Cost to build a hotel from scratch

Who doesn’t love a stay in an exclusive, boutique hotel, with five-star service and all the luxurious extras? Just imagine if it was your own hotel, designed and built to your own spec, and tailored to your unique taste and style.

Whether you’re an entrepreneur looking for their next opportunity or simply doing some research on possible future projects, we thought a handy guide that covers the cost of building a hotel would be pretty useful.

How much does it cost to build a hotel?

There is a huge variance in construction costs of a hotel that largely depends on key factors, such as:

• The type of experience you want to give your guests – luxurious or budget, themed or basic
• The location of the hotel
• The overall design of the building

The average cost to build a luxury hotel starts from around £4.6k per sq m, while a budget hotel starts around £1.6k per sq m.

What factors affect hotel construction costs?

Building a hotel has an array of costs that are broken down into these main areas:

• Acquiring the land is the first big expense. On average, land costs make up an average of 9% of a hotel’s development costs.
• Building and labour costs which on average accounts for somewhere between 64% and 72% of the overall budget.
• Fees, such as architects, surveyors, interior designers, financing, cost add up to anywhere between 10%-18% of the budget.
• FF&E Furniture, fixtures and equipment, costs between 8%-10% of the budget.

How much does it cost to build a motel?

• Motels are a basic version of a hotel and usually only consist of one or two storeys. A motel will cost less to construct than a luxury, multi-storey hotel. This will depend on your specs for the motel.

The average cost to build a motel in the city centre costs around £1.8k per sq m, while the cost to build a motel out of town costs between £1.6k per sq m and £2k per sq m.

So, do you still want to build a hotel?

Building a hotel is not for the faint-hearted and takes an incredible amount of determination.

However, with some clever decision making, wise choices and a successful team supporting you, it’s sure to be a triumphant endeavour.

FAQs

What are the key factors for a successful hotel?

Whatever the size of your hotel, whether it’s a small motel or a huge, luxurious hotel, to be successful it’s important to consider these key factors:

• Be clear about what you want from the hotel. Consider if it’s to be a sideline or your main line of work.
• Do your research. Finding the right location to build your hotel is key to the success of your project. It needs to be convenient (unless the hook is its remoteness), close to top attractions or activities.
• Have a clear concept and idea of your hotel construction cost from the outset and stick to it.
• Pick a good team of architects and builders who can help you create your vision and stick to your budget.