Hotel Construction Cost Guide: Essential Pricing Information

  • November 19, 2021

Your dreams are coming to life — you’re finally ready to open a hotel. As you envision your hotel, you may be wondering how much it costs to build a hotel. From paying an architect to funding the construction process, you’ll likely need to find a funding source to make your hotel a reality. Keep reading to learn about the hotel construction process and how much it costs to build a hotel. 

Hotel Construction Process

The hotel construction process can be simplified into three major steps. We’ve outlined these steps below to give you a better idea of when you’ll need funding. 


The first step is where you put your ideas on paper. During the conceptualization phase, you’ll plan out exactly what your hotel will look like. This includes determining the design of your hotel, the size of land you’ll need to bring it to life, and any additional resources you’ll need to include the amenities that will draw in guests. 

As you conceptualize your hotel, you’ll want to start considering how you’ll afford the hotel construction cost. A construction loan from AVANA Capital is a great resource for building your hotel. 


The procurement phase is where you’ll purchase or receive access to your hotel site. If you haven’t already, you’ll hire your team of architects, builders, contractors, and more. Lastly, you’ll go through the process of applying for the permits that will make the hotel yours. 

Before you can fully complete this step, you’ll want to have funding secured to cover the full cost of the construction. 


The final stage of building your hotel is the actual construction. This is where you’ll watch your hard work pay off. Your experienced team of builders and architects will take your ideas and bring them to life. 

Cost to Build a Hotel

The cost to build a hotel varies from property to property.

There are several factors that affect the cost of construction, including location, size, and amenities. Hotels located in major cities generally cost more to build than rural hotels. Also, the cost to build a hotel increases when a hotel is larger and includes amenities such as a ballroom, restaurant, and spa.

The cost of land is another key consideration. Land cost can make or break your hotel project. If the cost of land is too high to build a hotel in the location you want, consider buying an existing hotel building to renovate instead of constructing a new one. In some cases, the cost of land is equal to the cost of building a hotel.

All things considered, the cost to build a hotel has been as little as $8 million for a 24-room boutique hotel or more than $1 billion for a new resort on an island in Dubai. An average hotel with roughly 50,000 square feet may fall in the middle at a cost of $22 million ($440/square foot). Read on to learn a few other factors to consider when it comes to hotel construction costs.

When considering the cost of financing, you’ll need to consider which type of funding will be most affordable for your project. Even if the cost of land and cost of construction are low, the cost to finance the hotel could make it prohibitively expensive. For example, the cost to finance hotel construction may be higher when borrowing money than the cost of land. If the cost of financing your hotel is too high, consider investing your own equity or finding another funding source, such as a construction loan from AVANA capital.

What Not to Do When Building a Hotel

Building a hotel can be an exciting endeavor. But before construction begins, there are some things hotel owners should know to avoid any mistakes along the way.

Don’t Go Overboard

When it comes to building your hotel, don’t plan for luxury and amenity spaces that your funding can’t deliver. For example, the cost to build a hotel with an indoor pool can be expensive — potentially putting you over your budget. Consider looking into the cost of an outdoor pool or another entertaining amenity that better suits your funding. If you find yourself unable to budge on certain plans, you’ll want to speak with a loan specialist like the team at AVANA Capital to learn how you can afford these amenities. 

Don’t Try to Do Everything Yourself

Building a hotel is a big undertaking — don’t try to do it on your own. Hiring an architect and general contractor will cost you less than trying to do everything yourself. 

Don’t Try to Save Money With Unskilled Labor

Construction cost is expensive enough without the mistakes that may come with using unskilled labor. Even if you need to put forth a bit more than you planned, the cost will pay off in the long run when you don’t have to go back and correct errors later on. 

Finance Your Hotel with AVANA Capital 

At AVANA Capital, we believe in the power that entrepreneurs hold to grow communities. That’s why we’re here to help you secure the funding you need to do just that. With over 150 combined years of experience, our lending experts understand what it takes to become an entrepreneur. We’re ready to walk you through the construction loan process and get you the funding you need to bring your hotel dreams to life. 

Get started with your loan request or contact us today to learn more about our construction loan options!