There are a number of key factors to building a successful ground-up hotel in a high-barrier-to-entry market, but clearly cutting development costs and construction time are chief among them. This is why Hilton, along with owner and developer Southern Hospitality Services, LLC, have partnered on the first modular construction hotel in the San Francisco market.
Last month a staging ceremony was held at the future site of the Home2 Suites by Hilton San Francisco Airport North as pre-fabricated elements of the hotel were put into position. Modular construction is a process in which a project is built off site in a controlled environment to produce modules, which are assembled on location.
Adrian Kurre, global head of Home2 Suites by Hilton, noted this represents the first modular construction project for the Home 2 Suites brand. He added the extended-stay hotel is expected to be open for business as soon as January or February of next year, roughly one year since ground was broken on February 13.
Vishal Patel, chief purchasing officer, Southern Hospitality Services, underscored the project’s efficiency. “This is our first modular construction project and we have been thrilled with the process thus far. Our first phase of construction is proceeding on schedule, well ahead of the pace that we would see from a traditional build. In fact, we expect to cut about half of the hotel’s construction time through modular building,” he said.
Kurre pointed out some of the benefits of the truncated timeline.
“You look at that process and that is a year of them driving cash flow that they wouldn’t normally have had. That’s a year of us collecting fees that we wouldn’t have had. So for the idea of return on an owner investment what an incredible process this is,” he said.
When asked to estimate how much the company was saving in terms of cost as a result of the new construction method, Patel noted “it was very difficult” to measure precisely. However, he did note, “we expect to have significant financial savings in several areas, including expedited ROI and lower long-term maintenance costs. We project a faster return on investment with the property opening a year ahead of time. Additionally, the modular building process provides a more durable, consistent final product and we expect major long-term savings on maintenance costs.”
During last week’s staging event, a crane lifted and positioned the hotel’s exterior panel pieces. In addition, guests were also able to tour one of the pre-fabricated suites, featuring the brand’s signature in-room kitchen and separate living and sleeping areas.
Kurre noted he was particularly impressed with the precision involved in the process as he pointed out that construction crews were able to drop the modular cubes within one-eighth of an inch of where they needed to be. He further noted that when rooms are put down in place they are more or less finished, including carpeting, cabinetry and wired for lighting.
Kurre emphasized that the modular construction process does not translate into a cookie-cutter approach to development and there are plenty of opportunities for a property to be unique and reflect the local community.
“One of the values of doing a Home2 is the consistency of the product. We also know from our internal studies that Millennials will tell us, for example, that when they go to a particular region they want to know that the hotel they’re staying at is in Boise, ID. If they’re in Miami they want to know they’re in Miami. This modular process doesn’t restrict that at all. You can do your design and put carpeting in there that makes you feel like you’re in Miami. You give that sense to the travelers of Boise or Miami in that sense of arrival with the colors and the way you’ve appointed your fabrics in those areas. All of that is customizable and easily done,” he said.
The Home2 Suites by Hilton San Francisco Airport North will incorporate several sustainability measures above the standards of the brand. Solar panels will produce close to 50 percent of the hotel’s energy, a bio retention pond will filter water run-off and additional measures will help to reduce the hotel’s overall carbon footprint. Additionally, Kurre noted that the project uses less of carbon footprint since much of it is put together off site and shipped over.
Kurre acknowledged that construction of this hotel is very much a learning process for the company. “We’re going to monitor this project extremely closely. We’ll sit down with the owners, installers, and builders of the modules afterwards and say ‘what can we do to make this even more efficient of a process?’ This being the first one it’s really exciting, but the key to this one is having that open communication all the way; ‘here’s what we can do to make it cheaper, better, faster and a better build.’ We’re going to do all of that,” he said.
Patel, meanwhile, noted the company is planning another modular construction project, but couldn’t reveal any details at this time. “We are very excited to utilize the modular building process again,” he said.
Kurre concluded, “This won’t be a soft trend, I think this will be a hard trend. This will be way things get done in the future.”