According to HVS San Francisco senior vice president Elaine Sahlins-author of the recently released HVS Hotel Development Cost Survey for 2013-2014-by the end of 2013, the hotel investment market as a whole had largely recovered from previous recessionary years. Meanwhile the trend in market-by-market hotel development remains uneven.
“The hotel fundamentals of stronger markets (primarily in coastal and urban locations) have improved to the point where the value of existing properties may be at or near the replacement cost, supporting an increase in new hotel construction,” says Sahlins. “Two trends continue to gain momentum: a proliferation of proposed select-service hotels and the increase in public/private partnerships to develop major hotels in a number of central business districts. Concurrent with the increase in hotel construction is a baseline reduction in hotel rooms across the US. As the inventory of obsolete hotel rooms contracts, a significant portion of new supply is replacing closed rooms.”
Since 1976, HVS has tracked hotel construction costs throughout the United States. The survey considers data for six lodging types: economy/budget hotels, midscale hotels without food and beverage, extended-stay hotels, midscale hotels with food and beverage, full-service hotels, and luxury hotels and independent resorts.
