How Much Does It Cost to Build a Motel?

If you are considering starting a motel business, ensure you have the correct estimated expenses. The hospitality industry is lucrative, and the cost of building a motel is much lower than hotels.

2 to 3-story motels close to significant highways serve as ideal accommodations for Motorists due to the low rent and basic facilities. Several factors should be considered before estimating the cost of building a motel; however, on average, it costs around $160.04 per square foot in the US.

Starting a hotel in New York or California typically costs between $750,000 and $1,000,000 for a small motel and, on average, $22,000,000 for a hotel with about 115 rooms. The costs are substantially higher for luxury and high-rise hotels.

Read about some important factors that directly affect a motel’s cost so you can make a better decision!

Factors Affecting Motel Construction Costs

1. Land Cost

Location is a crucial factor to take care of when building a motel. You must pick a strategic site that will draw tourists all year long. This category accounts for one of the most significant portions of your spending. Recent studies reveal that the cost of land accounts for around 9% of the overall budget, and many small and local motels opt for long-term leases.

The cost of buying land and any work needed to be done before development is called land costs. It costs more to build a motel in an urban area than in remote locations. Generally, land cost is 10 to 20 percent of the total costs.

2. Size

The cost of building a motel or any other project is directly related to its size. The dimensions and scope of a project have a significant impact on construction costs. To execute large motel projects, more resources and labor are required. For more critical tasks, highly qualified workers might also be needed. The job will cost more; the more intricate and thorough it is.

You have to plan and decide wisely about the number of rooms and stories you want to have in your motel. According to a rough estimate, the average cost of a motel is $77,000 per room in the US.

3. Hard Costs

Actual construction costs are the subsequent expenditure to take into account. These expenses are also called “hard costs,” cover many expenses, such as licenses, supplies, constructor and subcontractor bids, garage and landscape fees, and other building tasks.

Many often refer to them as ‘Brick and Mortar’ costs. These costs involve all expenditures related to physical construction, like labor, building materials, electrical supplies, and carpentry costs.

It costs you 64% to 72% of your overall budget, excluding the land cost. The size of your motel still affects this; the more the quality and modernity, the higher the proportion and price.

4. Soft Costs

These fees are for non-construction-related charges. Among them are costs for engineering and architectural services, licenses, finance tax, insurance, entitlement, LEED certification, and other expenses.

Soft prices might occasionally include post-construction fees like security and upkeep. You can face soft costs even after the construction, like health and safety checks.

Typically, the most significant portion of soft costs is financing. It usually costs between 2 and 4 percent of the overall budget. In urban and ecologically sensitive areas, entitlement costs are higher. Soft costs typically comprise 7 to 17 percent of the overall project expenditure.

5. Furniture, Fixtures, and Equipment Cost

Along with location, you must ensure that your motel is welcoming and comfortable for its visitors. Therefore, you must buy the appropriate furniture, fixtures, and machinery to match the intended aesthetics of your motel. It includes everything from mattresses, dining tables, and cupboards to your hallway carpet and chandelier.

Any technical equipment you want to set up will also be featured in FF&E for a more contemporary look. Around 8% to 10% of all items fall within this category.

FF & E costs involve the furniture needed for rooms, like beds, tables, chairs, cupboards, etc. Bathroom fixtures, renovations, and replacing old items also fall in this cost. You have to select these items according to your budget and the requirements of the potential customers.

6. Operating Expenses

Cash flow and other opening-related costs make up the operating costs. When starting a motel, you need to consider hiring and instructing your staff, purchasing supplies, employing technical support, and paying for electricity and water.

Despite not taking up much of the entire budget, they are just as crucial as other, more significant expenses. They generally add 1% to 4% to the overall budget.

7. Profiling your Hotel

Take your time researching before you design your motel or allocate startup cash. You better understand what you would like to happen through study, including the advantages and disadvantages of your business enterprise.

To choose the overarching theme of your motel, you must also profile your intended audience.

8. Professional Fees

Professional fees are costs associated with construction. For example, this area of spending includes fees for the architects, surveyors, interior designers, engineers, and other specialists you may need to collaborate with.

The budget for the professional fees comprises 10% to 18% of the total construction costs.

Summary

The cost of building a motel is much lower than a hotel because of the few amenities. Direct entrance eliminates the need for common areas, and you won’t require many staff members. Careful planning and management will help you complete your project successfully and avoid stressful situations.

Starting a hotel construction project by first calculating allowable construction expenses would only be worthwhile. The prospects will seem more feasible once you breakdown down the construction expenditures and analyze your budget. Before starting construction, using the figure provided in this article will help you better understand how much you may expect to spend.