One effect of a growing economy is the cost to build or renovate hotels is constantly climbing. In 2018 alone, the cost of construction rose by an eye-popping 5.7%, according to Rider Levett Bucknall’s “First Quarter 2019 North American Quarterly Construction Cost Report.”
In addition to increasing labor expenses, the cost of materials to build is rising, too, as much as 10% or more in some cases. The sharp rise is partially caused by the sheer volume of new hotels opening. In the first half of 2019, 456 hotels opened in the United States.
Also, with a severe labor shortage, there are not enough experienced workers to efficiently complete projects timely. With the scarcity of qualified manpower, buildings that are being constructed are lacking quality and taking longer to build, thus increasing construction costs.
This is why some hotel owners are studying modular construction as a potential solution. Simply stated, some hoteliers see this as a way to complete projects more efficiently and with more quality control, even if the appeal of huge labor savings isn’t quite as significant as what people had generally hoped for.
With modular construction, the building can be constructed in various methods depending on the circumstance of the design and location. Buildings can be constructed out of wood, steel or even concrete. They can be created in components, such as prefabricated panels, full guestrooms or anywhere in between. Some modular units even have the bathroom built out where the feeds are all tied together in the corridor or chase system.
Take the CitizenM Bowery Hotel in downtown New York City as an example. This hotel’s 300 rooms were all prefabricated off-site using steel and concrete. In this instance, the whole room was trucked in and slid into position. Once in position, each room was connected to the plumbing and electrical systems. Each unit was sent to the site with the flooring and most of the FF&E—including the television—attached.
The panelized system is becoming popular as well. The wall panels are built in various incremental lengths from floor to ceiling and from left to right. Panels are then stacked on a trailer and transported to the site. Each is numbered and designed to connect to each other vertically and horizontally. They can be completed with such finish elements as a brick veneer, EFIS or siding and can include having the windows in place.
Another solution is building out only the bathroom off-site. This was the case with the Embassy Suites Seattle Downtown Pioneer Square. For this project, bathrooms were built in northern California and trucked to the site. Once each floor was poured, bathrooms were lifted by cranes and slipped into place, according to the project’s developer, Greg Steinhauer.
While there is an initial higher upfront construction cost, this method saved time as well as aggravation and created a higher quality control. This also allowed the hotel to open quicker, creating a faster revenue stream.
Another method to speed up construction time is creating a modular electric room. Here, all of the switch gears and panels are in place. The electric room simply slides in and the feeder wiring can easily be hooked up to the panels.
Be mindful that shipping and logistics can increase the cost of the modular pricing—In some cases significantly so. The cost of trucking can add up quickly and sometimes exceed the cost of traditional construction. Having the manufacturing plant closer to the site helps alleviate some of the transportation cost. For the CitizenM Bowery Hotel project mentioned earlier, rooms were built in Poland, shipped to Brooklyn and trucked into lower Manhattan. A bit far, but, for the New York City market at that time, it might have been the best option.
An important element to keep in mind when contemplating modular is discussing this construction approach with the local building department. Officials must agree and approve your modular plan. In some instances, this involves representatives visiting the plant where the modular components are being fabricated. So be sure your municipality will accept this construction technique before you start planning. Lastly, make sure the detailed construction drawings are signed and sealed by a qualified engineering firm who specializes in modular design and your contractor has experience in this method of construction. The time benefit of modular will be lost if your project is used as a learning curve.
Stephen Siegel is principal of H-CPM (Hospitality CPM) and a proven professional in the areas of design, engineering, contractor negotiation and project management for new construction and renovation projects. He earned both a bachelor’s and master’s degree in construction management from the University of Florida.
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