Ms. Furbay

Development & Construction

Modular Construction: An Evolution in the Development of Modern Hotels

By Susan Furbay, Vice President of Business Development, HVS

Though historically associated with residential and low-rise commercial buildings, modular construction has gone more upscale in recent years. What are the benefits, and what should hotel developers consider before going modular? The term "modular construction" once conjured images of small construction trailers or antiquated mobile home clusters just off the highway-not the most alluring draw for high-end developers and top-tier hotel companies, nor for their gentrified clientele.

Today, however, the concept of modular construction has evolved, with developers across the U.S. adopting a modular approach to building 2- to 4-star select-service, full-service, and even boutique hotels.

What is Modular Construction and What are Its Benefits?

Modular construction involves a process in which individual "modules" or "pods" are constructed or pre-fabricated off site within a controlled plant environment. The modules are then fitted together in ways that allow the unit to function as a unified structure.

Sounds simple, but it's important to understand how flexible modular construction is in practice. Developers can implement hotel bathroom pods or they can pre-fabricate an entire guestroom. Entire integrated, steel-framed hotel structures can be fabricated, transported, and stacked and sealed through the modular process on sites around the world.

While modules are being built at the factory, developers are busy breaking ground, laying the foundation, and performing grading operations at the building site. When the modules are complete with all fixtures and fittings, they arrive at a fully prepared site for installation and final finishes.

The Method's Many Benefits Include

  • Quality Control - Their assembly within these standardized facilities allows each module to achieve exact design specifications while meeting the same codes and standards as conventionally built structures.

  • Efficiency - According to Palomar Modular Building, a full-service modular building contractor, modular construction can reduce build time by up to 50% versus the time it would take to complete a project with traditional construction methods.

  • Reduced Costs - By reducing the construction timeframe, developers can significantly reduce the costs of a build. In the past, transporting the modules was far more expensive than it is today, with a growing number of factory locations and improved techniques in packaging driving down costs.

  • Stronger Structures - Structurally, today's modular buildings are designed to be both strong and durable. Each module is engineered independently and built to withstand the rigors of transportation and craning onto foundations. No more worries about loosely fitted walls coming apart in high winds.

  • Other Benefits - In addition to quality management and time savings, modular construction provides other benefits to the developers. By building most of the structural elements in a factory, developers avoid site disruption and vehicular traffic at the site. Safety and security are improved, as well. Modular construction also steers clear of issues such as scarcity of materials, problems securing skilled labor in certain areas, and weather conditions-all of which that can adversely affect the construction process.

Notable High-End Modular Hotels in the Pipeline

Modern-day modular construction doesn't just apply to simple, budget hotel projects in rural or domestic markets. Here are some examples of high-end modular hotel construction on the rise.

  • citizenM Hotel, Manhattan - On Bowery Street in Manhattan, citizenM, a boutique and "affordable luxury" hotel brand, and Brack Capital are constructing a 300-room boutique hotel utilizing pre-fabricated guestroom pods built in Poland and shipped to New York. When completed, the 20-story hotel will comprise 210 stacked and sealed modular components. For the Bowery project, modular construction has allowed for a significant reduction in the number of trips for delivery of materials through the congested streets of Manhattan, reducing construction time by several months. The hotel is scheduled to open mid-year 2017.

  • AC Hotel by Marriott, Oklahoma City - Farther west, NewcrestImage, a privately owned hotel development and construction firm, is planning to build its first hotel in Oklahoma City using modular construction technology. The 142-room AC Hotel Bricktown will be one of the first modular constructions in the Oklahoma City hotel market. All rooms and finishes will follow Marriott's AC Hotel brand specifications, and the pre-fabricated construction will reportedly be indistinguishable from other AC branded hotels The hotel's ground floor will be built using traditional construction. Dozens of pre-fabricated hotel rooms will then be lifted by crane and placed atop a one-story steel base forming the hotel's lobby floor. The hotel, one of many modular hotel construction projects in Marriott's development pipeline, is scheduled to open in the third quarter of 2017.

alt text
AC Hotel by Marriott, Oklahoma City, Photo Credit, Newcrestimage

Xanterra Parks Project, Yellowstone National Park - In Wyoming, Xanterra Parks and Resorts is amid a 20-year, $134-million contract to rebuild and renovate lodging facilities throughout Yellowstone National Park. When all five buildings are completed, the Canyon Lodge & Cabins will comprise 410 guestrooms. Modular technology has allowed the developer to assemble the first three buildings in six months, a far shorter time frame than stick-built construction, while avoiding seasonal challenges. This has led to lower labor costs and helped the project achieve LEED Silver certification.

International Markets for Modular Hotel Construction

Modular construction is even more popular overseas. A couple of years ago, Hilton teamed with modular provider CIMC to build a Hampton Inn at Bristol Airport in the United Kingdom. This was Hilton's initial push to build multiple properties using a new, more comprehensive modular technique where entire guestrooms are factory-built then shipped globally.

In October 2016, Hilton announced plans to build Africa's first modular hotel, the 280-room Hilton Garden Inn in the Ghanaian capital of Accra. Patrick Fitzgibbon, Senior Vice President of Development, EMEA, for Hilton Inc. recently spoke to the company's efforts at "pioneering hotel growth on the [African] continent" over the past half century. Mr. Fitzgibbon called the new hotel in Ghana "…a fast-paced construction solution that we feel has huge potential in Africa, with quicker returns for investors and a world-class hospitality experience for guests."

Similarly, InterContinental Hotels Group (IHG) recently launched its Innovation Hotel 2.0 concept, presenting ideas in sustainable tourism including the use of modular construction methods to reduce waste and energy consumption. Because these modules are factory-constructed, IHG believes it can deliver a more consistent product and include the use of environmentally friendly building materials and energy-saving technologies. In the age of sustainability and consumer awareness, this move could raise the company's profile among potential commercial and leisure guests.

Potential Challenges

  • Labor - The use of pre-fabricated modular construction in markets where construction is predominately controlled by unionized labor can pose certain challenges. However, even in New York City where construction workers are heavily unionized, modular manufacturers are beginning to employ trade union members and work closely with local unions to ensure everyone is educated in the modular process. In cities like Boston and Chicago, other heavily unionized markets, developers need to find ways to include union participation early on to avoid any opposition that can eat into the efficacy of the process. Again, this can prove tricky, with shortened construction times needing to be balanced by more projects to keep work volume consistent. Developers of high-end residential and luxury hotels often find that highly detailed custom finishes are better left to skilled labor at the construction sites. Nevertheless, even high-end development projects have utilized combinations of pre-fabricated construction for the base building, with detailed finishes performed on site.

  • Costs - Measuring the cost of modular versus traditional construction is far from simple. The cost is based on a per-unit basis, and the savings can run from minimal to many millions of dollars, depending on the hotel product type, design, location, presentation, and amenities. Given the efficiency of modular construction described above, some of the greatest savings are seen in areas with high labor costs. Furthermore, improved technology and quality control, reduced construction nuisances, and less general disruption in the neighborhood of the site can all contribute to overall cost savings. However, there is an element of give and take. A savvy developer must weigh these benefits against any potential risks such as cost of packing and shipping the modules to the construction site, unexpected delivery delays, and possible conflicts with permits and inspections.

Financing and Insurance

Finally, is modular construction more difficult to finance or insure? Not necessarily, according to developers.

Promise Buildings, a provider of modular structures, notes that as far as appraisal and financing institutions are concerned, these buildings are delivered as real properties. Accordingly, banks, lending agencies, and insurance agencies can treat modular hotel buildings the same as typical hotels that are constructed from the ground up.

alt text
The Canyons Lodge & Cabins, Yellowstone National Park, Photo Credit, Guerdon Moduler Building

More and more commercial contractors are adopting modular construction, and for good reasons. Given the higher quality control, faster built times, environmental benefits, and cost savings, it is no surprise that modular construction is gaining prevalence in the hotel industry. As major hotel companies like Marriott and IHG sign on for high-end luxury and boutique modular hotels, the industry should see these products come into even greater prominence in the near future.

Susan Furbay is Vice President of Business Development for HVS, working with hotel investors, brokers, owners, operators, and other clients seeking HVS expertise in markets around the world. Based in Washington, DC, Ms. Furbay joined HVS as Vice President of Business Development. In this role she is responsible of developing new business for all of the HVS offices and divisions throughout the world.Ms. Furbay formerly served as Vice President of Acquisitions and Business Development at Sage Hospitality and as Director of North America Lending in GE Real Estate’s Hospitality division, where she originated and closed hotel loans totaling nearly $500 million. Ms. Furbay can be contacted at 516-248-8828 ext. 275 or Please visit for more information. Extended Bio... retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
General Search:

MAY: Eco-Friendly Practices: The Value of Sustainability

Eric Ricaurte

In 2011, we visited the 10 hotels contracted in the room block for the Greenbuild conference in Toronto. As part of their award-winning sustainable event program, the conference organizers embedded green practices into the contract language for these hotels, who either had to comply with the requirements, explain their reason why they couldn’t implement them, or pay a $1,000 fine. Part of our consulting work was to gather the data and confirm some of the practices on-site. READ MORE

Susan Tinnish

Hotels brands have actively engaged in large-scale efforts to become more environmentally friendly. Individual hotels have made great strides on property. Many significant large-scale eco-initiatives s are most easily built initially into the infrastructure and design of the building and surrounding areas. Given that the adaptation of these large-scale changes into the existing asset base is expensive and disruptive, hotels seek different ways to demonstrate their commitment to sustainability and eco-friendly practices. One way to do so is to shift the focus from large-scale change to “small wins.” Small wins can help a hotel create a culture of sustainability. READ MORE

Shannon Sentman

Utility costs are the second largest operating expense for most hotels. Successfully reducing these expenses can be a huge value-add strategy for executives. Doing this effectively requires more than just a one-time investment in efficiency upgrades. It requires ongoing visibility into a building’s performance and effectively leveraging this visibility to take action. Too often, efficiency strategies center on a one-time effort to identify opportunities with little consideration for establishing ongoing practices to better manage a building’s performance ongoing. READ MORE

Joshua Zinder, AIA

Discussions of sustainability in the hospitality industry have focused mainly on strategies at the level of energy-efficient and eco-friendly adjustments to operations and maintenance. These "tweaks" can include programs to reduce water usage, updating lighting to LEDs, campaigns to increase guest participation in recycling, and similar innovative industry initiatives. Often overlooked—not only by industry experts but even by hotel operators and designers—are possibilities for hotel design and construction that can make a property truly sustainable from the get-go. READ MORE

Coming Up In The June Online Hotel Business Review

Feature Focus
Sales & Marketing: Who Owns the Guest?
Hotels and OTAs are, by necessity, joined at the hip and locked in a symbiotic relationship that is uneasy at best. Hotels require the marketing presence that OTAs offer and of course, OTAs guest’s email when it sends guest information to a hotel, effectively allowing OTAs to maintain “ownership” of the guest. Without ready access to guest need hotel product to offer their online customers. But recently, several OTAs have decided to no longer share a data, hotels are severely constrained from marketing directly to a guest which allows them to capture repeat business – the lowest cost and highest value travelers. Hotels also require this data to effectively market to previous guests, so ownership of this data will be a significant factor as hotels and OTAs move forward. Another issue is the increasing shift to mobile travel bookings. Mobile will account for more than half of all online travel bookings next year, and 78.6% of them will use their smartphone to make those reservations. As a result, hotels must have a robust mobile marketing plan in place, which means responsive design, one-click booking, and location technology. Another important mobile marketing element is a “Click-to-Call” feature. According to a recent Google survey, 68% of hotel guests report that it is extremely/very important to be able to call a hotel during the purchase phase, and 58% are very likely to call a hotel if the capability is available in a smartphone search. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.