Increases in development costs are affecting the feasibility of new hotel construction, according to the U.S. Hotel Development Cost Survey 2014/15 from HVS. Hotel construction costs have steadily escalated in the past three years in markets such as New York, San Francisco, and Miami. In Miami, for example, full-service and luxury hotel developers report cost increases of 25 percent to 30 percent over the past two years, the report states. Other markets have shown more moderate construction cost increases. Additional factors that will continue to affect construction costs include increased competition for well-located sites and the decline of the construction labor workforce.
Cost controls continue to improve, however, as design and construction technology advances, the survey shows. Increasingly sophisticated software allows users to attach costs to designs in real time, which shows the impact of changes on the construction budget, and project the long-term costs of building maintenance and replacement costs over time, based on materials and construction.
For more details, access the full report here.
