islamic Hotel which is providing services, food and beverages, uniform and others follow Islamic perspective. Damansara is one of location which is having positive growth in business. So, many businessmen, tourists and people will coming this place to lodging and get the service such as spa, dinner companies, room services, facilities and others.
Other than that, in future this area become more popular with have more hotels, food and beverage business, biggest companies and others. From that, hotel business still generate revenue because the companies doing their meeting, dinner and discussion with clients in the hotels. The Air Asia also generates the income to hotels and tourist agencies which is support the hotel and tourism industry with their package. For example, this airline provide lower price to fly, so many tourists will visit Malaysia
As conclusion, after learn feasibility study, and survey the location in internet about Klang Valley, it will give me idea how to do when we want to open any business. Starting the new project or new business is not easy as we think. We should be do feasibility study about demographic at that place, feasibility financing, market, organization and others.
Furthermore, starting business needed more knowledge about financing, management, loan, fund, market, economics of scale and other things. This is because without study about that, it can cause the business not generate more profit because at that place have saturated supply. So, while oversupply, we are business will not easy to compete with strong business which have strong economic of scale. So, my suggestion, when any people want to opening the business, they should do the research, analysis about location, supply, demand and get advice from people who more experience in that business. So, from that we can learn how they manage, resolve the problem, control the cost and others.
4.0 REFERENCES
Coltman, M.M. (1979). Financial Management for the Hospitality Industry. New York: Van Nonstrand Reinhold Company.
Gomes, A. J. (1988) A Step by Step Approach to Hotel Development. Journal of Lodging. February, 34-40.
Kam, R. (2009, September 7). 11 new hotels by 2011. The Star. Retrieved from http://biz.thestar.com.my
Kye-Sung, C. (1995). Consideration of management objectives by target markets in hotel feasibilities studies. Journal of Int. J. Hospitality Management, 2 (14), 151-156.
PA International Property Consultants (KL) Sdn Bhd (2009).Summary of property new: 1st September – 25st September 2009. Retrieved from http://www.pa.com.my
Li-yin, Shen., Vivian, W.Y.T., Leona, T., & Ying-bo, J.(2010). Project feasibility study: the key to successful implementation of sustainable ans socially responsible construction management practice. Journal of Cleaner Production, 18, 254-259
Ward, T. J. (1989) The Hotel Feasibility Study. Journal of Progress in Tourism, Recreation, and Hospitality Management. C.P Cooper ed, 1, 194-205,
