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Striking the right balance between cost and quality design is arguably one of the most challenging aspects for any hotel, whether you're a 5-star resorts or select-service. Achieving the right mix is critcal to success--and involves sticking to the following principles:

  •      Meticulous planning during the early stages of development
  •      Emphasizing smart design that maximizes every square foot of space
  •      Ruthless negotiation
  •      Compressing time by making decisions and sticking to them and
  •      Thinking long-term as well as short-term during the planning stages

Discipline and ingenuity are essential to containing costs without compromising integrity. Architects, engineers and others involved in the planning stage of a project can have a tremendous impact on the cost of a project, sometimes by just doubling down, analyzing their designs and finding places where they can cut space without cutting features, even in 5-star properties.

Be meticulous (slow even) during the planning stages of a project. The cost of a poor-quality team is far greater than the cost of hiring experienced architect and designers, recommends the Urban Developer blog. Hire a strong design team and take time to weigh all options during the earliest parts of the concept-development phase and you’ll likely see fewer bumps in the road later during the process.

Small changes/Big Results

Emaar Hotels’ architect Himank Goswami details one project in which budgetary pushback pushed him to take a second look at his design for one hotel. “The guestroom layout plan was reviewed and I was able to cut down 10 square feet without compromising the functionality of the room.”

While this doesn’t sound significant, in a 200-room property, his cut translated into 2,000 fewer square feet property-wide and substantial savings.

Limiting room size whenever possible is essential with the steep cost of each room adding up. A piece by consultants Boutique Hospitality estimated that the average cost for one budget motel room was $86,000, including FF&E, land, building and site improvements, pre-opening/working capital and soft costs. The average cost for a luxury hotel and resort room was $705,000.

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Get Tough at the Table

Negotiation is an often-overlooked aspect of cost-control—one that can make a tremendous difference.

Prices vary widely for building materials. So create and empower a committee to negotiate with suppliers, contractors and other vendors to get the best prices for comparable materials and services.

Industry insiders say to avoid “bespoke” fixtures and materials if at all possible; opt for well-made, mass-produced items (which can more easily be replaced) instead.

Don’t Dither

An in-depth report by HVS found that construction costs in New York, Los Angeles, Miami and other metropolitan areas had jumped by 20-30% over the past few years. So delaying or changing your mind during almost any stage of new construction or renovations almost always raises project costs, even more than in the past.

Architects and developers urge discipline--freeze-in your design prior to construction because essentially anything that extends the construction phase or otherwise delays the opening or your hotel is cutting into your opportunity to generate revenue.

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Think Long-term

Smart decisions made during the design and planning stages will contain operating expenses down the road, even if the savings aren’t immediately apparent.

A few examples include investing in a more efficient HVAC system—since most hotels spend about half their operating budget on cooling and heat, opting for LED lighting (10 times more efficient) over incandescent options and other green initiatives.

Finally, plan with durability in mind, purchasing easy-to-maintain materials -- even decorative fabrics and artwork -- that will stand up to long-term wear and tear of a commercial operation.

Plan Carefully and Stick to It

Industry insiders agree that the keys to reining in hotel development costs are meticulous planning, a willingness to find creative design solutions and the discipline to map out a construction schedule and freeze it, with no indecision once the building phase begins.

Throw in a tough negotiating skills when selecting building materials and you have a solid blueprint for managing costs without sacrificing quality.

Michael P. Owens

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Michael P. Owens is Co-Founder + Managing Partner of influence group, a leading producer of content and events in real estate, technology, design and construction.

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