Is your tourism idea viable? 8 questions to answer before you invest
A promising tourism idea can quickly lead to plans, drawings, cost estimates and funding applications. Before committing significant time or money, however, you need evidence that there is a strong enough market for the idea to work. Over the years, I have helped tourism businesses, rural properties, self-catering operators, heritage attractions and community projects across Scotland test that question.
One thing I have seen again and again is that good tourism ideas often begin with genuine enthusiasm.
You may have a building that could become holiday accommodation, land that could support lodges or cabins, a heritage property that needs a new use, or an idea for a visitor experience that seems to have real potential.
You may be considering a single property as an additional source of income, balancing family use with holiday letting, or exploring how several buildings on a rural estate could generate sustainable revenue. Whatever the scale, the same principle applies test the market before committing significant time and money.
The temptation is to move quickly into plans, drawings, costs and funding.
But before you invest too much time or money, there is a more basic question to answer:
Is there a strong enough market for the idea to work?
In the projects I have worked on, the strongest decisions usually come from testing the idea early: who the customer is, what they will pay, how much demand there is, how the business will reach them, and whether the numbers still work when you take a realistic view of occupancy and costs.
Here are eight questions worth answering first.
Who is most likely to book?
This is one of the first questions I ask when looking at any tourism idea.
Who is the customer?
Couples? Families? Groups of friends? Walkers? Cyclists? International visitors? Dog owners? People looking for a luxury break? People travelling for a particular event or activity?
Trying to appeal to everyone usually weakens the idea.
I have seen how much difference it makes when a business gets clear about who it really wants to attract. It affects the accommodation itself, the facilities, the price, the marketing, and even how the business describes the experience.
You need to know who is most likely to book, what matters to them and why they would choose you rather than somewhere else.
Is there enough demand?
Just because an area receives visitors does not automatically mean there is enough demand for another tourism business.
This is where proper market research matters. It should establish not only whether visitors come to the area, but whether enough of the right customers are likely to choose your offer at a viable price throughout the year.
When I look at a new accommodation or tourism project, I want to understand what is already happening in that area.
How much accommodation is available? What appears to be booking well? Which times of year are strong? Are there underserved customer groups, locations, property types or seasons? Are new developments entering the market?
It is also important to understand whether demand is year-round or heavily concentrated in a few months.
I have worked with accommodation businesses where summer performance looks very strong, but the bigger challenge is what happens in the quieter months.
A business that looks profitable based on peak summer prices can look very different when you include November, January and February.
What are you competing with?
Your competitors are not simply the businesses next door.
Defining the competitive set properly matters because it determines which prices, facilities, positioning and booking performance provide meaningful comparisons for your idea.
Visitors don’t necessarily think in local-authority boundaries, and they may compare your business with alternatives much farther away.
A couple considering a high-quality rural break may compare properties across several parts of Scotland, not just within a ten-mile radius.
When I carry out competitor research, I look at more than price.
What are competitors offering? Who are they targeting? How do they present themselves? What reviews are they receiving? What facilities are customers responding to? How easy are they to book?
The aim is not to copy them.
The goal is to understand where your idea fits and whether you offer a strong enough reason to choose you.
What will people realistically pay?
Pricing is one area where I see assumptions made too early.
It is easy to start with the price you would like to charge.
The better question is:
What price will the market support?
If you also want to use the property yourself, include that in the calculation. Keeping peak weeks for family use may be important to you, but it reduces the most valuable letting availability and can materially affect annual income.
In my work with self-catering and accommodation businesses, I look at comparable properties, seasonal pricing, occupancy, and the overall quality of the offer.
I have also seen how quickly bookings can respond when pricing is brought back into line with what customers are prepared to pay.
If your financial projections only work with very high nightly rates, you need to be confident there is evidence that visitors will pay them.
And remember that price and occupancy work together.
A high rate is little use if the property sits empty for much of the year.
What is a realistic level of occupancy?
This is one area where business plans can become over-optimistic.
It is easy to put an attractive occupancy figure into a spreadsheet and make the numbers work.
But why is that figure realistic?
What evidence supports that figure—comparable local properties, booking patterns, seasonal demand, the proposed price point or a realistic build-up period for a new business?
I spend quite a lot of time looking at occupancy, booking patterns and seasonality. What works for one property or one part of Scotland doesn’t simply transfer to another.
New businesses also need time to establish themselves, build reviews, improve their marketing and develop repeat business.
Occupancy will vary significantly by location, accommodation type, customer, price and season.
The right assumption is not simply “the Scottish average”.
It should reflect the business you are planning.
How will people find and book you?
This is an important part of the business model and one you can easily leave until too late.
I have worked with both individual accommodation businesses and a specialist Scottish holiday letting agency, so I understand the different routes to market and how important it is to choose one that fits not only the property, but also the time and expertise you can realistically commit.
Will you market and manage the accommodation yourself?
Will you use a specialist holiday letting agency?
Will you list through platforms such as Airbnb or Booking.com?
Or will you use a combination?
There is no single right answer. The best route depends on how much time and expertise you have, how much control and flexibility you want, what level of support you need, and what each option will cost.
A specialist agency can bring marketing expertise, an established customer base, booking systems and support, but that comes at a cost.
If you are considering an agency or management partner, look beyond the headline commission. Ask what is included, how pricing decisions are made, how performance will be reported, who owns the customer data, and which additional charges may apply.
Large booking platforms can provide reach, but you need to understand their fees, how much control you retain over the customer relationship and how dependent you want the business to become on one platform.
Direct bookings can reduce commission costs and give you a closer relationship with customers, but they aren’t free. You need a good website, a booking system, effective marketing and the time to manage enquiries and bookings.
For some businesses, a combination will make most sense.
What matters is thinking about this before finalising your financial projections.
If your business plan assumes a particular nightly rate and occupancy, you also need to understand what it will cost to generate those bookings and who will manage them.
7. Does the idea still work when things do not go to plan?
One thing I have learned from working with tourism businesses is that the spreadsheet needs to survive contact with reality.
Test every tourism business plan against less comfortable assumptions.
What happens if:
- the project costs more than expected?
- occupancy is lower in the first two years?
- energy or staffing costs increase?
- marketing and booking costs are higher than expected?
- the opening date is delayed?
- visitors will not pay quite as much as you hoped?
- licensing, planning or other regulatory requirements add to the cost or timescale?
For accommodation projects in Scotland, regulation now needs to be part of the feasibility work from the beginning.
Short-term let licensing applies across Scotland, and depending on the property and location, there may also be planning requirements or additional local conditions.
You also need to consider visitor levies. Scotland’s visitor levy is not a single national charge. Local authorities can introduce their own schemes, so the position depends on where the business is located.
These issues do not necessarily make a tourism project unviable, but they can affect costs, pricing, administration and the customer proposition.
Sustainability should be tested as part of the business case rather than treated as an add-on. Energy efficiency may reduce operating costs, while credible environmental choices may strengthen the offer for particular customers, but any investment still needs to be proportionate and supported by evidence.
It is far better to understand these requirements before you invest than to discover their full impact afterwards.
Is this the best use of your investment?
For some owners, return is not purely financial. The property may carry family history or form part of a longer-term legacy, so the right option must generate sustainable income without undermining what makes the place worth preserving.
Sometimes the most useful conclusion from a feasibility study is not a simple yes or no.
I have worked on projects where the real value came from exploring options rather than simply testing the original idea.
Two higher-quality properties may make more sense than four smaller ones.
Perhaps your strongest opportunity is couples rather than families.
Perhaps you need a different price point.
Perhaps accommodation should form one part of a wider visitor offer.
Perhaps using an agency makes more sense than managing everything yourself, particularly if it can provide the level of support, you need while preserving any flexibility you require for personal use.
For an estate or larger rural property, feasibility work may also compare several buildings or sites, identify which opportunity should come first, and consider whether development should be phased. The best answer may be a portfolio of complementary uses rather than one stand-alone project.
For heritage and community projects, the question may be different again: how can the building or attraction generate enough income while still delivering the project’s wider purpose?
Sometimes the evidence says the original idea shouldn’t go ahead at all.
That may feel disappointing, but finding that out before making a substantial investment is far better than discovering it afterwards.
Good feasibility work is about making better decisions
A feasibility study should not be written to prove that an idea is a good one.
Its job is to properly test the idea.
That means looking at demand, competitors, customers, pricing, occupancy, routes to market, marketing and booking costs, regulation, risks, and the wider tourism market, and bringing it all together into a realistic view of the opportunity.
The evidence may confirm that the idea is worth pursuing, identify changes that could strengthen it, or show that proceeding would expose you to unacceptable risk.
Sometimes it will identify changes that could strengthen it.
Sometimes the best advice is not to proceed.
All three can be valuable outcomes.
How I can help
My work combines tourism market research with practical experience of accommodation, visitor attractions, rural tourism, community projects, pricing, occupancy and marketing. I provide a clear, independent and evidence-led view, so you can understand the options, assumptions, risks and likely returns before deciding what to do next.
If you are considering a new tourism development, accommodation project, diversification or visitor experience, I can help you test the idea before you commit significant time and money.
Depending on the project, that can include:
- assessing market demand.
- researching competitors.
- identifying the most likely customers.
- reviewing pricing and occupancy assumptions.
- considering different development options.
- looking at how the business could be marketed and how customers will book.
- considering direct bookings, specialist agencies and online booking platforms.
- testing the strength of the business case.
- reviewing relevant tourism regulation and local factors that could affect the business case
- identifying risks and areas that need further work.
- producing feasibility studies and business plans for investment, funding or internal decision-making.
My role is to give you an independent, evidence-led view of the opportunity, explain the trade-offs clearly and help you decide whether to proceed, reshape the idea or invest elsewhere.
Sometimes that means confirming that an idea has strong potential.
Sometimes it means reshaping it.
And sometimes it means spotting problems before they become expensive.
Whether you are testing a new tourism idea, reviewing the potential of an existing property or considering diversification across a rural estate, Fiona Drane Tourism Strategy can help you establish whether the market supports it before you invest further.
Corrie Hotel