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Elaine Sahlins, Director email@example.com (415) 268-0347 Direct
HVS International Hotel Development Cost Survey 2004
Elaine Sahlins Director, HVS International San Francisco
HVS International has tracked hotel construction costs throughout the United States since 1976. In 2001, the survey introduced data for a larger range of hotel products, setting new baseline ranges for six lodging types: Economy/Budget Hotels, Midscale Hotels w/o F&B (without Food and Beverage), Extended-Stay Hotels, Midscale Hotels w/ F&B (with Food and Beverage), Full-Service Hotels, and Luxury Hotels and Independent Resorts. The 2004 hotel development survey reports updated per-room development costs for 2003.
Each year HVS International researches development costs from our database of actual hotel construction budgets, industry reports, and uniform franchise offering circulars. These sources provide the basis for our range of component cost per room. New project construction cost data collected each year may increase the range and/or impact the mean and median of the construction cost components. These development cost ranges are then adjusted each year based on data reflecting the trend in each component cost category.
According to the census bureau, the volume of lodging construction in the U.S. remained relatively stable—$10,823 million in 2002 to $10,715 million in 2003— while total construction surged 5% from $650,495 million to $682,969 million, led by the increase in housing starts, which increased 10.34% from $427,548 million in 2002 to $471,789 million in 2003. As a whole, 2003 proved to be a volatile year for construction costs: lumber prices surged as did prices for steel, light structural components, plywood, and rebar. Increases in fuel costs also contributed to increased costs. Labor costs increased, partially due to upward pressure from workers’ compensation costs. The strength of new home starts put competitive pressures on certain construction materials, particularly wood products which began an upward trend in 2003. China’s demand for scrap also propelled pricing of other construction materials, particularly steel and rebar.
According to the Bureau of Labor Statistics, costs for many construction materials showed notable increases in 2003. The following table illustrates a sample of these trends.