An Evaluation of Financial Feasibility of an All-inclusive Hotel Investment in Small Island Developing States: The Case of Trinidad and Tobago

The current study presents a financial model to demonstrate all-inclusive hotel investment appraisal and sensitivity analysis. This thesis intends to study on a hotel investment in the Small Island Development States, Trinidad & Tobago. The financial viability of all-inclusive hotel is investigated by Cost Benefit Analysis (CBA) and Sensitivity Analysis has been done to address risky variables in this case study. Consequently, based on calculated Net Present Value (NPV) and Internal Rate of Return (IRR) -as most trustable evaluation criterion- the result established to assist investors and bankers to be well informed about the expected returns on equity with possible risk. Admittedly, the unprecedented situation caused by COVID-19 pandemic, leads this thesis to reassess the investment through two other scenarios, aiming to revise the analysis according to the latest projections of the tourism industry future while considering the new norm due to COVID-19 pandemic. Accordingly, with consideration of COVID-19 pandemic, the results reveal that the viability of the project is best attainable by scenario two. If the project deferred by two years it would become profitable and sustainable investment according to the positive study outcomes. Result of sensitivity analysis also identifies that the occupancy rate and price per night are variables with the highest effect on projects outcomes and hence should be closely monitored. Keywords: Hotel Investment, Feasibility Study, Financial Analysis, Sensitivity Analysis, Hotel Risk Factor, COVID-19