Establishing a themed indoor nightclub in Malta : a feasibility study

Abstract

Purpose: The study intends to scrutinise the feasibility of the establishment of a new themed indoor nightclub in Malta, by analysing such factors as the proposed site, the market and the financial details. Such venue was chosen since clubbing has always been a popular recreational activity on the island, whilst also giving consideration to the inception of various music festivals on our islands in recent years especially, suggesting that this sector is likely to experience growth in the future. Design: Following numerous meetings with the site owner to assess its suitability, an online questionnaire was circulated in order to help ascertain the market’s reaction to the proposed nightclub, whilst also helping to unearth the demand and spending patterns of clubbers. These findings were later applied in the financial analysis section to create a realistic simulation of the scenario, followed by the application of investment appraisal techniques to the financial feasibility of the base case scenario. Finally, a sensitivity analysis followed, which prepared the investors for a negative, alternative and positive scenario, thus allowing them to make a more informed decision. Findings: Findings from the market research evidenced that the investors could expect a very positive reaction to the proposed nightclub, whilst the financial analysis concluded that the project is one which is financially feasible. These findings suggest that its implementation should be contemplated by the investors as the project is likely to yield an attractive net present value whilst also enjoying a healthy cash position throughout the period forecast. Conclusions: The conclusions drawn in this study justify the project being labelled as one which is worth pursuing, rather than one which is labelled as a ‘no-go’ decision. Thus, it is one which will create value for its shareholders. Implications/Value: This research allows the proposed investors to make a better informed decision as to the project at hand, whilst its findings may also be harnessed by other investors or researchers.