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Focus on Hotel Construction Costs 2019

According to Fixr, the average hotel in the U.S. covers approximately 48,000 square feet with 115 rooms of 325 square feet and an ensuite bathroom each. While construction costs vary drastically per location, the average costs to build such a hotel are $22.2 million — or $463 per square foot. Labor costs around $8.9 million, materials cost approximately $9.8 million and equipment costs amount to $935,000.

Lodging Magazine reports that in 2018, 947 new hotels with a total of 112,050 rooms opened in the U.S. Nevertheless, hotel construction costs are still on the rise. There are various reasons for this, as Hotel Management advises:

  • Construction inflation: Currently, construction inflation growth stands at 5.5 percent. While this is lower than prerecession levels, it’s still relatively high and has an impact on costs.
  • Shortage of skilled labor: Construction unemployment was 6.4 percent in January 2019, according to Associated Builders and Contractors, Inc. At the same time, employment in construction is surging. In January 2019, 52,000 new jobs were added — 28,600 of them were in the nonresidential building subsector. What’s so important to understand is that there’s still a lack of skilled labor, mainly due to rebuilding efforts after the many recent natural disasters such as the wildfires and mudslides in California, as well as the hurricanes in Texas and the Caribbean, as Hotel Management reports.
  • Rising material costs: In 2017, the costs of materials rose by between four and six percent, with cement, steel, lumber and aluminum rising the most in price. On top of that, the tariffs placed on many of these materials in 2018 has also driven up costs.

Despite the rising costs of hotel construction, the hotel pipeline is still expected to grow by 2.2 percent this year. And that means that 1,022 new hotels with 116,357 rooms will be added, bringing the total number of hotels in the U.S. to 56,909 and the number of rooms to 5,381,090.

Hotel Renovation Services

Delivering unmatched craftsmanship and beating budgets at every turn, InterServ takes pride in maintaining the reputation as a leading hotel renovation contractor. Whether it is guestroom construction, hotel interior design, or remodeling consultations, InterServ provides hotel renovation services for virtually any need.