Feasibility Analysis for an Ecotourism Hotel in Costa Rica Essay Example

Guests can enjoy fish or lobster for dinner, knowing they caught it earlier that day near a splashing waterfall under the warm sun. The concept targets city dwellers aged 35 to 60 who seek exclusivity and excellence. Word-of-mouth marketing is expected to be the primary promotional method.

Guests can participate in fishing, farming, gardening, reading, and swimming activities as opportunities for rejuvenation and finding inner peace lost in modern times. These activities are optional but available for those who want to experience the earth's bounties and mysteries of its waters. The ideal location for this exclusive resort is Costa Rica's dense forests with a focus on attracting North American guests.

The employees will be trained to cater casually to the needs of this specific market in line with the green concept. A warm, relaxed, friendly, and courteous attitude is expected from the start of the experience.

The main focus of the text is to emphasize the creation of a one-of-a-kind guest experience in Costa Rica's rainforest. This experience allows city dwellers to detach from their everyday lives and participate in socially and environmentally responsible activities. The pricing for this concept will be determined through a marketing study, ensuring that it meets customer expectations while also supporting the preservation of both the concept itself and its surrounding environment. Costa Rica was chosen as the project location due to its reputation as an ecotourism destination, as well as its government and locals' willingness to embrace external investment and development projects. Currently, various environmental and social organizations are collaborating to responsibly manage Costa Rica's tourism industry for long-term sustainability.

La Fuerza stands out as an attractive tourist destination due to its rich

plant and animal life, cultural importance, and convenient flight options from major American and European cities. What makes La Fuerza special is its unique concept of providing a luxurious experience in complete seclusion while also promoting environmental and social responsibility through guest involvement in community engagement.

Market Analysis

The tourism industry is witnessing substantial growth rates, particularly in non-conventional forms that do not solely focus on sun and beach activities. According to the WTO, these alternative types of tourism are experiencing annual growth rates of 25% to 30%, whereas traditional tourism grows at a rate of 2% to 4% per year.

In Costa Rica's South Pacific Rain Forest, it is significant that 70% of tourists who visit the country are from the non-dominant sector. In the 1990s, tourism in Costa Rica saw steady growth at a rate of 9% per year. Consequently, in 2006, despite having a small population of just 4 million people, the country received almost 1 million visitors. Local entities anticipate this positive trend to persist and forecast an average rise in visitor numbers up to 2.

The number of tourists reached 2 million by 2010, with last year's total tourism receipt amounting to $1.6 billion. On average, each tourist spent $230 per day and stayed for 5 days. The hotel aims to attract the 15.

Currently, 6% of tourists stay in the country for a duration of 13 to 15 days. The hotel's target market comprises individuals aged 30 to 40 years old and 40 to 50 years old, which together constitute a total of 27.8% and 19.3% respectively among all visitors. It is crucial that the hotel caters to the needs of a significant portion

of visitors, amounting to 31.7%, who travel with their partners and possess an average income surpassing $100,000. Furthermore, the hotel aims to attract a distinctive niche market not currently reflected in Costa Rica's tourism statistics: stressed executives seeking respite from urban life and work-related pressures.

We believe that we can create a new form of tourism, which is seen as a therapy. There are two major trends driving the specific niche we want to target. One trend is the stress of modern life, which is a popular topic and Americans are eager to find ways to relieve themselves from it. This is evident by the increasing popularity of activities like Yoga and the growing interest in spirituality, nature, and alternative therapies.

People's holiday choices reflect this phenomenon. Research by the International Ecotourism Society indicates that the "Lifestyles of Health and Sustainability" (LOHAS) market segment is one of the fastest-growing travel trends. The LOHAS segment encompasses green tourism, eco-volunteering trips, and environmentally responsible tourism. The society's research reveals that 66% of US adults are interested in environmentally responsible travel.

Additionally, there are 55.1 million US travelers who can be classified as "Geotourists" - individuals who are interested in nature, culture, and heritage tourism.

Nearly half of the population prefers small-scale accommodations operated by local individuals, which is associated with the concept of "Super-connectivity." This refers to the increasing reliance on communication tools such as mobile phones, laptops, and wireless internet. According to the Travel Industry Association of America, in 2002, 25% of business travelers and 9% of leisure travelers carried laptops, while 69% and 61%, respectively, used mobile phones. These statistics suggest that a significant number of people choose not

to stay connected while traveling. For instance, 31% of business travelers did not bring a mobile phone on their trips. We also question whether those who do stay connected do so willingly or not. Our aim is to provide an opportunity for those who are eager to disconnect themselves. As the ecotourism industry expands and environmental responsibility becomes a competitive advantage, it is crucial for us to differentiate ourselves in the market through our unique offerings. The tourism industry experienced continuous growth in 2005 with a total increase in tourists reaching 800 million and an additional 42 million visitors compared to the previous year (WTO). This growth persisted despite various challenges such as terrorist attacks, natural disasters, health concerns, higher oil prices, exchange rate fluctuations, and economic and political uncertainties.

The tourism industry is vulnerable and unpredictable, influenced by various global factors that affect business. We have selected Peninsula de Osa in Costa Rica's southern Pacific coast as the site for our resort. This region is less developed than other parts of the country and has been referred to by National Geographic as "one of the most intense and pristine locations on earth." It is an excellent location for our environmentally-friendly and technologically-stress-free resort. Currently, Costa Rica has around 16,000 available rooms, but experts estimate that a minimum of 49,000 rooms are needed to meet the overall demand.

In 2004, a study reported that approximately 40% of reservations in the Pacific region of Costa Rica were lost because there weren't enough available rooms. The Peninsula de Osa has an even smaller number of lodging options compared to the rest of the country, with only 343 rooms in

that area. A survey conducted by the Instituto Costarricense de Turismo (ICT) revealed that 7% of tourists choose to visit the South Pacific region of Costa Rica. Because this area is highly appealing to nature enthusiasts and boasts one of the highest concentrations of biodiversity worldwide, efforts are being made to increase promotion in this region. This scarcity and government support create opportunities for our lodge concept. Costa Rica has already successfully developed a profitable ecotourism industry that preserves its natural treasures while providing economic opportunities for rural areas in need. The country is well-known and easily accessible.

The government of the South Pacific region is investing significantly in the early stages of development for its Ecotourism and Tourism industry. This industry involves various agents and requires obtaining permits to start a business. To establish our resort in Costa Rica, we need to adhere to all procedures and laws mandated by the country's legislation, which will necessitate negotiations with the Costa Rica administration. Afterward, we can identify several participants in ecotourism activity: ecotourism customers, outbound tour operators and travel agents, inbound land operators, and local entrepreneurs.

In other words, the various parties involved - Visitors, Resource tour, and Service Industry - must work together to ensure the marketing, demand capture, transportation, logistics, reception, and operation of the product. Typically, eco-tourists and outbound nature tour operators come from industrialized countries, while inbound operators and local tourism businesses operate in non-industrialized areas. Market segmentation research conducted on tour operators revealed that the largest growth in visitors to Costa Rica is seen in the "participant eco-tourist" segment rather than the eco-specialist market. The participant eco-tourist segment includes individuals who seek

a wide range of experiences in a 'soft' adventure holiday, such as canoeing or mountain biking, observing wildlife, rafting, horseback riding, while also appreciating the quality of landscape and richness of wildlife.

These eco-adventure tourists have a tendency to consume destinations at a quicker pace and with more comfort. On the other hand, specialist eco-tourists prioritize the close observation of nature for a longer period of time. The figure below illustrates the various categories of tourists visiting Costa Rica. The first layer consists of "purists" who visit Costa Rica exclusively for a specific purpose and engage only in activities related to that purpose. The second layer comprises individuals with a specific interest in any of the four sectors, but they also have additional interests in the other sectors. Therefore, they participate in activities related to multiple sectors simultaneously. This particular segment of tourists is considered the largest.

The third layer comprises individuals who lack a specific interest and are open to participating in any activity across various sectors. Time plays a significant role in this segmentation as it pertains to the duration spent on a particular activity. As per the publication "Ecotourism at a Crossroads: The Case of Costa Rica" (multilingual-matters.pdf) authored by Les M. Lumsdon and Jonathan S. Swift from Staffordshire University Business School in Stoke on Trent, it becomes apparent that eco-tourists engaged in soft adventures form the largest market segment. Consequently, our project will focus on targeting this particular group of tourists, providing them with an eco-tourist experience alongside numerous options for adventurous activities.

According to data from a survey conducted by HLA and ARA consulting firms, TES has compiled a profile of the ecotourist

market in North America. The age demographic ranges between 35 and 54 years old, although this can vary depending on factors such as cost and activity. Gender is evenly split at 50% female and 50% male, but there are noticeable discrepancies based on the specific activity. When it comes to education, 82% of surveyed ecotourists have college degrees. However, there is a trend showing that interest in ecotourism is shifting from highly educated individuals to those with less education, indicating an expansion into mainstream markets. In terms of household composition, there were no significant differences found between regular tourists and experienced ecotourists.

** When it comes to the composition of parties in ecotourism, a majority (60%) of experienced respondents prefer to travel as a couple. Only 15% stated their preference for traveling with their families, while 13% prefer to travel alone.

Competitive Analysis

The three companies analyzed below are considered direct competitors, although not entirely because they do not provide the same experience of disconnecting from society or immersing in the local community. While they offer high-quality products, they may not directly compete with our product. Furthermore, due to their small size and high demand, it is challenging to determine a dominant competitor.

Local Competitors in South Pacific Costa Rica include La Fuerza, Lapa Rios, Nicuesa Rainforest Lodge, and Aguila de Osa. La Fuerza is situated on a 1000-acre private property in Golfo Dulce, while Lapa Rios is on a 165-acre private property within Golfo Dulce/Peninsula de Osa. Nicuesa Rainforest Lodge is located in Drake Bay.
In terms of accommodation, La Fuerza has 40 villas, Lapa Rios has 16 bungalows, and Nicuesa Rainforest

Lodge has 4 private cabins and 1 guest house with 4 rooms. Aguila de Osa offers 2 suites and 11 deluxe rooms. Prices start at $300 per person at La Fuerza, $276 per person double occupancy at Lapa Rios, $160 per person at Nicuesa Rainforest Lodge, and $250 per person double occupancy at Aguila de Osa.
Amenities at La Fuerza include luxury accommodation with private terraces, open-air bathrooms, king-size beds, and organic cuisine. Lapa Rios offers queen-size beds, dual showers, screened wall windows, wooden floors, and culinary cuisine. Nicuesa Rainforest Lodge provides ceiling fans, hot showers, private terraces, and meals. Aguila de Osa offers hot water, ceiling fans, drinkable water, 24-hour electricity, Italian tiled bathrooms, and meals and transportation.
Activities at the local competitors vary but include farming and tree planting, interacting with the local community, adventure sports, and cooking lessons. At La Fuerza, visitors can also participate in tree planting and visit botanical gardens, go fishing or watch dolphins and turtles. Lapa Rios offers guided hikes, kayaking, fishing equipment, snorkeling equipment, windsurfing equipment. Nicuesa Rainforest Lodge provides kayaking, hiking, dolphin tours, snorkeling and scuba diving, bird watching, and other activities.
Aside from the local competitors in Costa Rica, there is also indirect competition from other eco-tourism hotels, resorts, and lodges outside of the country. Additionally, there is competition in the form of other activities that offer relaxation and stress-relief.In the future, competition may intensify among properties in customers' home countries due to the paradox of taking an airplane for an environmentally responsible vacation. When analyzing competition in the industry and the degree of rivalry among local competitors, the key factors to consider are location and service. Location

is especially crucial as these companies strive to provide visitors with a true connection to nature. They need a place that is isolated from major cities and incorporates nature in all aspects.

The text highlights the importance placed on service personnel and activities at various remote locations. These guests are typically demanding, high-paying customers who frequently travel and desire a luxurious experience. As a result, there is a strong emphasis on providing excellent service within available resources and offering a wide range of on and off-site activities to meet their needs. Despite the small number of competitors and their relatively small size, there is no clear dominant player in terms of rivalry. Demand is evenly distributed among travelers to the region, indicating a clear need for additional accommodations.

There are numerous international competitors in the field of eco-tourism, too many to be mentioned by name. These competitors consist of various individual and chain-run properties located across the globe in different locations. One important segment for us to consider is facilities located in the home countries of customers. This is significant because more customers are becoming concerned about the environmental impact of travel and are avoiding flying. These facilities in Europe, located in beautiful and often remote regions, are especially appealing to hikers, outdoor enthusiasts, nature lovers, birdwatchers, and others. Examples include the Scottish Highlands or the Alps, and reservations can be made through websites like responsibletravel.

In Britain and the United States, the Agrotourism industry can be seen as a rival to our business at "La Fuerza". This industry includes farms, wineries, farmhouses, and other country locations that are open to the public. Many of these places also

offer accommodation and activities that are similar to what we offer. Some examples of these competitors include ecohotels and lodges like l'Orri del Planes in the French Pyrenees. They rely solely on solar power for their energy, aligning more closely with the concept of eco-tourism and presenting stronger competition to us than larger hotel chains like Marriott and Intercontinental. These larger chains may promote their environmental policies, but they do not fully embody the eco-tourism concept due to their larger scale. The level of competition among these various competitors depends on their ability to combine different concepts. Additionally, we should also consider other forms of vacation options that provide relaxation and satisfy the needs of our target market.

We should once again remind ourselves of our customers and their needs. The customer of "La Fuerza" is an individual who lives and works in busy cities and experiences a stressful environment. In these cities, there is an abundance of products, information, complex tasks, and artificiality. This individual has limited time to relax and considers nature and simplicity as a luxurious and soothing escape. They have a high income and a good level of education. They are experienced travelers who seek unique experiences, not just passive enjoyment of a destination. Additionally, they are conscious about preserving the environment and have a sense of social responsibility towards local communities. With this understanding of our target market, we can now explore alternative products that may compete with the vacation and stress-relief experience offered by "La Fuerza."

We view psychologist therapies, alternative remedies, and activities such as yoga and meditation in our home country as alternatives to our stress-free and soul recovery

therapy. Relaxing spa facilities and resorts, body treatments, and massages are also seen as substitutes for the need to be pampered, rested, and calmed. Wine tasting, outdoor picnics, paintball, going to the cinema, and attending the opera are activities that can provide an escape. These activities are considered competitor activities. However, not all of them offer the opportunity to connect with nature. Furthermore, none of them can compare to Costa Rica's natural world and biodiversity in terms of non-artificial richness.

When it comes to contributing to civilization, there are various types of social responsible actions and environmental care that can be practiced. These actions include voluntary work in the home country, assistance to elderly individuals, reforestation efforts, participation in work camps, and sponsorship of individuals from underdeveloped countries. These alternatives guide our target clients' concerns towards the development and improvement of our home country and other underdeveloped areas around the world.

On the other hand, Costa Rica is widely recognized, respected, and developed in terms of sustainable and ecological tourism. This makes it an easy and well-managed option for enjoying vacations while also respecting the environment and supporting local rural communities' further development. The passion for nature present in our target clients will make a difference, motivating them to seek relaxation in a rich and biodiverse area of the world. This provides them with the opportunity to enjoy their surroundings while also helping local communities and respecting the environment through sustainable tourism practices.

As for our competitors in the South Pacific of Costa Rica, most of them view themselves as eco-lodges that operate in an eco-friendly manner while also offering guests the chance to appreciate nature's beauty.

They all

market the "experience" of immersing oneself in the rainforest and witnessing its magic. It is crucial for them to integrate their offer with the kindness of Costa Rica citizens, the tranquility of the country, and the numerous adventure sports available. Overall, from budget accommodations to luxurious ones, they all strive to promote their commitment to the environment, responsible practices, and the chance to indulge in the mystique of the South Pacific tropical rainforest. While there may be other competitors offering similar opportunities to escape from modern city life outside of Costa Rica in ecotourism and other rejuvenating activities mentioned above, they do not offer the entire combination of hands-on activities, local culture, environmental and social responsibility, and the exceptional natural biodiversity and beauty of Costa Rica's rainforest. Hence, many of these competitors do not perceive themselves as direct rivals.

Barriers to Entry

When starting a business, there are typically obstacles to overcome. In the case of opening a hotel, one major barrier is the investment required for the land and building. Although the land in our rural part of Costa Rica is less expensive compared to popular areas like the North Pacific or international destinations like Mexico, the Caribbean, or the Amazon, there is still a significant amount of investment needed to acquire materials for constructing the main building and its amenities.

All of these purchases are expensive because they need to be of high quality to justify the price we will charge our customers and to align with our commitment to being environmentally friendly. Therefore, we will require a significant financial backer to provide the necessary funds. The process of acquiring land and starting construction is just

as crucial as obtaining the necessary permits for development. One critical requirement is conducting an environmental impact study to assess the hotel's potential effects on the environment and determine if it is appropriate to proceed with construction. Additionally, there is a considerable amount of paperwork to be completed with local municipalities, including obtaining construction permits and fulfilling other legal obligations. These procedures can take anywhere from several months to one or two years.

Still, we remain committed to conducting all of our development in a responsible manner to facilitate the entire process. Additional investment will be necessary to offer transportation and potentially other supplementary services to our guests, though these could be outsourced. Staffing is another crucial consideration for entry barriers. Given the region's remoteness, finding suitable personnel poses a significant challenge. Nonetheless, we strongly advocate for our business model that prioritizes employing local individuals and equipping them with the necessary tools to effectively represent the culture of their countries. While management acknowledges the associated costs, we believe that our expertise in the hospitality industry will compensate for the need to hire expensive managers, as we will assume the responsibility of training the local people.

Lastly, brand recognition is crucial for us as a new brand in the market. Unlike other resorts, we lack the same level of reputation. Attracting customers becomes a significant challenge for us, given our status as a new and relatively unknown resort brand. Therefore, it is vital for us to convey the right message to our target market from the beginning. This will help us differentiate ourselves from the competition, gain a comparative advantage, and benefit from rapid market penetration. Additionally, having

price controls is essential as pricing plays a critical role when introducing our product to the market.

Having a price that is either too low or too high can negatively impact the perception of your product. The value of a service is subjective and intangible. To minimize the risk of errors, it is recommended to consider pricing as the final step in your marketing mix. Over time, the service industry has implemented various strategies to boost sales, such as adjusting prices or offering different price options. The first step is to divide your customers into segments and understand their individual needs. By conducting a simple survey, we can create a pricing model for each customer segment. The crucial part is accurately forecasting how many people from each segment will visit the resort at each period.

Optims, a highly effective and sophisticated software, is designed to maximize revenue. However, the use of properly configured excel sheets can serve as a cost-effective alternative. When setting prices, it is important to base them on the value of your product rather than competing with rivals to avoid getting involved in a price war. Instead, emphasize the significance of our distribution channels, which necessitates careful analysis and evaluation. Cost management is crucial. Technology that aligns with environmental sustainability, such as solar and hydroelectric power, alongside recycling initiatives, reforestation methods, and organic farming, offer significant opportunities for innovation. Although infrastructure development requires a substantial investment, our competitive advantage lies in a strong partnership with a local village.

Our business model involves actively collaborating with the local community in a fair trade relationship. Our primary goal is to provide the locals with the essential resources

to enhance and rejuvenate various services, including roads, schools, and medical facilities. Simultaneously, we will hire local residents to work at our hotel, making them our primary workforce during construction and operation. The suppliers we prioritize will be the ones who provide us with food and beverages.

We will actively seek out suppliers to purchase organic food from local communities. Our goal is to support small producers from around the country and offer them fair trade conditions. In doing so, we aim to provide our guests with products that are 100% organic and support small businesses. Rather than engaging in power struggles, our philosophy is to give every participant a space and opportunity to showcase their products to international visitors, as this can benefit everyone in the long run. Control of Distribution Channels: According to an exit survey conducted last year by the Costa Rican Institute of Tourism, it was found that approximately 37% of tourists visiting Costa Rica planned their trip based on booking procedures.

According to the survey results, approximately 9% of visitors planned their trips independently through personal research or recommendations, and directly booked through various means such as telephone, fax, or the Internet, without any assistance from travel agencies. Additionally, another 35.1% stated that they made their trip plans upon arriving in the country, also choosing to book on their own. Therefore, more than 70% of the surveyed sample indicated a preference for planning their trips on their own terms.