An Evaluation of Setting up Donaghys Youth Hostel In Cardiff Bay
University of Wales Institute Cardiff
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The effect of the economic recession is still being felt in many countries throughout the world. The spending cuts, the rise in VAT and high inflation rates have contributed too people looking at ways to save money. This has led to a rise in demand for low cost accommodation. This project will attempt to capitalise on the demand by looking at the feasibility of setting up a youth hostel in Cardiff Bay, which currently has none available making it a niche market. To do this a literature review will assess previous research carried out by different authors. A business plan will show the costs and legislation needed to determine whether the idea is viable and market research will be conducted by using a questionnaire, an online survey and a focus group to determine the target market. Results will show that what people expected a hostel to have are changing. Privacy and en suite bathrooms have become necessities and are the main reasons why people did not choose this accommodation. Further analysis will reveal that if hostels put in more private rooms and en suite bathrooms it could target a larger proportion of people since price was regarded by 29% of respondents as the most popular aspect of hostels. With costs of renovating at £212,487 and only 24 beds available, the hostel will not make a profit until year three at £4,301 leaving the business at risk of a decrease in sales and a margin of safety less than 4%. Although a hostel makes money over a long period of time due to the cheap operational costs, in the short term unless the right strategy is implemented the business could become bankrupt.
BA (Hons) International Hospitality Management