Hotel & Motel Management - November 5, 2007 - (Page 60)

60 Construction REGIONAL PIPELINE H&MM November 5, 2007 | HotelMotel.com www.HotelMotel.com/digital_edition Rising costs confront Midwest builders IN THE details Demand for concrete, metals up Hotel developers are facing an increase in material costs and wait times, but the demand for new properties is still great. No signs of slowing down Costs up 7 to 8 percent Shortage of construction workers By Dennis Blank IN THE works Interstate Hotels & Resorts formed a joint venture partnership with Premier Properties USA to build three hotels. Each will be located within a Premier Properties lifestyle and retail center. The hotels to be developed are the 114-room Hyatt Place at The Marquis in Williamsburg, Va.; the 136-room aloft at The Metropolis in Plainﬁeld, Ind.; and the 136-room aloft at The Venu in Indianapolis. Trident Properties International and The Bricton Group will increase its presence in Lafayette, Ind., when they break ground on the Courtyard by Marriott, which is expected to open in summer 2008. The property will join two other Brictonmanaged properties in the area, with the existing 83-room Days Inn and 74room TownePlace Suites by Marriott, which recently underwent a $1-million renovation. The Water Club, a $400million project by Borgata Hotel Casino & Spa in Atlantic City, held a “topping off” party to mark the completion of the building structure for the property. The hotel is expected to open in early 2008. CONTRIBUTING EDITOR D emand in the U.S. and overseas for concrete, steel, copper and fixtures is accelerating construction costs for hospitality contractors, but it is not enough to slow continued strong demand for new hotels in the Midwest. Contractors and hotel owners say there are no signs of a slowdown going into next year’s building cycle. “It has been pretty amazing,” said Dan Marak, acquisition and development director for Midas Hospitality/Construction in Shawnee, Kan. “I have never seen anything like it. I have been through several cycles and this is the longest cycle. We haven’t even seen a hiccup.” Marak specializes in building branded hotels less than 100 guestrooms in medium-size cities. While he has not seen a shortage of concrete, the price of cement can vary by as much as $20 a yard The Embassy Suites Hotel and Convention Center in Loveland, Colo., is part of John Q. Hammons Hotels & Resorts’ development pipeline. among different cities. “Currently, we are in a period of unprecedented price increases since 2004,” according to Jeffrey A. Raday, president of McShane Construction Corp. in Rosemont, Ill. He anticipates costs to be up between 7 and 8 percent this year—which includes a 4 to 5 percent cost of living increase for union construction workers in the Chicago area. Because of the high demand for concrete, Raday faces long lead times for pre-cast concrete panels he is using in his current project. “Most of the precasters are booked,” Raday said. “If you book an order today, the earliest you can get it is six months from now.” McShane is midway through a six-story, 251-room aloft—the new upscale Starwood Hotels & Resorts Worldwide brand—near the Rosemont, Ill., convention center. The hotel is loaded with high-tech amenities and an elevated walkway between the hotel and parking garage. Scott Tarwater, senior vice president for John Q. Hammons Hotels & Resorts, said prices for steel and concrete have gone up as much as 30 percent in the last few years. “Since the economy in India and China kicked into full gear, it has absorbed a lot of the available concrete and steel and forced the supply price through roof,” he said. The company is in various stages of construction on nine convention hotels and one branded airport facility, carrying an overall price tag ranging between $550 and $600 million. Among the JQH projects are a 10-story, 283-suite Embassy Suites with 80,000-square-feet of meeting space in Murfreesboro, Tenn., and another 12-story, 300-suite Embassy Suites with 100,000-square-feet of convention space near Pleasant Grove, Utah. Tarwater said because the company has a long-term relationship with contractors, who have a strong subcontracting base, they are able to stockpile building materials. Pepper Construction in Chicago is halfway through the renovation of the historic Palmer House Hilton in the downtown area—a project estimated to cost between $75 and $85 million. In addition to dealing with hikes ranging from 6 to 8 percent on construction costs, Pepper must also deal with the shortage of construction workers. “We are in a very signiﬁcant battle to get enough quality people,” said Rich Tilghman, senior vice president. “If you are a construction engineer coming out of school, you have a lot of offers. We try to ﬁnd them before they graduate, and they can work as an intern with us.” The company already is working on a lot of pre-construction hotel projects that will come on line in 2009, including a Hilton hotel in a mixed-use project called Union Station in downtown Chicago. hmm@questex.com JOHN Q. HAMMONS HOTELS & RESORTS The Hotel Minneapolis A joint venture between Minneapolis-based Hempel Properties and Morrissey Hospitality Cos., The Hotel Minneapolis will have 224 guestrooms and a conference center. The property is due to open August 2008 in the restored Midland Building and will operate as a Doubletree. Original architectural features that were preserved include marble columns and original plaster work in the lobby. Along with being connected with wireless high-speed Internet access throughout the hotel, all guestrooms will be furnished with a ﬂat-screen television, MP3 player docking system and access to remote printing services. Auberge Resports will open Encantado, a luxury resort in Santa Fe, N.M., in July 2008. The property will feature 65 casitas, a world-class spa, signature restaurant and lounge on 57 acres. Omni Hotels has a resort scheduled to begin development in Pontogque, Mexico in 2008 and a partnership with Songy Partners of Atlanta to jointly purchase and redevelop a hotel in downtown Houston, beginning later this year. Compiled by Stacey Higgins, shiggins@questex.com THE HOTEL MINNEAPOLIS http://HotelMotel.com http://www.HotelMotel.com/digital_edition

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Hotel & Motel Management - November 5, 2007 Contents M&A Pace Slowing After Early Boom LodgeWorks Jumps Into Upscale Game Accor Reorganizes Leadership, Structure Perspective At Your Risk Travel Trends Sales Clinic On Finance Family Business Matters Cornell Insights Franchise Law Training Trends Satisfaction Trends Management Trends Events Guest Column Trends & Stats GM Survey Historic Property Conversions Offer Appeal for All Extended-Stay Brands Survey Green is the Word at IH/M&R Show Transactions Restaurant POS Handhelds Keep Managers Alerted Rising Costs Confront Midwest Builders Business Travelers: Breakfast Still an Important Perk IH/M&RS Product Preview Vacation Ownership Projects to Grow in U.S., Abroad Awards Training Programs Jump to Front Lines Refrigeration: Before You Break It, Fix It Lighting Enhances Property People Supplier News Best Western Aims High with Atria Vantage Makes Global Plans Sierra Moves Forward with New Name, High Expectations Maintenance Doctor Social Marketing Makes Way into Hotel Industry People Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - November 5, 2007

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