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06-29-21 | News

Construction and Hotel Development is Threatened by Shipping Shortages

Travel After Over a Year in Heats Up

As with many situations throughout the pandemic, corporations are struggling to get ahold of not only building materials but shipping containers which is furthering the divide between plans and building.

As with residential construction, lumber prices, shipping shortages and competition has inflated hotel construction and with travel beginning to ramp up again, developers are looking to cut spending.

Labor shortages, rising costs, and supply chain issues have made building and even furnishing newly built hotels a growing challenge. For example, there has been a spike in shipping container costs due to a spike in consumer spending due to stimulus packages making their way into consumer pockets.

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"If you're not prepared, and you're not planning for the disruption, you're going to get smoked right now," said Joe Ward, vice president of asset management at Ohana Real Estate Investors, owner of properties like the Montage Beverly Hills.

According to Skift, shipping containers have added as much as $1.5 million to a project's cost. Trinity Investments, which owns hotels like Westin Maui Resort & Spa and a JW Marriott and Ritz-Carlton in Orlando, typically spends $2,800 on a 40-foot container from Asia to Honolulu, as opposed to now where their latest estimate skyrocketed to $20,000.

Major chains like Hilton, on the other hand, looked into using something else other than lumber to alleviate spending on new projects however, it was unsuccessful and has left even the largest of chains struggling. With costs unobtainable, many developers are planning to start construction again between 2022 and 2024.

https://skift.com/2021/06/03/pace-of-u-s-hotel-development-is-being-threatened-by-global-shipping-bottlenecks/

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