Hotel Developers Move Towards Prefab Construction
PHOENIX—Labor and lending are concerns that have the potential to halt hotel development before it even gets started. At the Lodging Conference in September, developers on the “From the ground up: Dynamics of a new build” panel discussed what it takes to construct a new property in the current cycle and highlighted markets they’re building in. It’s becoming more difficult to find good labor and good lenders, the panelists said, and that has led some developers to be more cautious. Mitch Patel, president and CEO of Vision Hospitality, said construction costs have gone up 10-15% a year. For example, a 100-room Hampton Inn property that was being built at $85 to $90 per square foot in 2009-10 is now costing $130 to $135 per square foot, he said. “What we’ve seen, it’s somewhat stabilized,” he said. “When we say stabilized, it’s still growing at 3%, 5%, 7% … but the numbers are becoming more difficult to justify, and we all know we’re at the tail-end of this cycle, so...
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