Managing a hotel construction project is a lot like keeping a bunch of plates spinning in the air. There is land to be bought, permits to obtain, and building standards that must be met, all of which must be accomplished while dealing with bureaucratic red tape. Add to that the huge number of commercial projects drawing resources away from hotel development, the rising cost of materials, and a dwindling number of workers, and the commotion of jackhammers and bulldozers in hotel construction can quickly become silence.
One of the primary causes of this silence is competition for land. When competition is high, more lucrative projects such as multifamily housing and condominiums are often favored over hotel development, according to the HVS U.S. Hotel Development Cost Survey 2014-2015. Additionally, the places that draw new hotel developers often boast sky-high prices that are steadily climbing to unreasonable levels. Developers of full-service and luxury hotels in Miami reported cost increases of 25 percent to 30 percent over the past two years.
Of course, cost doesn’t matter when it’s a challenge to find construction workers, designers, manufacturers, and architects to get the job done. Bill Wilhelm, president of California-based general contractor and construction management firm R.D. Olson, says labor constraints are a side effect of a slow economic recovery. “It takes time to build back up. But more important is trying to find the qualified people who are still left in the industry.”
Being shorthanded in an industry that requires substantial documentation can push back timelines, and continued efforts to go green, like Title 24’s heightened energy efficiency requirements in California, make it hard to find material and design alternatives that are up to code at a decent price, Wilhelm says. Harder still is finding the manpower to push through the permitting process. One way to handle this is by suggesting clients handle the development in tiers so construction can begin as soon as permits are granted.
“We’ve used that approach for a number of years. We’re always trying to get these jobs jumpstarted as best as we can,” he says. “Clients understand ‘Hey, heads in beds is where there’s a return on the investment, so how do we do that?’”