In today’s world where commuting from place to place is highly accessible, the hotel industry is continuing to see a rise. Worldwide travel is one of the primary factors adding to this rise in the trend of hoteling. This is one of the reasons that many people keep on investing in the construction of new hotels and successfully attract tourists at large.
If you are planning your hotel construction project and the costs are worrying you out, make sure you secure adequate financing for the process. Weigh your options carefully while you are making the choice of a construction loan or a financing scheme.
This article aims to help you manage your hotel construction costs adequately.
Controlling hotel construction costs: Four-point strategy
Hotels are a safe abode for people to rest, sleep, and eat peacefully away from home. You can utilize your hotel idea in a creative way to provide travelers with another home away from home. For the execution of all your useful ideas, you need to be sure on the costs front. Optimize the list of costs associated with the whole process, and save yourself from the hassle of delays, disruptions, and disputes at later stages.
Four points to tackle costs are as follows:
1. Identify and understand the hard costs
Hard costs consist of equipment, material, and labor of your construction project. These costs take up the most part of the construction project budget. So, when you find out ways to cut hard costs, you are likely to save a good percentage of costs without a doubt. You can make use of multiple cost estimation tools for this purpose.
One of the tools is 5D Macro-BIM. Here, you are able to combine CAD capabilities with the construction material database. In this way, it gets easier to analyze the costs and make decision-based on thorough information. Once you save the costs from this area, you will be able to redirect the savings towards another part of the project or cut down on the budget entirely. You can even save money by choosing the location of the hotel wisely.
2. Manage soft costs timely
Soft costs are costs not related directly to construction like that of labor, material, and equipment. These include Permit fees that you pay to the local jurisdiction or the legal fee attached to the acquisition of property and construction related proceedings.
These also include the fees of expert witnesses like a quantum and a Delay expert, besides survey costs, and engineering consultant fees. You also need to optimize the insurance premium linked with your construction project, in order to limit the soft costs associated with your project. You will also need to take care of the local and state laws if applicable to your project well before-hand.
3. Consider operational costs
While it is considered that the operational costs are related to the function after the construction is complete, there are numerous operational expenses even before groundbreaking. You need to pay Employee wages and bear training costs. Operational costs related to a hotel construction project will also include electricity, sewage, and water bills. These also include the guest room supplies and food costs applicable in daily routine when the project is in process.
Managing these costs well before the groundbreaking of your project is important because otherwise, your project may face delays in activity execution. Such a situation then needs you to seek the services of a delay expert to mitigate the negative impacts of delay on your project. Make sure you have these experts in the loop but optimize operational costs too.
4. Weigh your financing options
Every construction project has huge costs involved. Many owners need to rely on various financing options so as to complete construction in due time. These options can be related to construction loans for various financing schemes. The owners initially get financial support from such sources and then save up in the coming months.
Financing sources can help you in matching your long-term business goals even if your current capital is not enough for your hotel project to materialize. Just make sure you weigh the financing options carefully, and choose the package most in line with your business goals.
Starting your hotel construction project so?
The hotel construction project, it turns out well, will be an amazing source of revenue for you. But for taking the project towards successful completion and fulfilling the business plans with it, you need to manage and optimize the costs effectively. Make sure you identify all the hard and soft costs and get rid of unnecessary ones. Control the operational costs and choose only the most practical and advantageous financing source for your project.
In the meanwhile, you need to keep in view the importance of each and every consultant required in the construction project. Hire the most experienced professionals only.