Page 6 - 2020 JN+A & HVS Hotel Cost Estimating Guide

INTRODUCTION
by Warren G. Feldman, AIA, ISHC CEO of JN+A | Principal of HVS Design
Each of the last 11 years, we have released the update to the Hotel Cost Estimating Guide at the NYU Investment Conference in early June. This year, we won’t be seeing everyone at the conference due to the pandemic. I thought it might be helpful to address some questions that are arising relating to design and construction once we emerge from this difficult time.
How will the pandemic affect construction costs?
1. Labor rates will likely drop as they generally do following the beginning of a recession. The amount of that drop will vary by market and specific industry, but it generally has been in the 7-10% range in past recessions.
2. The new regulations regarding social distancing will likely cause installation inefficiencies, which may offset some or all of the labor rate savings.
3. The requirement for temperature monitoring, drop ship deliveries, laborer contact records, etc. will no doubt lead to increasing general conditions costs.
What kinds of delay and additional cost claims and clauses are likely to arise from the pandemic?
1. The contractors will be seeking coverage for costs related to the shutdown of jobsites such as paying the salaries of employees dedicated to the project who cannot work remotely, but are not allowed to work to local restrictions.
2. Out-of-town contractors imported for a specific project will have housing costs to pay even if no workers are staying in the apartments.
3. The “four workers to a room” situation, which some contractors have used in the past, may not be possible going forward, requiring an increase to housing costs.
4. The application of Force Majeure clauses to Covid-related shutdowns will be a major contract issue in the near future.
How will the current social distancing and hyper cleaning trends impact hotel design?
1. The design of self-service food and beverage outlets is going to be dramatically affected in the short run. Most select-service properties have a self-service breakfast scheme which will be difficult if not impossible under current guidelines.
2. The spacing of seating and the use of communal seating will be dramatically different moving forward. This could result in more space being needed to feed guests in the morning in select-service hotels. The capacity of hotel restaurants will be impacted leading to a potential increase in room service demand. Room service had been scaled back in recent years with the advent of grab and go alternatives.
3. Group and convention meeting space demands may ask for different spacing of seating resulting in lower seat counts and, therefore, requiring more large spaces. The key will likely be flexible seating that can be rearranged into a variety of seating options. This will likely cause lower margins in existing meeting spaces and food and beverage options.
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JN+A and HVS DESIGN | HOTEL COST ESTIMATING GUIDE 2020