If you’re thinking of building a hotel, the estimated cost to build a hotel may surprise you. Building a hotel can cost anywhere from $15 million dollars to $20 million dollars. That may seem like a lot of money, but it’s not. If you plan your project strategically, you’ll find that the cost to build a hotel is relatively low compared to other large scale projects.

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How Much Does It Cost to Build a Hotel?

Hospitality can be a very lucrative segment of commercial real estate, but it’s important to have a good understanding of the costs and factors that go into that industry. So, how much does it cost to build a hotel?

Early 2020 saw an all-time high in United States hotel construction. However, the Covid-19 pandemic put a damper on that growth. Hotel rooms in construction went down by 61,000, according to pipeline data from STR. As of December 2021, there were 158,906 hotel rooms in construction in the U.S., down by 19.2% one year earlier.

How Much Does It Cost to Build a Hotel?

When it comes to building a hotel, hard and soft construction costs can vary greatly depending on a number of factors, including city, type of hotel, and more.

“There’s a lot of factors that go into the cost of any building in any sector,” said Robert Marsh, Vice President of global construction firm Turner & Townsend and lead of the Hospitality Construction team. “With hospitality in particular, it’s hard to assign a set range given all the parameters: urban center, oceanfront, high rise, low rise, branding, what star level or amenities would be included in the property.”

Depending on who you ask and what types of hotels and locations they work in, you may get widely different answers for hotel development costs.

Hotel Construction Costs Per Room and Per Square Foot

According to Marsh, four- or five-star hotels in cities like New York, Los Angeles, San Francisco, and even Miami or Chicago could range from about $700 to $800 per square foot (PSF).

On the other hand, according to Vimal Patel, owner of Q Hotels, operating primarily in Louisiana, pre-pandemic costs for hotels in his area were around $105,000 to $130,00 per room, or around $105 to $125 PSF.

Patel added, “Now those costs have gone through the roof. Every day it’s changing.”

And of course, budget hotels and motels are a different story altogether.

“A 100-room economy hotel/motel will cost around $7,750,000 to build, with a mid-range version costing $22,500,000 and as much as $61 million for a 5-star hotel,” said Reid Hogan, a commercial real estate advisor at LandCashin. “The corresponding average cost per room is $77,500, $225,000, and $610,000. Costs per square foot range from $150 to $475.”

Again, depending on location and type of hotel, the costs vary greatly, so it’s important to speak to someone knowledgeable in the location you want to build in and the type of hotel you’re interested in building.

Hotel Construction Costs and Factors to Consider

Much like the cost of building a multifamily apartment complex, there’s a wide range of costs and factors to consider when building a hotel.

Land Costs

The first factor to consider is the cost of the land itself, which varies based on location. If you don’t already own a piece of land, then land costs need to be factored into your total budget.

Furniture, Fixtures and Equipment (FF&E)

Furniture, fixtures, and equipment includes furniture for guest rooms and public spaces, carpeting, bathroom fixtures, kitchen equipment, laundry equipment and more. The FF&E varies depending on the type of hotel you’re building. For instance, a five-star hotel or resort will have much more expensive FF&E than a budget hotel or motel.

Hard Costs

Hard costs include the brick-and-mortar costs of building a hotel, which can also vary widely depending on location and type of construction.

For instance, a smaller hotel in the suburbs that only requires a four-story wood frame will have significantly fewer hard costs than a steel-frame high-rise in an urban location.

Soft Costs

Soft costs include any non-construction fees: permits, engineering, architecture, taxes, insurance, maintenance, etc. Labor costs fit under the umbrella of soft costs as well.

These costs will also vary depending on location. Be sure to fully research your specific area to determine how much soft costs will be for your hotel, so that you can budget accordingly.

“Construction material and labor costs are volatile and are not likely to settle down anytime soon,” Hogan said.

City and State Regulations

Another factor to consider when building a hotel, aside from hotel construction costs, is the regulations in your district. For instance, “In California, there’s quite a bit of seismic requirements,” March said. “A beachfront in Florida has hurricane requirements. Urban settings such as New York have their own codes and requirements for high rises and small footprints, as you can imagine.”

How Long Does It Take to Build a Hotel?

According to Hogan, hotels can take over two and a half years to build, sometimes less depending on the type of construction. Patel said it usually takes approximately 18 months to build a limited-service hotel, meaning without food or beverage service.

How Much Does It Cost to Run a Hotel?

The costs of running a hotel again vary greatly depending on the location and type of hotel. Some hotels, Hogan said, have operating expenses that amount to 75% to 90% of revenue, with higher rates during the pandemic.

Is It Cheaper to Build or Buy a Hotel?

Whether it’s cheaper to build or buy a hotel depends on the buyer, Patel said. Building a hotel, beginning with simply finding a location, can be a three-year process, which means no profit for that amount of time. However, in the long run, building a brand new hotel can lead to a more fruitful result with fewer costly repairs, like old rooves or bad HVAC units.

Is Owning a Hotel Profitable?

Hotels “can be very profitable,” Hogan said. “A 100-room economy motel can net over $250,000 [per month] if there are no significant economic, weather, or health-related business interruptions.”

Nonetheless, the pandemic created a good deal of business interruptions, leading to less profit for many hotel owners. As Hogan said, the success of your hotel depends on a number of factors that may be outside of the owner’s control.

According to Patel, “Branded hotels are becoming less and less profitable because of the lack of support the brands give the franchises.”

Some examples of branded hotels include the Marriott, Hilton, Best Western and more.

How to Get Financing to Build a Hotel

The most common way to get financing for building a hotel is through a bank loan or investor money.

“For experienced operators, SBA 504 and 7-A loans and conventional financing are available,” Hogan noted. “Rookie operators should consider partnering with an experienced operator for their first hotel.”

When Building a Hotel, Make Sure to Do the Research

The most important task to remember when building a hotel is to do your due diligence. This means researching the costs that are specific to your location and looking at the profitability of similar hotels in your area. It’s best to talk to a financial advisor who has experience in the hospitality industry. If you’re new to commercial real estate, then partnering with someone who has experience building hotels is a good idea.

How much does it cost to build a hotel

The cost to build a hotel depends on the size and location of your property. There are plenty of variables that will affect how much it costs to build a hotel.

The Cost To Build A Hotel

The cost of building a hotel varies depending on the size and location of the property. Construction costs can also vary based on whether or not you are planning to use prefabricated materials or building materials that are already on site.

Elite Hotels has analyzed the cost to build a hotel in major cities around the world, including New York City, Paris, London and Tokyo. These are some of the most expensive cities in which to build hotels and resorts because they have high labor costs and stringent building codes that must be followed by contractors.

How Much Does It Cost To Build A Hotel In New York City?

New York City is one of the most expensive places in which to construct buildings due to its high labor costs and stringent building codes. According to Elite Hotels, it would cost about $1 billion to construct a five-star hotel with 800 rooms on Park Avenue between 59th Street and 60th Street in midtown Manhattan (see image above).

How much does it cost to build a hotel?

The answer depends on the type of hotel you’re building and the location. A luxury hotel in a major city will cost more than a budget motel in a small town. But if you’re looking for an average price, we’ve got you covered.

According to Construction.com, the average cost of building a four-star hotel is $100 million and $50 million for a three-star hotel. These figures include the cost of construction and land acquisition, but not the cost of furniture or fixtures like TVs or refrigerators.

In addition to this base price, there are other fees associated with building hotels that can add up quickly:

Land acquisition costs — This includes everything from surveying land to paying taxes on it, as well as buying it from previous owners if necessary. It also includes costs related to demolition (if there was one), relocation of utility lines or other utilities that need to be moved prior to construction, relocation of existing buildings and removing any hazardous materials on site such as asbestos insulation or lead paint chips.

Construction permits and fees — You’ll need these before breaking ground on any new construction project in your city. Permit fees vary widely

How much does it cost to build a hotel?

The answer to this question depends on the type of hotel and the location. A typical budget for building a hotel ranges from $20 million to $45 million.

A high-end luxury hotel can cost up to $200 million while an affordable 4-star property costs around $50 million. The sky is the limit when it comes to the price of constructing a 5-star hotel that can cost up to $250 million or more.

The cost of building a hotel depends on several factors such as location, size and quality of facilities offered by the establishment, etc. The most expensive hotels are located in Dubai, Abu Dhabi, London and New York because these cities offer many opportunities for tourists and business travelers alike.

In addition, if you want your hotel to be known as one of the best in town then you need to provide superior services and amenities at all times which will require additional costs for maintenance and repairs over time.

There are a multitude of factors that determine the cost of building a hotel.

The size of the property and its location are some of the most important factors. The quality and finish of the hotel will also affect the price.

Hotel owners also need to consider whether they want to build a new hotel or renovate an existing one. Finally, they must decide whether they want to build a stand-alone building or add on to an existing structure.

The cost of building a new hotel can range from $3 million to $50 million depending on how large it is and where it’s located. Renovating an existing structure will be less expensive but requires more effort because you’ll need to make sure everything matches up with your vision for the property.

The cost of building a hotel will vary greatly depending on the type of hotel you are building. For example, the cost to build a four-star hotel will be higher than the cost to build a two-star hotel.

The cost of building a hotel varies significantly by location. For example, it would cost more to build a hotel near Times Square in New York City than it would in rural Oklahoma. The same is true for building materials. On average, however, there are some general costs that you can expect when working with an architect or contractor:

Costs for Building Materials and Labor:

The cost of labor varies depending on where you live and what type of work needs to be done onsite. Generally speaking, however, you should expect to pay between $50-$80 per hour for labor costs alone when working with an architect or contractor who charges by the hour rather than by the project (i.e., fixed fee). If there are multiple contractors involved in your project, then each person may have different rates according; therefore it’s important to ask questions early on so that everyone knows what they’re getting into before they start working on your project!