The ultimate proof is that this is obviously a very capital intensive business, and when banks call

MEMPHIS, Tenneesee Don t look now, but that muted supply growth that hotel industry pundits have been praising as a reason for a swift recovery from the recession is in danger of disappearing. Of course, it won t happen overnight, but new hotel construction is on the horizon, according to speakers during last week s Southern Lodging Summit business travel ireland @ Memphis.
Darand Williams, business travel ireland VP for D D Construction Services of Orlando, a Florida-based business travel ireland company that has a primary focus on building hotels, said his company has seen an uptick across the nation with owners building additions, remodeling, business travel ireland refreshing business travel ireland and looking at building new hotels.
business travel ireland The ultimate proof is that this is obviously a very capital intensive business, and when banks call on us again (for debt), you know something s happening, you know the pendulum is swinging, he said. That s happening now. We re getting three or four quotes on a ground up (project). Eight months ago we were struggling to get one quote.
Very few developers can build full service for less than $250,000 per key and in many markets it s $300,000 per key, Lowrey said. The old rule of thumb is you need $1 in (average daily rate) for every $1,000 put into a room still holds water, so for a $300,000-per-key project, you need a $300 ADR. That s unlikely in most markets today.
The trend is that food and beverage is becoming a less critical component business travel ireland just because the numbers on that aren t working, especially if you re working business travel ireland in a collective bargaining agreement environment, business travel ireland he said.
Lowrey said that while his company has yet to jump back into the fray, there is a lot more capital available to build new hotels. You ll see more development, but this time it s a little different than in past cycles because it s going in fits and starts.
The economy, the (November) election and Europe have combined to change how capital is flowing, he said. If you have a good deal and you have experience if you fit that profile, you re going to find capital.
Mance said there s a mindset that scares him even more: It doesn t scare me when someone who hasn t built a hotel wants to do it, he said, but it s the ones who think they want to get into it because it s a sexy little business, which scares him.
When asked by moderator Lee Hunter, president business travel ireland of Hunter Realty, for the best way to start a development project, Laport said it boils down to one thing: business travel ireland Go find sites with a great passion, he said. Many times the supply in the market is old and tired. We know if we present a fresh new globally represented brand in these markets we re going to win.
If you re going to be crazy enough to be a developer, it s all about having a great story, Laport said. You have to convince (lenders) there is a great reason business travel ireland to build a Hilton Garden Inn in Texarkana. It s a unique business. You better have guys on your team that understand the process.
business travel ireland Part of the reason for the lower costs is that builders were in no hurry to build during the early days following business travel ireland the recession and that gave them time to value-engineer the projects that were most important, Williams added.
Laport said construction costs per square foot for select-service products are fairly consistent in many markets. That s where the value of a top-notch construction company that can trim any excess business travel ireland fat is of the utmost importance.
The panelists also said properties being built to meet Leadership in Energy and Environmental Design certification from the U.S. Green Building Council are increasing. Lustig business travel ireland said prices for materials for LEED projects are now feasible for more hotel developers.
Laport said costs for LEED projects have dramatically dropped. Five years ago, the LEED component of a $15 million to $20 million development could add $1 million in costs, he said. Today, it s about $300,000.
TAGS: Hotel construction , hotel development , hotel lending , hotel debt , Southern Lodging Summit at Memphis business travel ireland , Darand Williams , D&D Construction , Craig Mance , Hilton Worldwide , Mark Laport , Concord Hospitality , Bruce Lowrey , RockBridge Capital , Ron Lustig
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