Feasibility Analysis Of Outdoor Playground

Feasibility Analysis Of Outdoor Playground

Before a developer or organization considers the construction of a new outdoor playground resort, the investors generally require a feasibility study. A feasibility study is typically performed by an independent third-party consultant who specializes in analyzing the performance of the outdoor playground. The purpose of performing the feasibility study is to determine if the proposed outdoor playground development is economically feasible. A proposed project is economically feasible if the value of the proposed project equals or exceeds the development costs when completed and operational. The feasibility study will analyze revenues, expenses, and net income in determining the value of the proposed project and will compare it to the projected costs of the development. The purpose of this article is to analyze the major components of a feasibility study and the general areas that a feasibility study showed review as part of determining the potential success of an outdoor playground project. Major Components of a Feasibility Study

There are a number of major components included in performing market feasibility and financial analysis study for an outdoor playground project. The following lists the major components:

1:Area, Demographic, and Neighborhood Analysis
2:Site Review
3:Proposed Development Recommendations and Costs
4:Market Analysis
5:Proposed Development Usage and Pricing Analysis
6:Financial Analysis
7:Valuation Analysis
8:Comparison of Value Created to Projected Costs
9:Area, Demographic, and Neighborhood Analysis



1:The area,demographic, and neighborhood analysis evaluates the local economy surrounding the proposed development. The area analysis focuses on the four forces – social, economic, governmental, and environmental – that influence the performance and valuation of a waterpark facility. Demographic information including population, households, income levels, employment levels, etc., should be reviewed in detail to calculate how many people and potential customers live within the local and regional areas. Site Review

2:The site review evaluates the subject parcel concerning its size, access, and visibility, topography. The proximity to leisure guests for the outdoor playground is an important consideration as visitors appreciate convenient access from area highways. Our firm typically analyzes a drive time or mileage radius and estimates the number of available youths and adults within a 30-, 60-, 120-, and/or 180-mile (or minute) ring from the subject property. Drive time demographics: What are the population and household income levels within various drive times of the subject property, and how does it compare with other markets? Site: Is the site large enough to support the outdoor playground project being planned? Is there room for future expansions?

3:Proposed Development Recommendations and Costs. The facility’s recommendations and costs include an analysis of the scope of the project and the cost to develop the proposed project. Some clients provide the consultant with their plans for the development, and this section reviews the plans and recommends changes that the consultant may feel are appropriate to the development plan. Other clients request that the consultant analyze and recommend the scope of the development based upon their market research for the feasibility study. Physical plant information: Have any architectural plans been developed by the client? Facility size: How large should the project be? Theming: What type of theming should the outdoor playground have? How elaborate should the theme be?

4:Market Analysis: A thorough market analysis of the local hospitality and outdoor playground resort market is an essential component of an outdoor playground resort feasibility study. A thorough market analysis of the local and regional outdoor playground market is an essential component of an outdoor playground feasibility study. The projections of financial performance for the project will depend heavily upon the data gathered in this section.

Outdoor Playground Resort Market

For studies on outdoor playground, an analysis of the existing outdoor playground’ attendance and pricing is very important to review. The consultant will need to do a thorough research of a variety of published sources and total revenues at comparable properties. below are things to consider.

Existing and potential competitors: How many other outdoor playgrounds are located in the area? How many are proposed in the area?

Attendance: How are existing waterparks performing in terms of attendance and usage? How many visitors do they receive in a year?

Amenities of competitors: To what degree will exist and potential outdoor playgrounds be competitive in terms of size, amenities, pricing, theming, etc.?

Outdoor playground pricing: What are outdoor playgrounds in the area charging for use of their facilities? What is the average ticket price per attendee at the competitive properties? For the purposes of comparison, it is important to consider the proposed subject property.

5:Proposed Development Usage and Pricing Analysis
A thorough analysis of the projected usage and pricing is a key component of a feasibility study.

Usage: What are the historical and projected usage levels and pricing of the existing outdoor playground and amusement parks within the region?

Facilities: How do the subject property’s proposed facilities, location, and size compare to the existing properties?

Population: What is the population base within a 30- to 60-minute drive around the subject property, and how many youths are in the area who would potentially utilize the proposed outdoor playground during the season?

Season passes versus day pass: What will be the pricing for season passes versus day passes?
Projections: Based on the data gathered, what type of attendance levels will the subject achieve for the first five years of the analysis? What type of pricing levels are reasonable considering the proposed attendance levels?

6:Financial Analysis
Estimate the potential gross revenues for the subject property based upon an examination of the prior operating history of the subject property (if available), operating history of comparable properties in the subject market area and on a national basis, and an analysis of industry trends.

Analyze departmental, undistributed, and fixed expenses, and project appropriate amounts in each category. For example, staffing and labor costs are critical components of operating an outdoor playground.

Project the resultant net operating income (cash flow before debt service) over an appropriate holding period.

7:Valuation Analysis
The economic value of an outdoor playground is calculated through a discounted cash flow analysis from the income capitalization approach. This analysis utilizes the property’s project

8:Comparison of Value Created to Projected Costs
The key component of a feasibility study is to determine if the projected value created as shown from the discounted cash flow analysis equals or exceeds the development cost for the proposed project. A feasibility study should present the projected value created after performing a detailed analysis of the market, projected usage, and financial analysis. In some cases, the consultant performing the feasibility study will not have the detailed costs available, and this conclusion will be determined at a later date after the client has costing estimates performed by building contractors and architects. In other cases, the client has estimates of construction costs, and the feasibility study will present these estimates and compare the value created to the development costs to determine if the project is feasible. The most viable projects, which have the greatest investor appeal, are those where the value created is greater than the development costs for the proposal. However, the value created may be less than the development costs, but the project may still be feasible if the municipality agrees to abate taxes or provide some capital assistance to the developer in terms of infrastructure. This would allow either for improved financial projections or for lower development costs.

9:Conclusion: The feasibility study of an outdoor playground requires analysis and expertise beyond other types of commercial real estate. An outdoor playground resort feasibility study requires a thorough market analysis involving a study of the economic and demographic factors. An outdoor playground feasibility study requires a thorough market analysis involving a study of economic and demographic factors as well as a review of the outdoor playground and amusement park markets. Both studies require a complete financial analysis, which looks at various revenue and expense categories. The purpose of the feasibility study is to provide honest and reliable information to the client to help them in their decision process on whether to develop the outdoor playground.

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