Feasibility Study - Lot for new Business Location

• Note: The parties named in this report are fictional and Spectrum research is a fictional company. This writing and research was performed for a course on Technical Communication at the University of Houston - Downtown to demonstrate knowledge and understanding of feasibility study format and is for sample writing purposes only.

Memo

To:          Alicia Jones

From:    Spectrum Research 

Subject:  Pet Resort Feasibility Report

Date:      April 13, 2022

The client has initiated an investigation of potential sites for a custom-built pet boarding facility in the Houston area. Spectrum Research was contracted to perform this investigation. The following report first determined which environmental factors are most likely to affect success for pet resorts. Next, several sites were compared to discover which of four most completely fulfilled the requests of the client and the needs of any pet resort business.

Spectrum found that the factors most important for site selection are number of single-family homes and income level of the families living there. Single-family homes have one of the highest percentages of pet ownership. For a family to qualify as a potential client they must be able to travel often, and research proved that families with an income over $100,000 travel the most. Within this group, ages 26 to 41 travel more than the rest of the population. Thus, the researcher looked for busy neighborhoods with mainly single-family homes whose income level is over $100,000, between the ages of 26 to 41. 

The intersection of these factors was found just outside I-10 and Highway 6. In this area are many large plots of land with pricing over $3,000,000, but the client requested .5 acres under $1,200,000. The researcher was able to locate four lots within the requested price range, which were further investigated and examined for their compliance with several other factors and client requests. 

To aid in determining an optimal location, the researcher sought out area businesses that may be competitors for the client’s facility. Five prominent business were discovered with a variety of competitive advantages and strategies, but one stood out as the most similar to the new facility. Camp Bow Wow would be the main competitor in the area, so the best location would be furthest from this competitor without leaving the area of interest. 

An idea location was selected, which costs less than the client’s total budget. It also includes an informal partnership with a large pet store chain that will be next door to the new pet resort. The lot has fiber access, and the pet store chain has agreed to pay for the installation of other utilities on the lot. The client will cover the final installation to the site of the resort. 

This report was prepared by a junior writer of Spectrum Research’s staff, Rebecca Botello, with the help and input of Dr. Frank N. Furter and Felicia Martinez. For further information please contact Spectrum Research. 

FEASIBILITY REPORT on PET RESORT LOCATIONS

To Aid in 

Site Selection for a New Pet Boarding Facility

Presented to 

Alicia Jones, Future Owner and Operator of Pet Resort

Presented by 

Rebecca Botello of Spectrum Research

April 2022

 Abstract

Spectrum’s client, Alicia Jones, plans to open a luxury pet boarding facility in the Houston area. Spectrum used reports from Berkshire Hathaway, the American Veterinary Medical Association, and city-data.com to discover the most important location factors for pet boarding businesses. The research findings showed that the target demographic is families in single-family homes with income levels over $100,000. Two zip codes, 77450 and 77094, were selected because they fit the demographics of the target market. Five nearby pet boarding companies were examined, and Camp Bow Wow was shown to have the most similar strategy to the client’s proposed business. Once the target demographic and competition were established, potential sites were compared to aid in an ultimate recommendation of a location near Highway 6 and the Katy Freeway, on the inbound (Southern) side of the freeway.

Keywords: Pet Resorts, Pet Boarding, Pet Business Location, Animal Services, Houston Pets

Executive Summary

The client requested a feasibility study for three to four possible sites where a new, custom-built pet boarding facility would be placed. After research, it was determined that the ideal site for the client’s new facility is located 3.6 miles from the most threatening competitor, in the 77094 zipcode, on the inbound side of Katy Freeway near Highway 6. It includes an informal partnership with a pet retailer who will be building on the same lot. The location is directly accessible from the feeder road, which will reduce the costs of advertising due to the visibility of the location. 

The location meets the findings that the research suggested would benefit a pet boarding facility. Research showed that families living in single-family homes and have income over $100,000 travel the most and are most likely to own pets. This makes these factors the most important assets in a pet resort location. Further research revealed that the intersection of these demographics could be found in the zip codes 77450 and 77094, which is the location of the recommended build site.

There are 5 main competitors in the area, and the most threatening to the client’s potential business is Camp Bow Wow. The competitors had a variety of competitive advantages, ranging from low cost to focused differentiation. Camp Bow Wow uses a strategy of focused differentiation to attract wealthy clientele who will pay a premium price for boarding that is all-inclusive and features frequent daily interaction between pets and staff. This business strategy matches the client’s the most closely, making them the most threatening competitor.

Four sites that matched the requirements of the client and the research that was performed concerning the target demographics. Site one was selected as the best recommendation. Site two matched many of the objectives of the study but is located much closer to Camp Bow Wow. Site three is unfortunately within walking distance of Camp Bow Wow. Site four meets the least objectives of the research and is located too close to an apartment complex.

The research methodology included the report of Berkshire Hathaway on travel, the American Veterinary Medical Association’s report on pet owner demographics, data from city-data.com on income levels in Houston, and information provided by real estate agents on the website loopnet.com.

Introduction

The client is currently working at the Houston Chronicle but is planning to make a career shift. They are now seeking a site for a deluxe pet boarding facility in the Houston Metropolitan Area. The client requested that the site of the facility should be at least a half-acre, surrounded by suburbs, have access to fiber internet service, and easily accessible. Other requirements include high traffic in the area, and a good balance of cost to square footage. The budget is $1.2 million, but the client would prefer to spend less, if possible, with exception for an outstanding location.   

To retrieve information about pet owner and traveler demographics, the researcher pulled reports from Berkshire Hathaway and the American Veterinary Medical Association. To locate the target demographic in Houston, city-data.com was used. To identify specific sites the website loopnet.com was used. 

Pet owner demographics showed that families that own single-family homes were most likely to have pets and be in the target income level. The target income level of travelers is families earning $100,000 per year or more. The age range of those who travel frequently is between 26 to 41.

Nearby competitors were discovered. There are 5 significantly close to the optimal area for the new pet resort. A comparison revealed that Camp Bow Wow has the closest match to the client business in that they both will serve an upscale clientele at a premium price. The other 4 competitors compete in different spaces for different clients. 

Four potential sites were chosen to examine more closely. They all fit the client’s budget and many of the needs of the business model. Three of the sites are located close to Camp Bow Wow. Each had its own benefits and drawbacks. One is located near three hotel chains, which could prove beneficial. Three of them offer way more land that the client requested, but the costs are the exact budget of the client, leaving no wiggle room.

One site stood out among the rest as it is far enough away from Camp Bow Wow to prevent fierce competition, it includes an informal partnership with a major pet retail chain, has access to fiber internet service, will have utilities built in, and is directly on the feeder street to a major freeway. The site is on the inbound side of the freeway which is convenient for those heading to the airport. This feeder location also provides visibility and ease of access to anyone passing by. 

Methodology

Research for this report began with an examination of factors such as pet owner demographics, traveler demographics, and local (Houston) demographics. Every five years, the American Veterinary Medical Association releases the AVMA Pet Ownership and Demographics Sourcebook. The most recent edition was released in 2018. Traveler demographics came from Berkshire Hathaway’s 202o Report “Research Reveals Top Trends About Traveling During Covid-19.” Local demographics came from city-data.com’s research on Houston area income levels.

This report will compare pros and cons of four potential sites. To select the four potential sites, online research was performed using a filtered search looking for sites that fit the client needs. With help from a real estate website called loopnet.com that supplies commercial real estate information, the larger pool of potential sites was examined more closely and pared down to the four best options. 

These costs for purchase or rent of the facility, cost of utilities, location, traffic, square footage, number of nearby competitors, competitive advantages of nearby competitors, and other factors were compared for each of the four sites, and an optimal solution decided upon.

Results

Pet Owner Demographics

In Texas, 62% of households are pet owners, which makes number of households in the area an important factor in site selection. There are different types of households, which will be examined next.

“Family” households are more likely to have pets than “non-family” households. Family households are homes with both parents and children living in them. Renters and those living in multi-family residences like apartment complexes are less likely to have pets than single-family homeowners. For this reason, areas with a concentration of rental apartment complexes are less than optimal. Families living in mobile homes have the highest rate of pet ownership, but the mean income level for these areas is lower than single family homeowners. 

This brings up an important demographic feature – income. Interestingly, the income of pet owners is only marginally higher than non-pet owners. However, the pet boarding business relies on pet owners who travel frequently and can afford to board their pets while they are away.  

Traveler Demographics

To discover the optimal average income level for the new facility’s surrounding neighborhoods one must find out who is traveling the most. Traveler demographics show that households earning more than $100,000 are likely to travel up to 188% more than households with lower incomes and that people in the age range of 26-41 travel more than the general population. 

Local Demographics

With the demographics in mind, an area of town was selected. Houston’s highest earning suburbanites live in the following two zip codes: 77450 and 77094. These areas include Houston’s wealthiest families in the ideal age range. Household income ranges from $90K to $200K and above. The age range is from 32 to 55 and around 50% to 98% of residences are family households. Both the zip codes border Katy Freeway near Highway 6. 

Competition

            There are five pet boarding facilities along the 5 mile stretch of the Katy Freeway that this research focuses on. Each has its own competitive advantage and strategy. The client’s plans are to develop a luxury pet boarding facility. The research is intended to identify the competitor that most closely matches the new facility’s strategy, and recommendations will reflect a location that is as far away as possible from the most threatening competitor without leaving the area of interest.

1.     Camp Bow Wow

a.     Offerings: Dog day care, dog boarding, dog training, dog grooming

b.     Competitive Advantage or Strategy: The Camp Bow Wow facility theme is “summer camp for dogs.” The focus of this business is on providing mentally and physically engaging activities to customer’s pets. The company offers an all-inclusive boarding option for pet owners that includes day camp, indoor-outdoor play yards, individual cabins, “campfire treats,” medication administration, and individual attention. They offer two tiers of luxury boarding rooms. Their services come at a premium price. 

2.     Canine Country Club

a.     Offerings: Dog day care, dog boarding, dog training, and dog grooming

b.     Competitive Advantage or Strategy: The business is described as a country club for dogs. They offer boarding with premium pricing, but lower pricing than Camp Bow Wow. The resort offers a large swimming pool, splash pad, and large green spaces for playtime with an indoor space for rainy days. The boarding facilities have several tiers of luxury rooms for dogs. 

3.     Sweet Dreams Dog Boarding

a.     Offerings: Dog boarding

b.     Competitive Advantage or Strategy: The unique feature of Sweet Dreams is that the boarding service is run from the owner’s personal home. This guarantees that a person is always on-hand to give personalized attention to boarding pets. The company also states a low-price advantage but does not display pricing on their website.

4.     Katy Kennels – Love on a Leash

a.     Offerings: Cat and dog boarding, dog grooming

b.     Competitive Advantage or Strategy: This facility boards both dogs and cats. The company offers a very low price for boarding, their highest tear boarding is cheaper than the lowest tier of Camp Bow Wow or Canine Country Club.

5.     A Pet Lover's Sitting and Grooming Service-Pet Sitting & Grooming

a.     Offerings: Dog day care, all-animal boarding, dog grooming 

b.     Competitive Advantage or Strategy: This facility runs an in-home pet sitting business, like Sweet Dreams. The pricing starts at a higher point than the highest tier of Canine Country Club. Unique to this facility, boarding is offered for all types of animals including but not limited to dogs, cats, birds, fish, reptiles, small farm animals, and others.  

Locations

1.     Katy Freeway at Cypress Run

a.     Description: This is a 2-acre property selling for $3,049,200. This pricing is above the client’s budget, but there is a pending contract with a major pet store chain who is interested in negotiating a half-acre to a pet resort. The pricing of the full 2-acre lot would place our client’s costs for .5 acres around $762,300. 

b.     Cost of Utilities: This lot falls under the Longhorn Town Utility District for water services. Utilities will need to be set up for this lot, but the pet store chain is willing to cover the costs of running the utility lines to the property. From there on the costs to run utilities to the facility will be covered by the client. Fiber is available to 48.56% of homes in the area and can be run to the lot by request.

c.     Location: This site is 3.4 miles from Camp Bow Wow, on the feeder road for Katy Freeway with a new pet store planned next door. It is on the Southern side of the freeway.

d.     Traffic: The Katy Freeway is one of Houston’s busiest roadways. 

e.     Square footage: .5 acre

2.     Julie Marie Lane near I-10

a.     Description: This 1.69-acre lot is close to Camp Bow Wow, but it is located just outside a neighborhood and near three hotel chains. The property is listed at $1,300,000 which is slightly higher than the client’s budget, but this is a great location.

b.     Cost of Utilities: Water, gas, and electric are set up for this commercial lot. Fiber is available to 48.56% of homes in the area and can be run to the lot by request. 

c.     Location: This facility is .6 miles from Camp Bow Wow on the Northern Side of Katy Freeway. 

d.     Traffic: There are a variety of active businesses nearby. 

e.     Square footage: 1.69 acres

3.     21774 Katy Freeway

a.     Description: This 1.47-acre lot is located next to several large businesses. It is much larger than the client’s requirements but fits the budget of $1,200,000.

b.     Cost of Utilities: Water, gas, and electric are set up for this commercial lot. Fiber is available to 48.56% of homes in the area and can be run to the lot by request.

c.     Location: This facility is on the north side of the Katy Freeway, within walking distance (.4 miles) of Camp Bow Wow. 

d.     Traffic: Heavily trafficked area off major freeway, near popular businesses.

e.     Square footage: 1.47 acres

4.     1501 Westborough Drive

a.     Description: One block away from the Katy Freeway, this property is 1.6 acres and selling for $1,200,000.  

b.     Cost of Utilities: Water, gas, and electric are set up for this commercial lot. Fiber is available to 48.56% of homes in the area and can be run to the lot by request.

c.     Location: This location is 1.8 miles away from Camp Bow Wow on the Northern side of the freeway. 

d.     Traffic: This is one of the least trafficked areas of the four sites. Apart from the apartment complex, there is a hotel, car dealership, and a row of freestanding restaurants. 

e.     Square footage: 1.6 acres

Discussion

Based on these findings, locations near suburban areas with single-family homes are the best option for the facility. This recommendation is in line with the client's parameters. The households should have a median income over $100,000, and the average adult age range should be within or close to the range of 26-41. The 77450 and 77094 zip codes are the perfect intersection of these demographics and will make an ideal location for a luxury pet boarding resort. The zip codes' locations on the Katy Freeway will provide easy access for residents in either zip code and provide visibility from freeway traffic and shopping centers. 

The company's main competitor will likely be Camp Bow Wow due to its similarities to the client's proposed business. Of the five nearby businesses examined, Camp Bow Wow offers the most luxurious boarding and care, competes at a higher price, and has a cohesive, enticing theme to their business. The client's facility should be located far away from Camp Bow Wow without leaving the area of interest. 

Site number one fulfills the client's requests and has additional benefits. One benefit is the pending contract with a major pet retail chain. The client will be able to negotiate with the pet store to acquire the desired land for their facility. During the research phase, the Spectrum researcher contacted the pet store chain to confirm their willingness to work with the client's pet boarding facility. Representatives of the pet retailer agreed to discuss options with the client and were enthusiastic about the idea of co-locating with a pet-related business. The placement of the pet store next door to the boarding facility will work almost like a partnership, without any contractual agreements after the completion of the sale of the land parcel to the client's pet boarding facility. Both businesses will benefit from each other by providing visibility and relevance to their locations, but neither will be required to perform any special duties in service of the other. Spectrum suggests hiring a property lawyer or commercial real estate agent to aid in lot ownership negotiation. Spectrum also suggests negotiating for more than a half-acre to allow the business to grow. 

The price point for this property is lower than any of the other options by around $400,000. Additionally, the lot size is closer to the requested acreage, and all the other lots are at least three times the size of the requested plot. With the savings from the property purchase, the client will be able to use more of their funding to enhance the facility's offerings. Improving the facility will allow the client to compete with the tempting services of Camp Bow Wow and other area competitors. $400,000 is more than enough money to build a beautiful doggy swim area, splash pad, agility run, and more. 

The utilities will be brought to the lot by the pet store chain. Utility installation is required on this lot, but the pet store chain is willing to pay for most of the work.

The location is right along the freeway, guaranteeing visibility. None of the other sites offer direct access to the highway. Highway access is a supreme convenience for boarders, and it will cut costs of marketing by allowing the facility signage to double as a roadside billboard. Additionally, the location is closer to town on the inbound side of the freeway, which is incredibly convenient for those traveling to an airport. 

Site number one also has proximity to the neighborhoods in the target market. The property is on the south side of the freeway, near the most densely inhabited and wealthy suburban homes. It is also the only location on this side of the highway within the client's price range. 

The distance from the most threatening competitor minimizes clientele overlap and encourages a friendly relationship with related businesses. There is a lovely Cracker Barrel next door that employees can easily access during their lunch breaks to dine or buy rocking chairs, Pop Its, patchwork quilts, and other tchotchkes. Cracker Barrel operates within the ideals of fairness, mutual respect, and equal treatment of all people. Cracker Barrel, the people pleasers. These values match up with the values of dogs across America. Dogs love people and view them as equals, just like Cracker Barrel and its constituents. 

Site number two fulfills the client's requests, but it is much closer to the leading competitor than site one. The lot is on the same side of the freeway and just .6 miles from Camp Bow Wow. 

This property is set slightly further away from the freeway than other properties, which could be quieter for the boarding animals. The site is not on the preferable Southern side but is still close to the target market area. Nearby businesses would provide some visibility, but the lot is not directly on the feeder of Katy Freeway. 

The lot is directly outside a neighborhood and next door to two hotel chains with another across the street. These hotel chains could be valuable assets, as travelers with pets not allowed in the hotels could board their dogs at the client's facility. 

Site three is a viable option but has serious drawbacks. This lot is within walking distance of Camp Bow Wow, which has the potential to cause friction and increase the costs of customer acquisition. This proximity is not ideal, but the cost of the lot, location in the desirable zipcode next to a successful business park, and the price all fit the client's needs. 

The location of site four has a foundational problem with the large apartment building being so close to the site. This complex is directly across the street from the lot. Based on the research findings, a location next to an apartment complex is not preferable and thus not ideal for the client's business. However, the zip code, budget, and size fit the client's needs. The nearby businesses would draw traffic, and the lot is near the area of interest. 

Recommendation

Based on the rest of the research findings, the prime location for the client's luxury pet boarding facility is the Katy Freeway at Cypress Run lot. This property affords the most benefits and the most negligible drawbacks. It is within the client's price range, desired size, and preferred location. It is in a heavily trafficked area and has access to fiber internet service and is far enough away from its main competitor to reduce competition.

Notes, References, Appendices

A Pet Lover's Sitting Service. (2022). Need a pet sitter, in home boarder or groomer? A Pet Lover's Sitting and Grooming Service-Pet Sitting & Grooming. Retrieved April 13, 2022, from https://lovepetsitting.com/ 

Canine Country Club. (2022). Retrieved April 13, 2022, from http://www.mycaninecountryclub.com/ 

Covid-19 Travel Research. Berkshire Hathaway Travel Protection. (2021). Retrieved April 13, 2022, from https://www.bhtp.com/blog/covid-19-travel-research?utm_source=HNR&utm_medium=referral&utm_campaign=HTrends-Publish 

Dog day care services. Camp Bow Wow. (2022). Retrieved April 13, 2022, from https://www.campbowwow.com/ 

Fiber optic internet providers and TV companies in Katy, TX. Best Neighborhood. (2022). Retrieved April 13, 2022, from https://bestneighborhood.org/fiber-tv-and-internet-katy-tx/ 

Find your next commercial property. Commercial Real Estate. (2022). Retrieved April 13, 2022, from https://www.loopnet.com/ 

Houston, Texas (TX) income map, earnings map, and wages data. (2022). Retrieved April 13, 2022, from http://www.city-data.com/income/income-Houston-Texas.html 

Sweet Dreams Dog Boarding. (2022). Professional Dog Boarding in Katy, TX and Greater Houston Metro Area. Sweet Dreams Dog Boarding. Retrieved April 13, 2022, from https://sweetdreamsboarding.com/ 

U.S. pet ownership statistics. American Veterinary Medical Association. (2018). Retrieved April 13, 2022, from https://www.avma.org/resources-tools/reports-statistics/us-pet-ownership-statistics 

Welcome to. Love on a Leash. (2022). Retrieved April 13, 2022, from https://loveonaleash.net/