X hits on this document

PDF document

Elaine Sahlins, Director HVS International San Francisco - page 3 / 8

21 views

0 shares

0 downloads

0 comments

3 / 8

HVS International, San Francisco, California

Hotel Development Cost Survey 2004

2000

1.2

%

(5.0) %

2.3 %

2.9 %

2001

(0.1)

(4.0)

(5.9)

(6.5)

2002

0.5

(0.6)

4.0

3.5

2003

1.5

2.2

6.5

4.5

Source: Bureau of Labor Statistics

Steel mill products

Iron and Steel

Construction Cost Changes 2000 - 2003

Materials and Components for Construction

Lumber

Volume

2003 Number of Loans

Average Loan Size

Volume

2002 Number of Loans

Average Loan Size

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

$1,021 508 443 858 $2,830

24 27 24 47 122

$43 19 18 18 $23

$82 375 380 425 $1,262

10 19 22 33 84

$8 20 17 13 $15

While many of these costs had declined in recent years, construction expenditures, across the board, were all higher in 2003. Iron and steel increased at a compound rate of 11.55%, followed by steel mill products at an 8.2% compound rate over the two-year period. Clearly these costs have direct implications for higher development costs, particularly for urban and larger destination projects.

Another influence on hotel development costs was the increasing availability and cost of financing. During 2003, lenders warmed significantly to hotel refinancing, although money for new construction was relatively scarce. The following chart represents the upward trends in hotel financing transactions as reported by respondents to the Mortgage Bankers Association survey.

Hotel/Motel Loan Origination

Source: Mortgage Bankers Association of America

Although interest rates remained low, lenders’ appetite for providing construction financing was still limited as compared to the end of the last decade. Financing for existing product has been more readily available than for new construction. Many lenders report that traditional first mortgage loan-to-value ratios for existing acquisitions were trending upwards, some as high as 75% toward the end of 2003, while construction loans are still moderated at 50% to 60% of the lower of value or construction cost. Although interest rates remain at

3-8

Document info
Document views21
Page views21
Page last viewedSun Dec 04 01:58:41 UTC 2016
Pages8
Paragraphs287
Words2575

Comments