Luxury Hotels - Cost model, April 1996 | Features

London hotel performance 1991-95 (all hotels)
Year	Occupancy	Average achieved rate/room £	Operating profit, (1982 base) £
1991	66.4	83	7800
1992	70.5	81	7200
1993	75	75	7000
1994	81.2	82	8500
1995	82.2	90	9600
Source: Panell Kerr Associates

Development standards for four- and five-star city-centre hotels
Development areas
Five-star city centre	70-85 m2 gfa/guest room
Four-star city centre	55-70 m2 gfa/guest room
Indicative space standards
Suites	48-90 m2/guest room
Double bedrooms:
-large	35-50 m2/guest room
-average	30-35 m2/guest room
Allowance for partitions	6-8% of bedroom area
Restaurant	1.6-2.0 m2/seat
Bar	1.5 m2/seat
Kitchen/food preparation and storage	0.8-1.0 m2/seat
Banquet	1.2-1.4 m2/seat
Catering for banquet	0.12-0.25 m2/seat
Function/meeting rooms	1.5-1.6m2/person
Conference facilities	0.6-2.0 m2/person
Staff restaurant/kitchen	1.2 m2/seat
Service rooms	30-50 m2/bedroom floor
Ancillary space allownce
General storage and housekeeping	350-400 m2
Front hall/entrance/lounge	250-400 m2
Adminstration	150-225 m2
Circulation
--public and back of house areas	25%
-bedroom floor	35-45%
plant rooms and ducts	6-8%
Car parking	0.3 spaces/guest room
	21-27 m2/car space
Allowances for additional facilites
Retail units	10-100 m2
Swimming pool and changing	250-500 m2+
Health spa	30-100m2+
Gymnasium	50-100 m2+
Source: Davis Langdon & Everest and Lawson F, Hotels & Resorts, Butterworth, 1995

Luxury hotel development costs (£000s)
Development costs
Demolition	250
Construction costs	13,300
(based on £1255/m2 gross floor area)
External works	50
Furniture fitting and equipment	3,570
Total Construction costs	17,170
Professional fees @ 12%	2,060
Finance costs @ 12% pa	2,446	21,676
(50% of construction programme)
Site/existing building purchase
Existing building	10,309
Acquisition costs @ 5%	520
Finance costs @ 12%		13,579
Developer's profit @ 12%		3,607
Total development cost		38,862
	Say	39,000

Luxury hotel development costs (£000s)
Development costs
Demolition	250
Construction costs	13,300
(based on £1255/m2 gross floor area)
External works	50
Furniture fitting and equipment	3,570
Total Construction costs	17,170
Professional fees @ 12%	2,060
Finance costs @ 12% pa	2,446	21,676
(50% of construction programme)
Site/existing building purchase
Existing building	10,309
Acquisition costs @ 5%	520
Finance costs @ 12%		13,579
Developer's profit @ 12%		3,607
Total development cost		38,862
	Say	39,000

Luxury hotel assessment appraisal
Appraisal year	1	2	3	4	5	6	7	8	9	10
Number of beds (a)	106	106	106	106	106	106	106	106	106	106
Occupancy (b)	55%	65%	70%	75%	75%	75%	75%	75%	75%	75%
Income
Achieved room rate (£) (c)	202	222	243	253	263	274	285	296	308	320
Total revenue (£000s) (d)	6,827	8,989	10,975	12,375	12,864	13,402	13,940	14,478	15,065	15,652
Total expenses (£000s) (e)	5,578	6,991	7,243	8,167	8,491	8,845	9,200	9,555	9,943	10,331
Net income (£000s) (f=d-e)	1,249	1,998	3,732	4,208	4,373	4,557	4,740	4,923	5,122	5,321
Finance costs (£000s) (g)	2,910	2,910	2,910	2,910	2,910	2,910	2,910	2,910	2,910	2,910
Net income to equity (£000s) (h=f-g)	-1,661	-912	822	1,298	1,463	1,647	1,830	2,013	2,212	51,946**
Discount factor @ 16% (j)	0.8621	0.7432	0.6407	0.5523	0.4761	0.4104	0.3538	0.305	0.263	0.2267
Discounted cash flow (£000s) (k=h x j)	-1,432	-678	527	717	697	676	647	614	582	11,776
Net present value (l = total of all 10 yearly values of k)										14,126
Debt
Total annual debt	2,910	2,910	2,910	2,910	2,910	2,910	2,910	2,910	2,910	21,562†
Discount factor @ 9.5% (n)	0.9132	0.834	0.7617	0.6956	0.6352	0.5801	0.5298	0.4838	0.4418	0.4035
Discounted cash flow (£000s) (p=m x n)	2,657	2,427	2,717	2,024	1,848	1,688	1,542	1,408	1,286	8,700
Net present value (£000s) (q=total of all 10 yearly values of p)										25,797
Total net present value (£000s) (l=q)										39,923
*Total revenue is derived from room revenue (365 days x a x b x c), plus revenue from food, beverages and other sources. Non-room revenue can be derived from estimates or factored as a proportion of total room revenue.
**Includes residual value of future earnings less outstanding mortgage balance and disposal costs. Residual value of net earnings @ 8% = £68,187,000
†Includes outstanding balance of loan capital at end of year 10 = £18,652,000

Cost breakdown
	Element cost (£)	Cost/m2 gifa (£)	% of total cost
Substructure	497 800	46.99	3.74
1.5m diameter rotary bored piles, 15m deep; pile caps		44 @	£5,450
Ground bearing slab; 200 mm hardcore bed; damp-proof membrane; high-yield bar reinforcement		1560 m2 @	£50.00
Basement retaining wall; reinforced concrete 300 mm thick; waterproofing; protection		300 m2 @	£180
Allowance for repairs; waterproofing and strengthening to retained basement walls		11 000 m2 @	£36,000
Reinforced concrete suspended troughed slab at ground-floor level, isolated and attached reinforced concrete columns		1500 m2 @	£60.00
Frame	787 300	74.32	5.92
Structural steel framing including portal frames at roof level		590 t @	£970
Allowance for additional framing and trimming to openings		50 t @	£1,180
Rigid board fire protection to beams and columns		7600 m2 @	£15.00
Reinforced concrete casing to columns at ground level		170 m @	£100
Glass reinforced gypsum decorative column casings		100 m2 @	£250
Upper floors	359 400	33.92	2.7
Precast prestressed concrete floor slabs including structural topping		7200 m2 @	£45.00
Insitu concrete suspended slab; 150 mm thick; 7.5 kN/m2 floor loading; to plant rooms		280 m2 @	£55.00
Galvanised steel mezzanine platforms to plant rooms		allow	£20,000
Roof	222 400	20.99	1.67
Slate roofing on battens and felt insulatoin and profile steel decking to portal roof framing		2250 m2 @	£85.00
Lightweight standing seam roofing, decking, insulation, colour-coated finish; to plant rooms and services areas		230 m2 @	£50.00
Single-ply PVC membrane, insulation and ballast to exposed plant areas		100 m2 @	£40.00
Lead roofing, code5; decking, insulation; to dormer windows		60 m2 @	£100
Gutters, hoppers, soakers, flashings; code 4 lead		160 m2 @	£60
Stairs	188 100	17.75	1.41
Reinforced concrete staircase; natural stone finishes; high-quality hardwood handrails and decorative balustrades; plastered and decorated soffit		six flights @	£17,500
Staff/escape staircases; reinforced concrete, granolithic finishes; mild steel handrails and balustrades; painted soffits		17 flights @	£4,300
Access stairs in plant rooms		allow	£10,000
External walls	1 087 000	102.6	8.17
Temporary propping, repairs and cleaning to retained stone/masonry facade; cutting pockets for connections to new structure		1 360 m2 @	£310
Extra for repairs to stonework features, cornices, string courses etc		230 m @	£260
Portland stone plain ashlar cladding on precast concrete units with deocrative detials based upon retained facade, including window reveals, sills, string courses		1 020 m2 @	£460
Extra for capping, parapet and cornice		75 m @	£1 200
Party-wall construction; composite blockwork cavity wall with insulation		370 m2 @	£40.00
Lightweight cladding, insulation and blockwork backing wall to roof level plant rooms		170 m2 @	£80.00
Louvres to plant rooms and intakes		60 m2 @	£300
Windows and external doors	611 800	57.75	4.6
Purpose-made bronze anodised aluminium and hardwood-framed double-glazed windows; opening lights in small panes to match appearance of original windows in retained facade; temporary support and modifications to existing openings		590 m2 @	£600
Purpose-made bronze anodised aluminium and hardwood-framed double-glazed windows; opening lights; to new-build external wall and dormers		375 m2 @	£450
Rotating entrance doors		3 @	£20,000
Main entrance doors		4 sets @	£4,000
Staff entrance, fire escape and roof access doors		12 @	£750
Loading bay roller shutter		allow	£4 000
Internal walls and partitions	526 300	49.68	3.96
Dense concrete blockwork; 190 mm thick to corridor and separating walls of guest rooms		7 200 m2 @	£30.00
Lightweight aconcrete blockwork; 100 mm thick to bathrooms, staff areas and all public areas		11 200 m2 @	£19.00
WC cubicles to public areas		20 @	£800
WC cubicles to staff areas		10 @	£300
Full-height laminate ducts with access panels to WCs and washrooms		50 m @	£130
Hardwood veneered folding partitions to meeting rooms and banquet areas		150 m2 @	£480
Internal doors	451 700	42.64	3.4
Doors to guest rooms; hardwood frame; fire-rated; high-quality veneer finish and ironmongery		106 @	£900
Doors to guest rooms; hardwood frame; non-fire-rated; high-quality veneer finish and ironmongery		232 @	£700
Door to corridor and public areas; hardwood frames; fire-rated; part-glazed; high-quality veneer finish and ironmonery		94 @	£1,000
Doors to staff areas; hardwood frames; fire-rated; vision panels; laminate finish; stainless steel ironmongery		112 @	£600
Access hatches to service risers		106 @	£150
Access doors to rise cupboards; softwood frame; fire-rated; ply-faced for painting		56 @	£300
Wall finishes	847 400	79.99	6.37
Plaster and decorative vinyl wall coverings to guest rooms, guest corridors and public areas		13 600 m2 @	£13.50
Plaster and emulsion paint to staff areas and back of house		3 700 m2 @	£9.00
Dry lining, thermal board in M/F firrings and decorative vinyl wall linings to external walls of guest rooms, guest corridors and public areas		2 500 m2 @	£32.00
Dry lining, thermal board on M/F firrings and emulsion paint to external walls of back of house areas		660 m2 @	£25.00
Marble wall cladding to guest bathrooms and pubic areas; sand cement backing		1 860 m2 @	£150
Ceramic tiling to guest bathrooms and public areas; sand cement backing		940 m2 @	£50.00
Ceramic tiling to staff areas and kitchens; sand cement backing		2 620 m2 @	£35.00
Hardwood veneered MDF panelling with mouldings; softwood subframe		920 m2 @	£100
Direct decoration to blockwork in plant and storage areas; emulsion paint		2 150 m2 @	£2.00
Allowance for dado and picture rails to guest rooms and guest corridors		4 000 m @	£5.00
Floor finishes	247 900	23.4	1.86
Costs of carpets are included in the furniture, fittings and equipment budgets.		1500 m2 @	£30
Total area of carpet is 6435 m2		4250 m2 @	£40
Marble floor tiles to guest bathrooms and toilets; sand cement bed		510 m2 @	£180.00
Wood block; resilient timber flooring to gymnasia and to banquet area as dance floor		180 m2 @	£50.00
Non-slip ceramic tiles to pools and changing areas; waterproof render bed		240 m2 @	£75.00
Heavy-duty, slip-resistant vinyl flooring to back of house and kitchen areas; sand cement screed		1160 m2 @	£23.00
Stained hardwood skirtings to guest areas		4000 m @	£15.00
Painted softwood skirtings to back of house areas		370 m @	£7.00
Marble skirtings 150 mm high to guest bathrooms and public areas; sand cement backing		550 m @	£35.00
Coved ceramic tile skirgings to public and back of house areas		675 m @	£15.00
Vinyl skirtings to back of house and kitchen areas		1500 @	£7.00
Ceiling finishes	412 500	38.94	3.1
Plasterboard suspended ceilings on M/F system; skim-coat and emulsion paint finish		6560 m2 @	£21.50
Allowance for access panels		allow	£25,000
Allowance for downstands, coffers and other features		allow	£100,000
Fibrous plaster cornices		4500 m @	£23.00
Concealed grid suspended ceiling with acoustic mineral-fibre tiles to guest toilets, health spa and office areas		710 m2 @	£25.00
Exposed grid suspended ceiling with acoustic mineral fibre tiles to back of house areas		1260 m2 @	£20.00
Fittings	2 233 000	99.24	8.09
Fittings are included as a part of furniture, fittings and equipment		3820 @	£100
Sanitary appliances	283 700	26.78	2.13
Sanitary appliances to guest bathrooms; white vitreous china; recessed vanity washbasin; back to wall WC suite and bidet; heavy-gauge steel enamelled bath; white ceramic shower tray; glazed shower screen; shower installation; heated towel rail		96 @	£2,400
Sanitary appliances to guest suites; white vitreous china; two recessed vanity washbasins; pedestal WC suite and bidet; heavy steel enamelled bath; white ceramic shower tray; glazed shower screen; shower installation; heated towel rail		10 @	£2,700
Washbasins, WC suites and urinals to WCs in public areas		allow	£12,000
Washbasins, WC suites, urinals and showers to staff areas		allow	£10,000
Fireclay cleaners' sinks		7 @	£250
Allowance for disabled fittings and grab rails		5 guest rooms @	£500
Services equipment	169 000	15.95	1.27
Building management system		10 600 m2 @	£15.00
Refuse compactor		allow	£10,000
Disposal installations	100 000	9.44	0.75
Cast iron rainwater disposal system, PVCu and cast iron sanitary drainage and vent to guest rooms and service areas		allow	£100,000
Water installations	280 000	26.43	2.11
Copper rising main installation to all guest rooms and service areas, boosted cold water supply; hot water supply with calorifiers to each guest floor		allow	£280,000
Space, heating and air treatment	2 113 200	199.47	15.89
Gas installation		allow	£20,000
Air-handling plant, chillers and pump distribution ductwork: fan-coil; gilles and diffusers to individual guest rooms and public areas; zoning control to meeting rooms; banquet areas; room control to guest room fan-coil units		8300 m2 @	£160
Low-temperature hot water central heating installation including sectional boilers, pump, controls to guest rooms, public areas and back of house areas; perimeter heating to public areas		10 600 m2 @	£60.00
Toilet extract to guest bathrooms; guest and staff WC and changing areas		allow	£20,000
Smoke extract and supply ventilation to basement areas including dedicated supply to health spa and fire rating of extract ducts		1560 m2 @	£70.00
Electrical installations	920 000	86.84	6.92
Low voltage/high-voltage installation; lighting, emergency lighting and small power to guest floors and public areas, excluding decorative lighting which is included as FF&E		8300 m2 @	£85.00
Lighting, emergency lighting and small power installation to staff and back of house areas, complete		2300 m2 @	£65.00
Standby generator, fuel storage and flues		allow	£65,000
Lift installations	304 000	28.7	2.29
Two 12-person passenger lifts serving six levels
Two 10-person goods lifts serving seven levels, one with fire-fighting capability
Four dumb-waiter hoists servicing two levels
One dock leveller
Protective installations	127 600	12.04	0.96
Hose reels and dry risers		allow	£35,000
Sprinkler rising main and single-level sprinkler heads to guest corridors, public and staff arenas, system linked to fire- and smoke-detection systems		5900 m2 @	£14.00
Lightning protection		allow	£10,000
Communications installations	196 600	18.56	1.48
Fire, smoke-detection and alarm system		10 600 m2 @	£8.50
Public address, television aerial and clocks		10 600 m2 @	£2.50
Closed-circuit television and security installation		allow	£15,000
Telecommunications, data and television wiring including tray, ladder lack and controls. Phones, televisions and other fittings included as FF&E		500 points @	£130
Special installations	120 000	11.33	0.9
Swimming pool and filtration plant unit complete, including air bath
Builder's work in connection with services	230 000	21.71	1.73
Associated buildiers' work, holes, sleeves, chases etc		sdfw	allow 5%
Subtotal	11 083 70	1046.22	83.33
Preliminaries and contingencies	2 217 000	209.27	16367
Construction manager's fee, staff service gangs, site estabishment and trade contractors' preliminaries - allow 15%		fdad	fadfa
Design reserve and contingency allowances - allow 5%		fasda	fadsfa
Total for hotel shell	13 300 700	1 255.49	100

Furniture, fittings and equipment
Guest room 106 @ £16 000 per person
Guest room FF&E cost breakdown
Carpets @ £1500
Curtains, drapes and blinds @ £2000
Sofas and armchairs @ £2500
Throw cushions @ £400
Writing desk and chair @ £750
Coffee table @ £500
Bed and headboard @ £1200
Bedside tables @ £500
Dressing table and chair @ £800
Wardrobe / armoire @ £1200
Sideboard @ £1000
Mirrors @ £250
Artwork @ £500
Umbrella stand @ £100
Bathroom stool and fittings @ £350
Bed cover and valance @ £750
Standard and table lamps @ £400
Ceiling light and wall lights @ £400
Television, video and audio equipment @ £600
Sundries @ £300
Suites
Extra over costs of additional FF&E to suites 10 @ £10 000
Public and front-of-house areas 2780 m2 @ £350
Back-of-house areas 1710 m2 @ £100
Kitchen equipment allow £250 000
Furniture, fittings and equipment	382 800	36.13	n/a
Procurement fee only for FF&E works excluded from construction manager's agreement	allow 7%	asfas	afdads
Design reserve and contingency allowances	allow 5%	fafd	afdsf
Total for hotel furtniture, fittings and equipment	3 572 800	337.24	n/a
	Net extra (savings)
	£/m2 gfa
Alternative element specifications
Susbstructure
New-build basement retaining wall to entire building perimeter, 360 m2 @ £180	03-Apr
Secant piled retaining wall structure in lieu of insitu cast retaining walls to entire building permieter, 660 m2 @ £215-235	06-Jul
Frame
Reinforced insitu concrete frame and troughed slabs, 8925 m2 @ £68-90	(11-40)
Load transfer structure to create column-free space to banquet areas, £85,000	10
Upper floors
150 mm thick lightweight insitu concrete on galvanised steel decking; screed, 7200 m2 @ £43-45	(2)-0
Roof
Aluminium standing seam roofing with colour-coated finish' insulated composite steel decking, 2250 m2 @ £75-80	(3-4)
Mill finish copper standing seam roofing; insulated composite steel decking, 2250 n2 @ £83-88	(1-2)
External walls
Portland stone cladding in lieu of retained facade elevation 1360 m2 @ £540	29
Mechanically fixed Portland stone cladding 75 mm thick in lieu of precast units; blockwork backing wall; insulation; new-build construction only, 1020 m2 @ £380-400	(7-9)
Granite-faced precast concrete cladding units in lieu of Portland stone plain ashlar; new-build construction only, 1020 m2 @ £500-600	May-16
Internal partitions
Metal stud shaft wall system to lift shafts, 1240 m2 @ £30	-
Space heating and air treatment
Variable-air-volume system in lieu of four-pipe fan-coil system, 8300 m2 @ £180-195	20-30

Luxury hotel assessment appraisal
			Shell & Services	FF&E	Total
Beirut, Lebanon	Five-star	US&/m2	1420	300	1720
		£/m2	930	195	1125
Kuala Lumpur, Malaysia	Five-star	M$/m2	2100	480	2580
		£/m2	540	125	665
Manila, Phillipines	Five-star	Peso/m2	30 000	6500	36 500
		£/m2	750	160	910
	Four-star	Peso/m2	28 000	6500	34 500
		£/m2	700	160	860
Perth, Western Australia	Five-star	A$/m2	2110	165	2275
		£/m2	1050	80	1130
	Four-star	A$/m2	1865	155	2020
		£/m2	930	75	1005
Singapore	Five-star	S$/m2	1950-2250	450-650	2400-2900
		£/m2	900-1050	210-300	1110-1350
	Four-star	S$/m2	1700-1900	350-450	2050-2350
		£/m2	790-880	160-210	950-1090

Regional variations
All costs in the model are abased on a central London location. costs should be adjusted by the following factors for schemes in other regions
Outer London	0.94
East Anglia	0.83
East Midlands	0.82
Northern	0.83
Northern Ireland	0.72
North-West	0.86
Scotland	0.88
South-East	0.88
South-West	0.83
Wales	0.83
Yorkshire & Humberside	0.82