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How to Start a Hotel Business in 2022 (+Cost and Business Plan)



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    2022 Notice: The Effect of the Pandemic on the Hotel Construction Industry​​

    When the pandemic first emerged in 2020, it shook many industries including construction, which has ongoing repercussions into 2022. What began as a lumber shortage due to an increase in home projects, eventually became a shortage in workers as well as in supply chains. This has resulted in an increase in construction costs of more than 4% in 2021, and a projected further increase in costs of 4% to 7% in 2022.

    In addition, many builders and contractors found that there were significant delays in their commercial projects during this time line. This, combined with the fact that the costs of many construction materials used in hotel building such as steel and concrete as well as flat glass and lumber are continuing to have increasing and volatile costs means that there could be further cost increases and delays in hotel building in 2022.

    Builders who are looking to break ground may want to consider starting earlier and locking in costs now to help offset rising prices in the future. Starting early can also help offset any potential delays that may occur in the future months due to supply chain issues and worker shortages.

    There is an enormous range of costs per square foot for hotel construction. This is because different types of hotels include varying amenities, areas, and materials. In addition, hotels built in urban areas usually have a higher cost per square foot than hotels built in more rural or suburban areas. For this reason, there is a hotel construction cost per square foot range of $134 to $550:

    Cost per Sq.Ft. to Build a Motel, 3-Star, 4-Star, and 5-Star Hotel in a Rural and Urban Area

    Cost per Sq.Ft. to Build a Motel, 3-Star, 4-Star, and 5-Star Hotel in a Rural and Urban Area

    Hotel Type Cost per Sq.Ft. Rural Area Cost per Sq.ft. Urban Area
    Motel $134 – $170 $180 – $234
    3-Star $190 – $245 $250 – $375
    4-Star $260 – $345 $350 – $410
    5-Star $332 – $400 $400 – $550

    Cost to Build a Motel per Square Foot

    The costs to build a motel ranges from $134 to $234 a square foot, depending on the state you are building in. Motels are constructed for much less money than larger hotels. They tend to be 2 – 3 stories, have few amenities, and few common areas. Motel rooms are cheaper to rent, making them the perfect choice for someone going on a roadtrip or who does not care about property amenities.

    Cost to Build a 3-Star Hotel per Square Foot

    Three-star hotels are considered standard hotels. Building a 3-star hotel costs between $190 to $375 a square foot, depending on the area. They have lobbies, communal areas, and restaurants. They may have gyms and pools as well, although not all include these features. They often do not have as many amenities as other hotels, and the materials are usually standard grade.

    Cost to Build a 4-Star Hotel per Square Foot

    Depending on the location, building a 4-star hotel usually costs between $260 and $410 a square foot. Four-star hotels generally include more amenities and better materials than a 3-star. They often have gym and entertainment areas, spas, more than one restaurant, and possibly other shopping and services.

    Cost to Build a 5-Star Hotel per Square Foot

    Five-star hotels are luxury buildings that include unique and high-end services for their guests. This increases the cost to build per square foot to between $332 and $550, depending on the area. They include many services, high-end gyms, pools, spas, and restaurants. They also have more communal areas, shopping, and other amenities.

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    Hotel Construction Cost per Room

    While square footage is a popular way to break down the construction costs, many hotels are also priced per room. This makes an easier determination of the project’s total cost by projecting the number of occupants, rather than the overall space. Like square footage, the cost to build a hotel per room varies on the type of hotel, although the location is important too:

    Cost per Room to Build a Motel, 3-Star, 4-Star, and 5-Star Hotel

    Cost per Room to Build a Motel, 3-Star, 4-Star, and 5-Star Hotel

    Hotel Type Average Cost per Room to Build
    Motel $75,000
    3-Star $221,000
    4-Star $318,200
    5-Star $604,200

    Costs of Building a Motel per Room

    The average cost per room to build a motel is around $75,000. Motels do not typically have many amenities, and the rooms are entered from outdoors, eliminating shared indoor areas. This means that if the motel has the same number of rooms as a better hotel, its construction costs are lower.

    Costs of Building a 3-Star Hotel per Room

    On averate, the cost to construct a 3-star hotel per room is of $221,000. Three-star hotels may have amenities and features for guests, but these are optional and vary by hotel. This is considered a standard-quality hotel with good quality but not luxurious features. There may be amenities like gyms and restaurants but not always.

    Cost of Building a 4-Star Hotel per Room

    The cost per room to build a 4-star hotel is around $318,200 on average. In a 4-star hotel, many of the features that were considered optional for a 3-star hotel are now standard. This includes restaurants, gyms, pools, spas, and communal areas. The materials used are usually of higher quality as well.

    Cost of Building a 5-Star Hotel per Room

    Five-star hotels have an average cost to build per room of around $604,200. They have many of the same features as a 4-star hotel, but they may have more of them or better quality. In addition, 5-star hotels often include additional services for their guests than a 4-star hotel may. The rooms are usually much larger, so the hotel may have fewer rooms in the same square footage.

    Specialty Hotel Construction Costs

    In addition to regular motels and hotels, several hotels also cater to specific needs or other purposes. Some of these fall in with the “luxury” line of 5-star hotels, but others have their specific costs:

    Cost per Sq.Ft. to Build a Guest House, Boutique Hotel, Casino, and Resort

    Cost per Sq.Ft. to Build a Guest House, Boutique Hotel, Casino, and Resort

    Hotel Type Average Cost per Sq.Ft.
    Guest House $100 – $500
    Boutique Hotel $190 – $550
    Casino $300 – $550
    Resort $300 – $550

    Average Price to Build a Guest House

    With Airbnb and the trend of catering toward travel, guest houses are becoming a more common phenomenon. For the average backyard guest house, costs start at $100 per square foot. For a luxury guest house meant for more people, costs go as high as $500 a square foot. A guest house is anything from a small house located on your property for friends and family to a bed-and-breakfast style inn with boutique amenities. Because of this, there is a wide range of associated costs.

    Cost to Build a Boutique Hotel

    Boutique have a full range of features and a wide range of costs from $190 to $550 a square foot, depending on the area and features included. These hotels tend to be smaller than most hotels, and they are designed to cater to guests in very specific ways. Someone may opt to stay at a boutique hotel because of a theme or a specific amenity that you cannot find elsewhere, such as a hotel that caters to pets.

    Cost to Build a Casino

    The cost to build a casino ranges between $300 and $550 per square foot, depending on the area. Casinos are considered luxury hotels and resorts in most areas. The idea is to encourage guests to spend money so that the business profits. To this end, the casino’s hotel portion is generally 5 stars, with many features and amenities and several restaurants and types of entertainment.

    Cost to Build a Resort

    Resorts are usually considered a destination stay. Depending on the area, they cost between $300 and $550 per square foot to build. Resorts usually offer relaxation and recreation to its visitors, making them a place where people take a vacation. For this reason, they are usually classified as luxury or boutique and are generally 5-star facilities with many services and features included.

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    Hotel Construction Cost Breakdown

    Every hotel is different in size, scale, number of rooms, land, and construction material. For this reason, your exact costs and percentages vary. However, it is possible to break down the various elements of building the hotel into percentages and categories that you can use to determine where your budget is going for this project:

    Hotel Construction Cost Breakdown: Opening Expenses, Furniture and Fixed, Land, Soft Costs, and Hard Costs

    Hotel Construction Cost Breakdown: Opening Expenses, Furniture and Fixed, Land, Soft Costs, and Hard Costs

    Breakdown Percent of Total Project Cost
    Opening Expenses 3%
    Furniture and Fixtures 9%
    Land 10% – 21%
    Soft Costs (Non-Construction Fees) 12%
    Hard Costs (Material, Construction) 55% – 66%

    Land Costs

    Land costs are usually included in the total cost to build. This includes both the purchase of the land and any work that must be done before development. This may include any existing buildings and their rework or tear down as well. Generally, land costs are 10% to 21% of the total project cost.

    Hard Costs

    Hard costs are construction-related expenses. These may include building or refurbishing an existing building. This includes both the material and the labor needed to construct and finish the site. Hard costs include the finish materials, such as flooring and drywall, and basic construction materials like concrete and steel. Because this group includes a range of materials and encompasses both new builds and refurbishment of existing properties, the cost is 55% to 66%.

    Soft Costs

    Soft costs are non-construction-based fees. This includes the architect and interior designer fees, draftsman, structural engineers, and other things like maintenance, insurance, permits, taxes, and other related costs to building that are not a specific material or visible in the finished build. Soft costs average out to around 12% of your total budget.

    Furniture, Fixtures, and Equipment

    Your hotel is not complete unless it is furnished and ready for operation. So, in addition to the hard costs of building, you also need to factor in the furnishings and fixtures, such as beds, tables, reception desks, restaurant and kitchen equipment, lights, sinks, plumbing, and furnishings like sheets, pillows, and towels that all hotels need to function. This portion of your budget should be around 9% of the total costs.

    Opening Expenses

    Also included in the total budget should be everything you need to open and run the hotel. This includes inventory, supplies, marketing, staffing, and technical services like utilities. This is an important part of the total budget and should not be overlooked. It usually runs to around 3% of the total project costs.

    Labor Breakdown

    It is common to work with a hotel builder or contractor specializing in this type of commercial build. Builders and contractors may charge up to $150 to $250 an hour for their services. In addition, you will likely need the services of the following professionals:

    Medium-Sized Hotel With a Parking

    Hotel Room Size Requirements

    There are very few actual requirements when it comes to the size of a hotel room. The average size of a hotel room in the U.S. for a standard hotel is around 330 sq.ft. However, it is possible to have luxury hotel rooms that are over 1,000 sq.ft. in size, and new trends in micro hotels have rooms that are less than 150 sq.ft. in size.

    The only requirements refer to ADA-accessible hotel rooms. These rooms need to have hallways and doorways that are a minimum of 32-inches wide inside the room and 36-inches wide outside of the room. There must be a minimum of 30 inches around each bed and turning radiuses of 60 inches in bathrooms and other small spaces.

    Beyond this, there are no requirements for making a hotel room a specific size or layout.

    How Much Does it Cost to Build a Marriott Hotel?

    Marriotts are a specific hotel franchise, which has set franchise fees and setup costs. The average cost to open a Marriott is between $7,000,000 and $10,000,000. This includes an initial franchise fee of $600,000 or $500 per room, whichever is greater.​

    The cost to run a hotel varies, depending on many factors like the hotel size, number of staff and employees, number of guests at any given time, what services the hotel includes, and level of service. A 5-star hotel costs more to run than a 3-star.

    With that said, you can estimate the percentages of your total revenue per room occupied that go into operation. Remember, these may not be the total expenses for your hotel because you may have restaurants, spas, and other amenities that change these figures.

    • Rooms payroll – 18.89%
    • Rooms expenses – 15.5%
    • Overhead payroll – 10.18%
    • Overhead expenses – 13.23%
    • Energy costs – 5.61%
    • Owner expenses – 28.44%
    • Cash flow – 8.15%

    Modern Hotel With a Swimming Pool at Night

    How Long Does it Take to Build a Hotel

    Hotels are a serious undertaking to build. From the first designs to the final finishes before opening, most hotels have a timeline of 2½ to 3 years to build. This assumes traditional construction. If you choose to use a modular build, it is roughly 20% to 30% faster, about 6 to 9 months faster, than traditional building.

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    Enhancements and Improvement Costs

    Cost to Build a Restaurant

    Most 4 and 5-star hotels and some 3-star hotels include at least one restaurant in their plan, so their costs are typically higher. Building a restaurant onto an existing hotel costs around $150 to $750 a square foot, depending on the establishment’s level of quality.

    Car Service

    Some hotels include car service, including pick up and drop off from airports and other transportation. Some even provide rides within a certain radius. Adding a car service starts at $50,000 and goes up, depending on the number and make of cars.

    Cost to Add a Spa

    Many 4 and 5-star hotels also include spas on their premises, which is accounted for in their plan and overall costs. BigHospitality recommends carrying out market analysis before installing a spa into your hotel to try to get your investment back.When added to some 3-star hotels the average cost is $500,000.

    Additional Considerations and Costs

    • Comfort. While the hotel’s appearance is important, it is also crucial to make sure that your hotel is comfortable, warm, and convenient. This is particularly true of boutique hotels because many people choose them for their homey atmosphere.
    • Location. Pay attention to the location of your hotel. Not only does it impact building costs, but it also impacts success. Make sure that there are not too many competitors so that your hotel does well.
    • External factors. Many external factors influence how well your hotel does. These include trends in domestic travel, consumer spending, consumer confidence in the industry, and international guests. These trends change over time, so it is good to keep them in mind and leave room to adjust.
    • Renovation. In addition to building a hotel, it is possible to also purchase and renovate an older or existing hotel. Franchise hotels are also available, usually at lower costs. Each project has its own set of total costs, influenced by location and the type of hotel you are building. Speak to a hotel builder or architect to get a better idea of these costs.

    FAQs

    • How big is the average hotel room?

    Hotel rooms come in all sizes, with the average being around 330 sq.ft.

    • How much does the average hotel cost per night?

    Many factors influence the cost of a hotel room per night. The average range is $50 – $200.

    • How much electricity does a hotel room use?

    Expect your energy costs to make up 5% of the hotel’s expenditure budget.

    • How much does it cost to furnish a hotel room?

    Furnishings make up roughly 9% of the hotel’s budget.

    • How much does it cost to make a 5-star hotel?

    The average cost of a 100-room 5-star hotel is over $60,000,000.

    • What is the largest hotel chain in the world?

    Marriott is the largest hotel chain in the world.

    • How profitable is owning a hotel?

    This is a very variable amount because hotel types, sizes, and services vary, and with them, so does the profit. Expect profits to make up roughly 36.95% of a room’s occupancy costs.

    FAQs

    How much do a hotel owner make?

    According to Shmoop.com, the owner of a chain hotel can expect an average hotel owner’s salary of $50,000, with a range of $40,000 to $60,000 a year. Don’t forget, the owner is paying a 4% to 6% franchise fee. He is also repaying, with interest, the financing on the property’s acquisition cost

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    How do I start my own hotel?

    The steps we cover in this guide:

    1. Step 1: Find a market need.
    2. Step 2: Craft your strategic goals.
    3. Step 3: Run the numbers.
    4. Step 4: Review financing options.
    5. Step 5: Do your paperwork.
    6. Step 6: Hire and train your team.
    7. Step 7: Draft a marketing plan.
    8. Step 8: Launch your hotel business.

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    How much does it cost to run a hotel room?

    According to research from EnergyStar, the average hotel spends $2,196 per room on energy. The good news is that there are cost-effective changes hotels can make to address this issue.

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    Does owning a hotel make money?

    Owning a hotel can be profitable if you have the right combination of location, price point, quality of the physical asset, marketing strategy, dedicated employees, and supportive investors and management partners. However, a hotel isn’t profitable by default, so you can expect a lot of hard work to generate profit.

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    How much do hotels make a month?

    Monthly average revenue per available room of U.S. hotels 2011-2020. In November 2020, the monthly average revenue per available room (RevPAR) was 36.67 U.S. dollars for hotels in the United States.

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    How much money do you need to buy a hotel?

    The average cost of starting a hotel in the US ranges from $750,000-$1,000,000 for a small motel, to the national average being around $22,000,000 for a hotel with around 115 rooms, and much higher for luxury and high-rise hotels (source.)

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    How much does a small hotel cost to build?

    How much does it cost to start a hotel business? The cost to open a small hotel in the United States is around $1,000,000, and the average cost to open a 115-room hotel is around $22,000,000.

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    How much does it cost to build a 3 star hotel?

    A survey of select-service hotels found that development costs were $221,000 per room. For a 100-room hotel, the average cost of a 3-star hotel works out to $22.1 million.

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    How much would it cost to build a 100 room hotel?

    Average cost per room is $318,200, so the average cost of a 4-star hotel is $31.82 million for a 100-room hotel. Of course, location is the key determinant for the cost of building a 4-star property.

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    Do hotel owners make a lot of money?

    The profit, or the money you get to take home, is the money that’s made after all the business expenses are paid off. While the industry is pretty tight-lipped about it, it’s estimated that the average profit turned by a hotel chain owner is between $40,000 and $60,000 per year (source).

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    How to Start a Hotel Business in 2022 (+Cost and Business …

    How to Start a Hotel Business in 2022 (+Cost and Business Plan) If you’ve ever wondered how to start a hotel business, you’re in good company. Today, in a world where anyone can become a hotelier by uploading their property on Airbnb, the hotel dream is alive and thriving but the global pandemic has made it more important than ever for upstart hoteliers to be diligent and strategic when launching their entrepreneurial journeys.  Despite the challenges we face in the pandemic, they will pass in time and it’s never been simpler to turn that dream of starting a new hotel business into a reality! But living the dream is easier said than done. The growth of Airbnb has made for a hyper-competitive environment that requires a thoughtful, thorough approach. There’s a lot more that you need to do if you want to build a business and not just a hobby. It takes a ton of time to build up enough cash to scale your business when you’re going property by property, unit by unit. To grow wealth faster as a hotel entrepreneur, you’ll need to take more risks and make bigger bets. Every month thousands of hotel management companies, independent property owners and hotel brands leverage Hotel Tech Report to find the latest technologies to help run their properties.  We reached out to more than 50 hotel owners to ask them about their journeys, struggles and lessons learned along the way. As you plan to open a successful new hotel business, the insights from these entrepreneurs will help shape your journey.  You’ll need to take concrete steps to plan the best approach to starting your hotel business. The path starts here. We’ve put together a high-level guide to getting started with a hotel business. Step by step, we’ll show you how to mitigate the risks of starting a new hotel business in today’s hyper-competitive market. By planning carefully, being strategic and empowering your operation with the right technology, you can turn your hotel business idea from dream to reality! What’s in this guide? 1. Hotel owner survey 2. Hotel startup costs 3. Benefits of owning a hotel 4. Lessons from successful hotel owners 5. 6 steps to hotel ownership 6. In-depth hotel owner interview 7. Running a hotel in the age of Covid Hotel Owner Survey Results If it’s your dream to open a hotel one day this article is for you.  When most people think about hotel owners they think about billionaire magnates like Conrad Hilton or J. Willard Marriott but in reality owning a hotel is actually not so different from opening a retail shop or convenience store.  Hotel management do require a bit more capital but they are much more profitable and sale-able than other small businesses.  Here’s a bit about the hoteliers we interviewed for this article: 90% of respondents own a single hotel like a boutique hotel or bed and breakfast 70% of respondents own a hotel between 11-50 rooms Top 3 funding sources: bank loan, savings and friends/family investment Average time owning a hotel is 6.4 years so they have significant experience to share but generally aren’t lifelong hotel owners How Much Does it Cost to Start a Hotel? The cost to start a hotel business obviously varies based on tons of variables such as: Location: places like New York City are much more expensive than somewhere like New Delhi, for example Quality: obviously a five star resort is much more expensive than a roadside motel Size: the number of rooms, restaurants, meeting spaces, etc. all have massive impacts on cost Despite the hotel startup costs varying dramatically, there are some data points that we can take into consideration when factoring for a “typical” hotel.  Data from hospitality consulting firm HVS shows that ground up construction of a full-service hotel typically costs $323,500 “per key” (or per room).  Again, this is for a lifestyle full-service hotel so it’s not the cost of a 10 room bed and breakfast, for example.  That figure breaks out into 5 buckets: Land: $33,900 (10%);…

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    2022 Cost to Build a Hotel | Hotel Construction Costs – Fixr.com

    2022 Cost to Build a Hotel | Hotel Construction Costs 2022 Notice: The Effect of the Pandemic on the Hotel Construction Industry​​ When the pandemic first emerged in 2020, it shook many industries including construction, which has ongoing repercussions into 2022. What began as a lumber shortage due to an increase in home projects, eventually became a shortage in workers as well as in supply chains. This has resulted in an increase in construction costs of more than 4% in 2021, and a projected further increase in costs of 4% to 7% in 2022.In addition, many builders and contractors found that there were significant delays in their commercial projects during this time line. This, combined with the fact that the costs of many construction materials used in hotel building such as steel and concrete as well as flat glass and lumber are continuing to have increasing and volatile costs means that there could be further cost increases and delays in hotel building in 2022.Builders who are looking to break ground may want to consider starting earlier and locking in costs now to help offset rising prices in the future. Starting early can also help offset any potential delays that may occur in the future months due to supply chain issues and worker shortages.There is an enormous range of costs per square foot for hotel construction. This is because different types of hotels include varying amenities, areas, and materials. In addition, hotels built in urban areas usually have a higher cost per square foot than hotels built in more rural or suburban areas. For this reason, there is a hotel construction cost per square foot range of $134 to $550:Hotel TypeCost per Sq.Ft. Rural AreaCost per Sq.ft. Urban AreaMotel$134 – $170$180 – $2343-Star$190 – $245$250 – $3754-Star$260 – $345$350 – $4105-Star$332 – $400$400 – $550 Cost to Build a Motel per Square Foot The costs to build a motel ranges from $134 to $234 a square foot, depending on the state you are building in. Motels are constructed for much less money than larger hotels. They tend to be 2 – 3 stories, have few amenities, and few common areas. Motel rooms are cheaper to rent, making them the perfect choice for someone going on a roadtrip or who does not care about property amenities. Cost to Build a 3-Star Hotel per Square Foot Three-star hotels are considered standard hotels. Building a 3-star hotel costs between $190 to $375 a square foot, depending on the area. They have lobbies, communal areas, and restaurants. They may have gyms and pools as well, although not all include these features. They often do not have as many amenities as other hotels, and the materials are usually standard grade. Cost to Build a 4-Star Hotel per Square Foot Depending on the location, building a 4-star hotel usually costs between $260 and $410 a square foot. Four-star hotels generally include more amenities and better materials than a 3-star. They often have gym and entertainment areas, spas, more than one restaurant, and possibly other shopping and services. Cost to Build a 5-Star Hotel per Square Foot Five-star hotels are luxury buildings that include unique and high-end services for their guests. This increases the cost to build per square foot to between $332 and $550, depending on the area. They include many services, high-end gyms, pools, spas, and restaurants. They also have more communal areas, shopping, and other amenities. Compare prices from hotel builders near you Hotel Construction Cost per Room While square footage is a popular way to break down the construction costs, many hotels are also priced per room. This makes an easier determination of the project’s total cost by projecting the number of occupants, rather than the overall space. Like square footage, the cost to build a hotel per room varies on the type of hotel, although the location is important too:Hotel TypeAverage Cost per Room to BuildMotel$75,0003-Star$221,0004-Star$318,2005-Star$604,200 Costs of Building a Motel per Room The average cost per room to build a motel is around $75,000. Motels do not typically have many amenities, and the rooms are entered from outdoors, eliminating shared indoor areas. This…

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    What Does It Take To Start A Hotel? – Forbes

    What Does It Take To Start A Hotel?Answer by Michael Forrest Jones, Beechmont Hotels Corporation, Money. Of course. Unfortunately, way too many hotels are ‘started’ by people who are completely unmindful of the fact that they could need anything more than that. Even more unfortunately, the ending is frequently a disappointing, if not unhappy, one in such cases. You posted this question – whoever you are – anonymously, so I’m going to make certain (hopefully accurate) assumptions about you, in an attempt (hopefully appropriate) to make it a little easier for me to answer your question intelligently. You have capital, or access to adequate (although not unlimited) capital, and financing won’t be a problem. You have limited, if any, hotel experience. You’re sensible when it comes to business, you’re not expecting to get rich quickly, you’re in it for the long haul, and your expectations about life are generally realistic. You’re a respectable, decent person who desires to be part of a respectable venture in which you can take pride; not someone who’s in it for the fast buck, who just wants to launch it next year, hoping to sell it off the following year for a quickie profit, and/or who’d just be trying to milk the last five dollars out of a $3.98 investment for however long it took to find some sucker to buy it. Since you’re asking, how does one ‘start’ . . . you’re probably contemplating new construction, not acquiring an existing hotel. (I have a suggestion. Please consider it carefully. If it’s your first time, and you have no construction or real estate development experience, consider the acquisition route, at least starting out. New construction requires somewhat more of an investment, it’ll take awhile before you get a payout [where, with an existing property, you’re getting at least some cash flow the first night after you take possession], and there is more risk involved [e.g., unforeseen cost overruns]. You can always do new hotels later as you gain experience and confidence – as well as revenue streams from your existing properties.) Accordingly, I’m going to assume that you’re someone I should advise conservatively. If my answer doesn’t come even close to what you need, it’ll be because a dialogue would be more appropriate and we need to have a talk. Please feel welcome to contact me. —————————————— Let’s start with your location. Give it a rest for now about streets, thoroughfares, zoning, traffic counts, etc. First, we want to make sure you’re in the right town. But before we do even that, let’s make sure you have the right kind of hotel in mind. Go to Hampton Inn’s website, and while you’re there, open the sites for Holiday Inn Express and Marriott. Start a reservation online for the city in which you’d like to build your hotel. If you’re contemplating building something more downscale and economical, with more spartan amenities (e.g., a Super 8 Motel) – my best advice is, don’t. It is very difficult to get a good return on new construction with an economy property in most places. You can price your rooms at sixty five bucks a night, but your competitors at that price and amenity level will be people with older, more worn properties in which they didn’t invest nearly as much, who can always undercut your price by about ten bucks. If you’re contemplating something more upscale, with food and beverage service, unless you yourself have restaurant management experience and can market a restaurant location in that spot successfully from scratch, my best advice is – again – don’t. I can get you a good restaurant manager who can keep your food and staffing costs down, but certain minimums will have to be spent anyway no matter what she does; and unless we have a way…

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    Estimated Cost to Build and Open a Hotel Business in 2022

    How Much Does It Cost to Build and Open a Hotel Business in 2022? Do you want to start a hotel business and you want to know the cost breakdown? If YES, here are 15 factors that determine the cost to build and open a hotel. All over the world, the hospitality business is seen as a very serious trade and the reason for this is not farfetched. The reason the hospitality business – especially hotel business is being taken seriously is because of its relationship with the tourism industry. If you are considering opening a hotel in the United States of America, it is important to point out that several factors can determine the actual cost of launching this type of project. The truth is that some of the factors may not apply to you, but the business model and the kind of business a person wants to build would affect the overall cost of the business. These factors are unique to each individual and this article may not cover such. Having said that, here are some of the factors that will influence the cost of opening a hotel in the United States of America; Estimated Cost Breakdown for Starting a Hotel Business The cost analysis as it relates to starting a standard hotel business in the United States of America, Canada, United Kingdom, and Australia can be said to be almost the same except for few variations. These are the key expenses you are expected to make when starting a medium scale but standard Hotel business in the United States of America The total fee for registering the business in the United States of America – $750. Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300. Marketing promotion expenses for the grand opening of the hotel in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580. The cost for a hiring business consultant (including writing business plan) – $2,500. The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400. The cost for leasing a standard facility in a good and centralized location – $450,000 The cost for remodeling the facility to fit into a standard hotel – $800,000. Other start-up expenses including stationery ($500), phone and utility(gas, sewer, water and electric) deposits ($20,500). The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $120,000. The cost for start-up inventory and equipment (supply of food ingredients and drinks, beds and pillows, cabins, racks, fridges, kitchen gadgets, washing machines, bar equipment amongst others) cleaning supplies ( soap, detergents/washing powder, bleach, starch/adhesive, laundry bags, invoices for wash-and-fold, bathroom supplies, racks, and hooks/hangers et al)- $45,000. The cost for store equipment (cash register, security, ventilation, signage) – $13,750. The cost for the purchase of furniture and gadgets (flat screen TVs, sound systems, telephone, printing machines, computers, tables and chairs et al) – $40,000. The cost of purchase and installation of CCTVs – $15,500. The cost for building and hosting a website – $600. The cost for opening party – $20,000. Miscellaneous – $50,000. You will need an estimate of two million, five hundred thousand dollars ($2.5 million) to successfully set up a medium scale but standard hotel (within the category of 4 Star) in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a hotel with basic services and facilities such as lodging, meals (local delicacies, Chinese cuisines, intercontinental…

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    How Much Does It Cost to Build a Hotel? | Assets America

    How Much Does It Cost to Build a Hotel? | Assets America  October 16, 2018As the hotel business continues to expand in response to the strong American economy, developers seek strategic opportunities to serve metropolitan and suburban areas.  They do this by building hotels featuring the newest amenities, quality materials and the most cost-effective construction techniques.  Understanding the cost to build a hotel in the chosen location is critical to project profitability. To understand what it takes to build a hotel, it helps to break down the costs into standard components. Standard Hotel Costs – Components List Land Costs Costs vary based on location and how the land was acquired.  Land can be purchased as direct market-based site acquisitions.  Or, land may be available through inheritance or purchased long-ago.  Developers typically assign the land a value as a percentage of the total budget.  In 2018, this averages 14% for U.S. based hotel projects. Hard Costs Did you know that Brick-and-mortar costs predominate hotel development?  However, they can vary widely based on the type and location of construction.  For example, a limited-service hotel can range from a three-story wood-frame building to a Class A steel-frame high-rise in an urban setting.  A high-end room might cost five times more to construct than a low-end room.  Non-residential construction costs rose 5.1% for the 12 months ending on March 31, 2018.  This increase is the highest since 2010.  However, it is well below the peak rate of 10.6%.  And, hard costs vary on average from 61% to 71% of total project costs.  This depends on the hotel classification (from midscale to luxury). Assets America® Can Be Your Trusted Source for Hotel Financing Without professional help, hotel financing and hotel construction loans can be a complex and daunting task.  Assets America® serves as a powerful ally to its clients. We have close to four decades of experience in commercial finance.  Moreover, we start by using our marketplace knowledge and vast expertise to understand the details and specifics of your hotel project.  With those details in mind, we match your project and its financials to the ideal hotel financing capital sources.  Please call us today at (206) 622-3000, or simply fill out the below form for a prompt response! Apply For Financing Soft Costs These costs cover non-construction fees.  These include costs for engineering and architecture services, permits, financing taxes, insurance, entitlement, LEED certification and so forth.  Sometimes, soft costs include post-construction expenses, including security and maintenance.  Financing is usually the largest chunk of soft costs.  These typically run about 2% to 4% of the project budget.  Entitlement costs are higher in urban and environmentally sensitive settings.  On average, soft costs account for 7% to 17% of the total project budget. For more information on hard costs and soft costs, read our guide, Hard Costs vs. Soft Costs in Commercial Real Estate. FF&E Costs Furniture, fixtures and equipment costs account for 8% to 12%, on average, of hotel construction projects.  These costs include furniture for guest rooms and public spaces, bathroom fixtures, carpeting, kitchen and laundry equipment, and technology systems.  Some projects might classify these…

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    How Much To Start A Hotel Business? | Facts – The Alcazar

    How Much To Start A Hotel Business? | Facts | The AlcazarAny commercial building that charges money to travelers who are looking for a refuge to stay can be called a hotel. From a typical multi-unit building to luxury villas, a hotel can be anything. It goes beyond getting a building with a bunch of rooms, the amenities, and charging people when they check-in. It is one of the major aspects that attract investors and corporates to start a hotel business. There are different ways to begin a hotel business, and in this article, we’ll tell you how much to start a hotel business, and see if this is the right one for you.The estimated cost of starting a hotel in the U.S. varies from $750,000-$1,000,000 for a small lodge. It’s about $22,000,000 for a hotel with around 115 rooms, and even higher for luxury and high-rise hotels.If you are opening a five-room boutique hotel or a mega hotel with hundreds of rooms, the cost of starting a hotel can be high. Owners require a lot of money to get started between the property, the machinery, the furniture, and the licensing requirements. Even a five-star hotel has the potential to cost $4.5 million to build. There is no market rate since the cost range is mainly dependent on the land valuation and the materials used in the construction. How much to start a hotel business varies from the location, structures, and amenities offered.

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