Abstract
This paper provides an empirical example of the valuation of real options in a large-scale tourism project. The main aim of this article is to elaborate the investment decision process in the evaluation of a ski centre enlargement project by employing elements of the real options methodology. Monte Carlo simulation was used to value the options as it offers the flexibility to directly simulate the uncertainty factors. Traditional discount cash flow analysis points the investment as profitable, although the real options approach proves it as not economically feasible. Copyright © 2006 John Wiley & Sons, Ltd.
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