Although far from its pre-Great Recession levels, lodging construction is moving forward, growing 14% this year, reports construction consulting firm FMI in its Q2-2014 Construction Outlook.

“Lodging growth is recovering from a large dip in 2009 and 2010, and activity to renovate and update will still be strong even as new lodging starts to improve,” the report notes. “Slow growth in new hotels is welcome by many in the industry as occu-pancy rates and RevPar (revenue per available room) improve. The increase in average daily rates per room will continue to be modest as business and vacation travelers shop for the best buy.”

Renovation seems to be where hospitality building owners are spending their money, and they are looking to invest in amenities that will provide a better experience to their customers.

“Trends in construction are focused on being more modern, more visually appealing and more trendy,” says Mike Kotubey, president of TDIndustries’ Dallas region. “Architecture is moving toward a sharper, angular approach. Amenities such as world-class restaurants, spas and common areas are becoming more popular.”

Firepits, fireplaces and ornate pools are regaining popularity as are multiple entertainment or themed bars, he adds. 

TDIndustries’ Dallas region is seeing these building owners invest in more behind-the-wall systems — central chiller water plants, vertical stacked fancoils, heat recovery, indoor air quality improvement via advanced filtration and control strategies — than they did before.

“Some very high-end hotels have implemented in-room electrical and HVAC control integration with the front desk reservation system,” Kotubey notes. “When a room is sold, the unit is placed into the occupied mode and local HVAC and lighting control is then enabled at the room. When a room is ‘checked out,’ the reverse happens and the room goes into the unoccupied mode. This has now surfaced in mid-range hotels.”

In the last few years, the majority of Las Vegas hotel construction has been in the renovation of existing facilities, says Ed Miller, contract executive at Irvine, Calif.-based Southland Industries. “The Sahara is being completely renovated and will open as the SLS in August; the Tropicana underwent a complete renovation over the past several years; the Golden Nugget just renovated its rooms; and Bill’s Gambling Hall (under Caesar’s ownership) just completed a renovation and was opened as the Cromwell Hotel & Casino.”

In the New York City market, hotels are renovating about every five to eight years to stay competitive, notes Adam Levy, vice president of Brooklyn, N.Y.-based Pace Plumbing & Fire Protection Corp.

“As the hotels go through normal wear and tear, it becomes noticeable over time and their hotel becomes less desirable to potential guests,” he explains. “Therefore, they must constantly renovate and modernize in order to be successful, creating cyclical work for contractors involved in the market. This is a niche market that not many people are successful in due to construction ongoing while the hotel is in operation, so being able to complete the work without disturbing the guests takes some extra effort.”

In the restaurant market, owners have closed offerings that did not hold up well during the Great Recession, Miller says. “Instead, they have renovated or are building new offerings in areas where the trends allow for an improved market share based on other market shifts, such as retail build-out, or connection to expansions in office or local markets.”

In cities such as NYC, restaurants are constantly changing ownership and management, and new ones are always springing up, Levy says. “This creates some nice plumbing and sprinkler work for contractors involved in the market.”

On the casino side, owners have retained existing buildings and either expanded their capabilities or renovated to provide offerings that appeal to the public, such as more entertainment venues, rather than adding gaming square footage, Miller explains. In Las Vegas, these would include Caesar’s-owned LINQ, the new SLS, the Cromwell and the Downtown Grand, which sat vacant for several years before it was completely renovated and reopened.

“Nightclubs and dayclubs are more popular, and pools have been a major area of expansion,” he adds.

Casinos continue to be a major player in Oklahoma construction, Kotubey says, especially Native American gaming projects, which continue to invest in facility expansion and upgrades.

Labor, material costs

“As the industry rebounds from a long recession, the outlook for talented labor gets tighter and demand for higher wages increases,”  FMI’s Second Quarter 2014 Nonresidential Construction Index Report notes.

That certainly rings true for the Las Vegas market. “The amount of work available is still significantly less then pre-recession levels,” Miller states. “The competition is very fierce and most owners are rebidding projects multiple times in order to secure a price that fits their budgets. Labor and material costs have continued to increase. This has forced us to bid jobs at more aggressive productivities and cut other areas. There is less margin for error and no room for unforeseen impacts.”

For Pace Plumbing, the key is pricing its hospitality jobs correctly to make up for higher costs.

“The higher costs of labor and material haven’t influenced our decision on what to bid and what not to bid, it has only influenced our pricing in terms of raising our estimated values to account for the escalation in costs,” Levy says.

TDIndustries relies on extensive planning, lean construction and prefabrication/modularization to do more work with the same number of workers in the field, Kotubey notes. The company recently hired a Six Sigma Lean Certified Professional to help in streamlining operations.

“We utilize a lean construction/lean manufacturing model to optimize all we do,” he says. “This reduces on-site manpower, improves quality, reduces costs and increases our competitiveness while also improving quality. Overall, we are working toward ‘doing more with less’ so we can book more, construct more and still offer career growth opportunities to our partners.”

Prefabrication, BIM

“A trend toward more collaborative construction exists today where the owner, construction manager/general contractor, architect, designers and mechanical-electrical-plumbing subcontractors work very closely together from the start of a project,” Kotubey says. “This allows the work to be done by the most effective party, significantly reducing the cost of design and project coordination.”

TDIndustries-Dallas has 28 building information remodeling professionals on staff in addition to 25 mechanical engineers, who work together to use the best design practices with the best installation practices. Often there is duplication of effort and conflicts in the field that are costly to resolve using the traditional method of construction management.

“By combining both functions under a design/assist or design/build approach, a project can eliminate many of these inefficiencies,” he adds.

Levy notes while Pace Plumbing is a big proponent of prefabbing certain items, which does increase productivity for jobsite crews, BIM can be a hindrance on certain jobs.

“We do not find it to increase productivity,” he says. “Generally speaking, it may even hurt productivity, with some exceptions being heavy mechanical areas, distribution floors or generally congested areas of a project.”

Southland’s Miller agrees: “We have seen BIM increase the fit of our systems and are pushing the prefabrication elements to the limits. However, BIM does add labor cost in the planning stages compared to the older style of detailing, especially for MEP systems. To date, we have not realized appreciable increases in productivity, but we are working on efforts to capture this in the future.”

More companies are doing fabrication of sections and mechanical systems, Kotubey notes, which allows building owners to have higher-quality construction, increased project safety, lower costs, less waste and shorter schedules. 

“Modular construction also is showing up more and more in commercial construction and may make inroads into the hospitality market in the very near future — think stackable, prefabricated rooms,” he says.

‘Resource management’

Green building is more commonplace in remodels and retrofits, FMI’s construction outlook report notes.

For the Las Vegas area, the state of Nevada offers tax rebates, which have encouraged large-building owners to pursue LEED project options, Miller says.

“However, most owners are looking at lowest first cost with little regard toward energy or water conservation measures,” he adds. “More existing building owners are looking at ways to implement energy and water conservation measures in an effort to decrease operating costs.”

High-end hotels have taken on green methods as a corporate responsibility to differentiate themselves, Kotubey says. Recycled water, rainwater harvesting, installation of low-flow toilets and showers, and energy reduction/recovery are becoming more commonplace strategies. 

“Green is almost becoming a requirement,” he adds. “Resource management would be a broader term I would use. From reducing laundry loads to recovering energy and water to finding new and innovative heating and plumbing technologies, hospitality management is becoming more focused on these items because they save money and resources, as well as enhance their status with the conservation-minded traveler.”

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