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How Much Does Building a Hotel Cost in 2025？

2024-12-31

Discover the comprehensive guide to "How Much Does Building a Hotel Cost in 2025?" by STARJOY. Uncover average hotel building costs to strategically plan your investment. Our expert insights and analysis provide valuable information for potential hoteliers seeking to navigate the evolving industry landscape. Stay informed with STARJOY and ensure your hotel project is a successful venture.

Table of Contents

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Location
Type and Class of Hotel
Size of the Hotel
Additional factors
Example Hotel Cost Breakdown

Hampton by Marriott hotel furniture for sale. Exterior view at dusk.

The estimated cost of building a hotel in 2025 will depend on factors such as the geographical location of the hotel, the type of hotel, size, and the level of luxury.

Location

Urban Areas (e.g., major cities): The cost of construction in the urban areas is relatively high because of land price, permits, labor, and infrastructure. Big cities such as New York, London, or Tokyo may have higher costs thanks to the higher rent level for premises and stiff competition in construction.

Rural or Suburban Areas: Often, the cost of the land and construction is also comparatively cheaper, but you might have to account for the cost of infrastructure and electricity.

Type and Class of Hotel

Budget Hotels: The construction cost of a budget hotel is also relatively lower than that of a luxury hotel because of the smaller number of facilities, the less complex structure, and the inexpensive construction materials. The cost could average anywhere from $100 to $200 per square foot.

Mid-Range Hotels: These hotels generally give more services, better interiors, and services like restaurants, meeting facilities, gyms, etc. They require an estimated construction cost ranging from $$200 to $$400 per square foot.

Luxury Hotels: The luxurious hotel with luxurious facilities, luxurious finishing, and the location can cost from $400 to $600 or even more per square foot. This price also covers additional facilities such as spas, rooftop bars, and restaurants of fine dining standards and others.

Size of the Hotel

Small Hotels (50-100 rooms): The construction cost of small properties is relatively cheaper than large ones with a higher cost per room.

Large Hotels (100-300 rooms): Larger hotels have advantages related to economy of scale, so while the cost per room will be less, the overall cost of construction will be more.

Luxury Hotels (300+ rooms): The big luxury buildings can be between $$150 million and $$500 million + depending on the location and luxury level.

Additional factors

Land Acquisition Costs: In large urban centres, land costs may form a large proportion of the overall cost of the project. For example, the cost of the land in the areas of high demand can be millions of dollars.

Labor and Material Costs: Due to the disruptions in supply chain and inflation in the fiscal year 2024-2025, there might be a hike in the price of raw materials and human resources in identified locations.

Permits and Fees: Local government charges, which include fees, permits, taxes, and zoning policies, are relatively higher and differ with the region and the existing laws.

Example Hotel Cost Breakdown

A budget hotel (2-3 stars): 75,000 square feet x $150 per square foot = $11.25 million.

A mid-range hotel (3-4 stars): 150,000 square feet x $300 per square foot = $45 million.

A luxury hotel (5 stars): 250,000 square feet x $500 per square foot = $125 million.

Such costs are based on average construction costs and do not include other expenses, including hotel furniture, promotion, and operational costs of establishing the hotel business. Thus, the final amount depends on certain specifications, the complexity of the designing process, and other contingencies.

Based on location, size, class, and luxury, a hotel in 2025 might cost anything between $10 million and $200 million or even more. For more accurate estimates of construction costs, one should seek advice from architects, construction contractors, and real estate agents.

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