Costs to Build a Hotel

Last Updated on May 19, 2024
Written by CPA Alec Pow | Content Reviewed by Certified CFA CFA Alexander Popinker

A hotel-type construction is a large-scale project that requires the full attention of an investor. Businesses in the field of hospitality involve quite a lot of risks and expenses, needing rigorous feasibility studies, as well as the involvement of numerous specialists in the entire process, from the purchase of the land to the completion of the final finishing touches.

How much does it cost to build a hotel?

The building costs for a hotel are affected by various factors such as the size of the construction, whether there will be terraces or balconies, the number of rooms, the size of each room, amenities like a fitness center, a pool, shops, and restaurants, and the type of hotel (basic or luxurious).

The cost per square foot may vary depending on factors such as the cost of the amenities we mentioned above, the cost of the architectural firm, parking lot pavements, prep work, and the cost of land purchase.

For example, the cost of building a hotel with a number of 155 rooms, 325 square feet in size with full bathrooms would be anywhere between $22 million and $26 million. In the table below you will get a more detailed presentation of each cost category involved in the construction of a hotel.

Item Percentage Cost
Architect and Contractor 10-17% $1,150,000-$3,790,000
Windows and Doors 2% $480,000
Roofing 6% $1,350,000
Plumbing 9% $2,030,000
Foundation 4% $920,000
Interior Finishes 23% $5,100,000
Kitchen 8% $1,800,000
Floor 5% $1,150,000
Exterior Finish/Walls 10% $2,250,000
Baths 15% $3,350,000
Special Features This takes the balance of the total cost $2,900,000
Total Costs $23,000,000-$26,300,000

What you need to know about hotel-type constructions

The land is essential for the success of the business

Hotel Building CostsAs in real estate investments, the place is the key to success. If in terms of guesthouses or small hotels, the location is generally given by the geographical/tourist area where you want to build the accommodation unit, in terms of hotels, you will need to consult both with a real estate investor, as well as with an architect.

Beyond pre-feasibility and impact studies, you need a cost estimate and countless approvals and opinions. The bureaucratic part is quite expensive and can take quite a long time. However, if the chosen land corresponds to the legal rigors to become the site of hotel construction, it is time to think about the next steps.

The finishes are the hotel’s business card

A solid, high-quality construction, designed to provide comfort and joy to customers, is the foundation of a successful hotel business. But we all know that a customer will first notice the finishes and only then will he discover with amazement and joy the other advantages that you make available to him.

For example, if you choose underfloor heating in the bathrooms, you can think about high-quality marble or ceramic floors. Wood is again a material that, used in finishes, gives a feeling of welcoming warmth, and rustic and elegant, hospitality. Wood, used especially for small and medium-sized guesthouses and hotels in mountainous areas, is replaced by contemporary glass, steel, and light, modern materials.

You might also like our articles about the cost of storage units, storage containers, or land surveys.

The plumbing is the soul of the building

The construction of the building itself does not differ much from the construction of a building with a residential purpose, for example. But when it comes to plumbing, the project becomes much more complex. A large hotel will probably have to provide large-scale technological installations for kitchens and laundries, but also many others, including:

  • complex sanitary installations;
  • equipment that consumes water, gas, and electric current at industrial levels;
  • air conditioning systems;
  • defrosting systems;
  • more thermal power plants and more complex and high-performance electrical installations;
  • efficient heating systems;
  • integrated communications and security systems;
  • even an own sewage treatment plant if necessary.

Small hotels and guesthouses are increasingly starting to adopt underfloor heating. In general, those who want to provide their customers with much-increased comfort and to reduce their room heating expenses in the long-term use floor heating under the tiles in the rooms’ bathrooms. This type of heating is done with the help of heating mats embedded in the adhesive of the bathroom tiles.

The construction of a hotel or guesthouse must take into account all seasons, regardless of whether the tourist season is in summer or winter. For example, many guesthouses and hotels adopt de-icing systems for ramps, parking lots, and pedestrian access areas in the hotel right from the construction phase – to offer extra comfort and safety to customers regardless of the season.

Regarding installations and large consumers, these are only some of the things that will concern you in the project phase. In addition, investments in equipment, computer systems, thermostats, and sensors for heating systems, possible solutions to obtain alternative energy and the cost of all materials are things that will be found in the estimates and in the final project.

You must not forget that you will need various approvals and will be subject to numerous inspections throughout the investment.

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