Mr. Roedel, III

Development & Construction

Advancements in New Hotel Construction

By Fred B. Roedel, III, Partner & Managing Member, Roedel Companies, LLC

New products, techniques, and processes are always being developed in the construction field with the objective of improving quality, reducing total cost, and decreasing the amount of time it takes to open a hotel's doors. We all know that the sooner you can open your hotel's doors, the sooner you can develop free cash flow.

New construction advancements range from alternative materials and pre-fabricated systems to environmentally friendly alternatives. They improve new hotel developments not only from the construction perspective, but from the operations perspective. Evaluating new construction products, processes and techniques is a critical step when putting together a new hotel development. The most important thing, however, to remember is that the value you will ultimately gain from embracing a new construction product or approach is directly related to the amount of time and energy you invest in educating yourself and everyone on your development team about it.

How the latest construction products and techniques can influence a new hotel development

There are two important steps when considering using a new construction product or approach in your hotel's development. The first is to ensure that you have a solid grip on the core objectives of the project. It is essential to understand its true economics and to be disciplined when it comes to designing, building, and operating a property that will reliably perform to your investment objectives based on the time you plan to own it. The second is to take the time to understand a product or approach and the value it will bring to your development. Some processes in particular are so new that there are limited numbers of consultants and contractors who understand them. When designers, contractors, and even operators do not fully understand new construction products or approaches, the likelihood that you will realize the full a value of using them in your project's design is dramatically reduced.

Time

Every new hotel development project must have a well designed and coordinated t plan in order to meet timelines. When developing a project's timeline start with the processes and systems you know will allow you to most effectively develop a time sensitive construction schedule. Next evaluate new construction materials, systems and processes that could improve the timeline. It is important to note that in order to be able to correctly evaluate e new construction offerings' value that you must allow time to educate yourself and all parties involved in the development about them. This learning curve must be factored into your timeline.

My company completed construction of a new 81-room, four-story block and plank hotel with an attached pool building that incorporated two newer systems, integrated concrete forms and pre-built bathrooms, in New York in July 2010. Site work started in October and the hotel opened for business exactly nine months later in July. Originally we projected that the use of the new systems in the project would result in a 30 day reduction in the overall development time-line. We, however, ended up realizing a 45 day reduction (including the operations component) as a result. We added almost 30 days to our pre-development period to make sure we clearly understood the two new systems and that all of the designers, contractors and our operations people did as well. This time investment resulted in better coordinated plans, better written and estimated scopes of work and more reliable construction and operating budgets. The end result of our embracing new construction technology and ensuring that every member of the construction team understood how to use it was that the overall development time-line for the new hotel was reduced.

Cost

There is no question that the cost of developing a new hotel is critical when it comes to meeting business objectives. We evaluate cost from both the actual development and the time it takes to begin operations.

New construction advancements can positively impact a development's cost from both a material and labor perspective. From the material perspective there is a consistent flow of new that can replace older technologies at an equal or lower cost, i.e. PEX piping versus copper and Styrofoam concrete forms versus concrete block. In today's world where raw material costs can immediately impact a material cost, it is imperative to have a handle on acceptable alternatives. The challenge isn't necessarily finding an acceptable alternative material, it is in finding companies that understand the technology and can properly install the product so you will realize its full value. Remember, the newer a technology, the fewer the people who will understand and have experience with it.

The cost of the new hotel development in New York that I mentioned earlier was positively impacted through the use of new, integrated construction technology. Its cost was reduced because the nature of the new construction products required significantly less labor, equipment and material investment than traditional products. For example, when we compared the price of the pre-assembled bathrooms to a traditional fit-out by various trades, there was a premium for the pre-assembled that we deemed worthwhile since using them would enable the hotel to open 30 days sooner. Since the hotel's financial projections showed it would conservatively produce $2,000 a day in free cash flow from operations we knew that its opening 30 days sooner would generate $60,000, a figure that would more than offset the higher cost of the pre-assembled bathrooms. In actuality our electing to use a variety of new construction products in the hotel's construction enabled it to open its doors 45 days sooner than was projected, which further improved its operating cash flow.

Quality

Newer construction technologies and systems can improve the overall construction quality of new hotels and improve their long term operational quality. In order for this to happen, however, every detail of a new hotel's design and plans must be as close to perfect as possible, which will impact its final structural quality and how smoothly it will operate. Too often the lack of understanding of the long-term compatibility of both new and traditional building components and products leads to problems both during construction and when it comes to longer term maintenance issues.

How the latest techniques in hotel construction can influence a renovation

Advancements in construction materials, systems and processes can be equally valuable in a hotel renovation. For example, pre-fabricated components reduce on-site construction time and new materials can be less expensive than traditional ones and installed more efficiently.

Whether you are undertaking building a new hotel or renovating an existing hotel, advancements in the construction industry can positively impact your project. When implemented correctly they typically shorten timelines and reduce long-term operations and maintenance costs. The result is more free cash flow.

Mr. Fred Roedel is a Manager of Roedel Companies, LLC along with his brother David. He shares the responsibility of developing and implementing the annual strategic plan of Roedel Companies. He also shares the responsibility of approving the final design, budget and timeline of any asset developed. Mr. Roedel is President of ROK Builders, LLC, the wholly-owned Construction Management subsidiary of Roedel Companies. In this capacity he is responsible for developing the strategic and annual plans of ROK Builders. Mr. Roedel, III can be contacted at 603-654-2040 ext. 105 or FredRoedel@roedelcompanies.com Extended Bio...

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