What Percentage of Hotel Construction Costs Should Go to Furniture?

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All hotel projects have a budget. From construction to final installation and inspection every dollar is to be accounted for. When calculating your hotel costs these variables will play a major role:

  • Size/scope
  • Where it sits on the sliding luxury scale
  • Location, location, location
  • Innovation and sustainability

Cushman & Wakefield (a commercial real estate powerhouse) published a formula for how much you can reasonably expect to spend in this study.

To get a rough idea of the total cost of a hotel project of any scale, simply include these factors:  

The average hotel per-room cost in 2016 was $115,000 - with FF&E, including hotel furniture, being a key component.

Furniture in Hotel Construction Costs

In 2016, the average FF&E costs per hotel room (by scale) were:

  • $10,000 (or 9%) of the total cost per midscale room
  • $16,000 (or 12%) per upper midscale
  • $20,000 (or 11%) per upscale
  • $32,000 (or 9%) per upper upscale
  • $101,000 (or 8%) per luxury room

Of course, there were outliers. The maximum FF&E portion per upper midscale room was $30,000, while the minimum for an upper upscale room was $10,000.

In most cases, you should expect quality custom hotel furniture to cost about 30% of the FF&E total.

So, expect furniture costs to be:

  • $3-4,000 (or 3%) of the total cost per midscale room
  • $5-6,000 (or 4%) per upper midscale
  • $6-7,000 (or 4%) per upscale
  • $10-11,000 (or 3.6%) per upper upscale
  • $30-40,000 (or 2.4%) per luxury room

 

How to Control Hotel Furniture Costs

Controlling Costs vs. Sacrificing Quality

Consider quality and cost when it comes time to start issuing Purchase Orders (PO’s) to your vendors. Some hotels will elect for their hotel furniture to be made overseas versus domestically as a cost-savings technique.

In most cases, they will “see” an up-front savings with the overseas option. They should also expect and plan for the furniture’s life cycle to be much shorter. That means, likely within 5 years, they’ll be placing another order to replace items that have not withstood the test of time, especially in the high-traffic hospitality environment.

The other option  is to go with an American-made, custom casegoods manufacturer. While spending a little more up front, hoteliers can be assured of the following quality benefits:

  • Shorter lead times
  • Responsive communication
  • Quicker access to replacement parts
  • Reduced risk of defects
  • Greater protection against counterfeits
  • Safer materials & products

What’s more, long-lasting quality means your product should remain in great condition beyond the average 8-year hotel-renovation cycle. That’s a definite win for your ROI.

Material Choices

When it comes to design, you’ll likely choose between a laminate and a wood veneer finish. Wood veneer - a thin layer of genuine hardwood glued to another wood surface - is often prized in upscale establishments for its “richer” look and feel.

Laminate is a less-expensive, man-made product composed of pressed synthetic and natural materials. Years ago, a laminate casegood stood out as fake. But laminate technology has made great strides to feature an array of classy, realistic finishes and colors.

While wood veneer can still be considered an upscale investment, laminate has closed the quality gap while remaining more economical. An experienced hotel furniture casegoods manufacturer can accommodate both.

Containing Hotel Construction Costs While Achieving Quality

Real estate prices and other key financial factors dictate the cost of building or renovating anywhere. A hotel construction or redevelopment project should be analyzed per room to know if the investment will pay off.

As a rule, consider that building or remodeling a midscale hotel in Manhattan is likely to cost more than building or remodeling an upscale hotel 75 miles south of Chicago. But guests everywhere appreciate quality furniture that’s:

  • Functional
  • Comfortable
  • Aesthetically pleasing

The right choice will boost the brand’s reputation and bring ROI from new bookings and repeat visits.

Learn more about investing in the right materials to yield a higher furniture ROI in your guest spaces.

Download our free veneer vs laminate comparison guide here:

Laminate versus veneer

Editor's Note: This blog post was originally published December 4, 2017 and was updated on June 24th, 2019 to reflect updated information.