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Cost Survey 2004 CANADIAN LODGING OUTLOOK
The Canadian Lodging Outlook is a joint monthly publication of Smith Travel Research and HVS International, Vancouver and Toronto, Canada . |
By: Elaine Sahlins - HVS International - San
Francisco
HVS International has tracked hotel construction costs throughout the United States since 1976. In 2001, the survey introduced data for a larger range of hotel products, setting new baseline ranges for six lodging types: Economy/Budget Hotels, Midscale Hotels w/o F&B (without Food and Beverage), Extended-Stay Hotels, Midscale Hotels w/ F&B (with Food and Beverage), Full-Service Hotels, and Luxury Hotels and Independent Resorts. The 2004 hotel development survey reports updated per-room development costs for 2003. Each year HVS International researches development costs from our database of actual hotel construction budgets, industry reports, and uniform franchise offering circulars. These sources provide the basis for our range of component cost per room. New project construction cost data collected each year may increase the range and/or impact the mean and median of the construction cost components. These development cost ranges are then adjusted each year based on data reflecting the trend in each component cost category. The following tables set forth the overall results of the 2004 Hotel Development Cost Survey. Due to the wide variety of development projects and their diverse geographic locations, ranges of development costs per room for all of the other property-type categories overlap. Additional differences in site characteristics, density, height, construction materials, building and zoning codes, local labor markets, and other construction costs, account for the wide range of per-room costs in each category. As an example, extended-stay and limited-service hotels may be more expensive (on a per-room basis) to develop in downtown urban areas than full-service hotels in suburban or tertiary cities. Even with all the different circumstances that affect hotel development across the different segments, it is interesting to note that the allocation of costs among the five different components tracked by HVS International result in consistent contribution ratios to total development cost. With the exception of the luxury and resort development category, all of the cost components show consistent trends in their distributions of costs. In the luxury and resort category, the different land and building and site improvements costs reflect the expense of procuring typically larger sites with high barriers to entry in urban and resort destinations. It is important in this analysis to note that there is no uniform system of allocation for hotel development budgets. Hotel development costs are accounted for in numerous line items and categories. Individual accounting for specific projects can be affected by tax implications, underwriting requirements, and investment structures. For example, in a development project, furniture, fixture, and equipment installation and construction finish work can overlap. Accounting for these items is not always the same from one project to another. In addition, we recommend that users of the HVS International Development Cost Survey should consider the per-room amount in the individual cost categories only as a general guide for that category. The totals for low and high ranges in each cost categories do not add up to the high and low range of the sum of the categories. None of the data used in the survey showed a project that was either all at the low range of costs or all at the high range of costs. A property that has a high land cost may have lower construction costs and higher soft costs. The total costs shown in the following tables are from per-room budgets from hotel developments and are not a sum of the individual components. All material used by HVS International for the development cost survey is provided on a confidential basis and is believed to be reliable. Data from individual sources is not disclosed. |
CANADIAN LODGING OUTLOOK
HVS INTERNATIONAL - CANADA
September 2004
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CANADIAN LODGING
OUTLOOK
HVS INTERNATIONAL - CANADA
September 2004 Year-to-Date
© Smith Travel Research, 2004.
Reproduction or quotation in whole or in part
without permission is forbidden.
*INS - Insufficient Data
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Selina Lai HVS International � Canada 2120 Queen St. East, Suite 202 Toronto, ON M42 1E2 (416) 686-2260, ext 21 (416) 686-2264 FAX [email protected] www.hvsinternational.com |