Modular or pre-fab hotel construction has a host of advantages over traditional hospitality development, the panelists said. | Image by Carrie Rossenfeld

Event Coverage: Modular Can Help Streamline Hotel Development

Carrie Rossenfeld Event Coverage, Hospitality & Tourism

Modular or pre-fab construction is slowly catching on as a method for building hotels that is time and cost efficient, providing a more precise and usable product, said panelists at the session “Stack & Stay: Are Pre-Fab Hotels the Future of Hospitality?” during the CREW Network Convention in San Diego last week.

In fact, modular construction — where all decisions, from lamps to bedlinens to utilities such as power hook-ups, plumbing, flooring, and lighting, are made up-front — can enable a hotel to be built in months instead of years. Pre-fab hotels are built offsite in factory-like settings, allowing for accuracy not traditionally found if built onsite, and assembled onsite. Rooms are delivered whole, furnishings and all, and stacked like Legos.

The panel’s moderator, Christine Chipurnoi with USI Insurance Services, said one problem with modular construction is that it isn’t well-known enough that lenders understand the process, which can make financing these projects very painful. She showed a short video on the modular construction of a 354-key Marriott hotel in Hawthorne, California, completed in August, that explained why these projects make sense.

Michael Merle of Guerdon Modular Buildings, the builder for the Hawthorne Marriott project, said taking a large portion of hotel construction and building it offsite means that 300 tradesmen are building it on a production lines, including electricians, dry-wallers, and plumbers. Every choice, including the artwork, carpeting, and drapes, is made in advance of production, and once production begins these decisions cannot be changed. Therefore, developers must make sure modular is right for them and the project and commit to it wholeheartedly at the beginning of the development phase.

Rachel Lambert of Mogul Capital was that developer for the Hawthorne Marriott project. She said after looking for better solutions regarding speed-to-market, her team decided to take on the modular process.

“It was intriguing to have something built in a controlled atmosphere — we were very excited about it,” Lambert said, adding that her firm has a few hotel projects in the works that are slated to be modular. “You must decide to do it early in the process, but the payoff is opening sooner.” Since everything is done on the front end — lenders, ordering furniture, etc., “it’s a different way of thinking” about development.

One thing Lambert’s team learned was not to go too custom with the guestrooms in a modular project or the process will take too long. “Stick with the prototypes, and focus on the playful with color schemes,” she said, adding that the corridors and other common areas are the places to customize.

Merle said that because there are so few builders doing modular development, concerns about capacity are valid. “How many modular projects can builders handle at a time?” He said more builders are adopting this method, and he knows of six modular manufacturers who are entering the market nationally.

Another concern is the cost of transporting the modules to the hotel location, which is difficult to pin down since there are so many factors to consider. Generally, Merle said, transportation costs between $4,000 and $6,000 per key.

Damage during transport is also a factor, but Lambert said there were surprisingly few of these with the Hawthorne project. Merle added that ways of preventing damage during transport have been addressed over the last two decades that modular development has been used. “You want to minimize touch points to minimize damage,” he said.

Regarding financing, Lambert said more lenders are on board now that they are beginning to understand the process. She added that modular will “open up a lot of opportunities for lenders” as it continues to grow in popularity.

Maintenance is another advantage to modular construction, Merle said, since modular builders know the exact internal structure of every room and can access every cord, circuit, and hidden element immediately for replacement or repair without guesswork. “The feedback we’ve gotten is that modular is hands-down a better solution.”

The ultimate challenge in modular construction, he added, is getting everyone on the same page early, but there is a steep learning curve and the process is quickly learned.