Building Costs Per Square Foot for Motel - USA National Average

A Detailed Analysis of Building Small to Medium-Sized Motels in the USA: An In-Depth Look at Costs and Considerations

Holiday Inn Express Scottsdale, Arizona – Three Storey Hotel with 122 rooms on Sale, Renovated in 2019 – Price $10,500,000 on Auction

The realm of real estate investment is vast and varied, with each sector offering unique opportunities and challenges. One such sector that has consistently piqued the interest of investors is the motel industry. Offering a perfect blend of affordability and convenience, motels have long catered to travelers across the United States. For those considering an investment in this industry, a clear understanding of the costs associated with constructing a motel is critical. This introduction explores the financial intricacies of building small to medium-sized motels, using data from the USA’s national average.

Constructing a motel involves numerous expenses, each with its own cost per square foot. These costs can vary significantly depending on the number of units and the quality of construction. Our data breaks down these costs in detail, providing insight into the expenses for foundation, framing, windows, roofing, overhang, exterior walls, flooring, interior finish, baths, plumbing, and special features. Each of these categories is further divided into four quality tiers – ‘Best’, ‘Good’, ‘Average’, and ‘Low’ – offering a clear understanding of how material quality can impact the overall cost.

Additional factors to consider include the use of masonry for exterior walls, which can increase costs by 8%, and the decision to build above the first floor, which can add an additional 2% to the total cost. On the other hand, choosing to construct outside metropolitan areas could potentially reduce expenses by 2 to 6%.

For a more tangible grasp of these costs, our data provides a comprehensive overview of the total cost of constructing a motel room, with specific values for motels with 9 units or less, 10 to 24 units, and more than 24 units. Notably, the cost per unit decreases as the number of units increases, highlighting the potential benefits of investing in larger properties.

By providing a detailed overview of the costs associated with motel construction, this introduction aims to equip potential investors with the knowledge necessary to make informed decisions. Whether you’re a seasoned real estate investor or a newcomer to the industry, understanding these costs is crucial to successful investment planning in the motel sector.

Table of Building Costs Per Square Foot for Motel with 9 Units or Less – USA National Average

Note: Add 2% for work above the first floor. Work outside metropolitan areas may cost 2 to 6% less. Add 8% when the exterior walls are masonry. Deduct 2% for area built on a concrete slab.

Building Cost Breakdown for Motel with 9 Units or Less – USA National Average: 

Rates Per Square Foot (USD$ per sqft)

1. Foundation (4%)
   • Best: $6.54 – $8.54
   • Good: $5.58 – $7.28
   • Average: $4.76 – $6.21
   • Low: $3.99 – $5.21
2. Framing (20% of total Cost)
   • Best: $32.72 – $42.70
   • Good: $27.90 – $36.40
   • Average: $23.79 – $31.04
   • Low: $19.94 – $26.04
3. Windows (2% of total Cost)
   • Best: $3.27 – $4.27
   • Good: $2.79 – $3.64
   • Average: $2.38 – $3.10
   • Low: $1.99 – $2.60
4. Roofing (8% of total Cost)
   • Best: $13.09 – $17.08
   • Good: $11.16 – $14.56
   • Average: $9.52 – $12.41
   • Low: $7.97 – $10.41
5. Overhang (2% of total Cost)
   • Best: $3.27 – $4.27
   • Good: $2.79 – $3.64
   • Average: $2.38 – $3.10
   • Low: $1.99 – $2.60
6. Exterior Walls (10% of total Cost)
   • Best: $16.36 – $21.35
   • Good: $13.95 – $18.20
   • Average: $11.89 – $15.52
   • Low: $9.97 – $13.02
7. Flooring (5% of total Cost)
   • Best: $8.18 – $10.67
   • Good: $6.98 – $9.15
   • Average: $5.94 – $7.76
   • Low: $4.98 – $6.51
8. Interior Finish (23% of total cost including finish carpentry, wiring, lighting, etc.)
   • Best: $37.69 – $49.28
   • Good: $32.17 – $42.05
   • Average: $27.42 – $35.77
   • Low: $23.05 – $30.05
9. Baths (15% of total Cost)
   • Best: $24.54 – $32.10
   • Good: $20.91 – $27.29
   • Average: $17.85 – $23.28
   • Low: $14.96 – $19.56
10. Plumbing (9% of total Cost)
    • Best: $14.78 – $19.31
    • Good: $12.62 – $16.48
    • Average: $10.71 – $13.97
    • Low: $8.98 – $11.71
11. Special Features (2% of total Cost)
    • Best: $3.27 – $4.27
    • Good: $2.79 – $3.64
    • Average: $2.38 – $3.10
    • Low: $1.99 – $2.60

Note: When masonry walls are used in lieu of wood frame walls, add 8% to the appropriate cost.

How Much Does it Cost to Build a 330 sqft Motel Room in the USA? – Hotel with 9 Units

Cost Per Unit (USD$ per Unit)

• Best Quality: $54,018.30 to $70,455.00
• Good Quality: $46,034.40 to $60,137.70
• Average Quality: $39,350.10 to $51,256.00
• Low Quality: $33,018.30 to $43,050.60

Total Cost of Building:

• Motel with 2 Units (Standard Double Room): $108,036.60 to $140,910.00
• Motel with 3 Units (Standard Double Room): $162,054.90 to $211,365.00
• Motel with 4 Units (Standard Double Room): $216,073.20 to $281,820.00
• Motel with 5 Units (Standard Double Room): $270,091.50 to $352,275.00
• Motel with 6 Units (Standard Double Room): $324,109.80 to $422,730.00
• Motel with 7 Units (Standard Double Room): $378,128.10 to $493,185.00
• Motel with 8 Units (Standard Double Room): $432,146.40 to $563,640.00
• Motel with 9 Units (Standard Double Room): $486,164.70 to $634,095.00

Table of Building Costs Per Square Foot for Motel with 10 to 24 Units – USA National Average

Note: Add 2% for work above the first floor. Work outside metropolitan areas may cost 2 to 6% less. Add 8% when the exterior walls are masonry. Deduct 2% for area built on a concrete slab.

Building Cost Breakdown for Motel with 10 to 24 Units – USA National Average:

1. Foundation (4%)
   • Best: $6.34 – $8.27
   • Good: $5.41 – $7.06
   • Average: $4.61 – $6.01
   • Low: $3.87 – $5.05
2. Framing (20% of total Cost)
   • Best: $31.71 – $41.37
   • Good: $27.05 – $35.30
   • Average: $23.04 – $30.07
   • Low: $19.34 – $25.23
3. Windows (2% of total Cost)
   • Best: $3.17 – $4.14
   • Good: $2.71 – $3.53
   • Average: $2.30 – $3.01
   • Low: $1.93 – $2.52
4. Roofing (8% of total Cost)
   • Best: $12.69 – $16.55
   • Good: $10.82 – $14.12
   • Average: $9.22 – $12.03
   • Low: $7.74 – $10.09
5. Overhang (2% of total Cost)
   • Best: $3.17 – $4.14
   • Good: $2.71 – $3.53
   • Average: $2.30 – $3.01
   • Low: $1.93 – $2.52
6. Exterior Walls (10% of total Cost)
   • Best: $15.86 – $20.69
   • Good: $13.53 – $17.65
   • Average: $11.52 – $15.04
   • Low: $9.67 – $12.61
7. Flooring (5% of total Cost)
   • Best: $7.93 – $10.34
   • Good: $6.77 – $8.82
   • Average: $5.76 – $7.52
   • Low: $4.84 – $6.31
8. Interior Finish (23% of total cost including finish carpentry, wiring, lighting, etc.)
   • Best: $36.50 – $47.61
   • Good: $31.18 – $40.69
   • Average: $26.48 – $34.56
   • Low: $22.24 – $28.99
9. Baths (15% of total Cost)
   • Best: $23.78 – $31.07
   • Good: $20.30 – $26.57
   • Average: $17.28 – $22.55
   • Low: $14.52 – $18.97
10. Plumbing (9% of total Cost)
    • Best: $14.30 – $18.68
    • Good: $12.21 – $15.92
    • Average: $10.39 – $13.57
    • Low: $8.72 – $11.38
11. Special Features (2% of total Cost)
    • Best: $3.17 – $4.14
    • Good: $2.71 – $3.53
    • Average: $2.30 – $3.01
    • Low: $1.93 – $2.52

Notes:

• When masonry walls are used in lieu of wood frame walls, add 8% to the appropriate cost.
• Add 2% for work above the first floor.
• Work outside metropolitan areas may cost 2 to 6% less.
• Deduct 2% for area built on a concrete slab.

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How Much Does it Cost to Build a 330 sqft Motel Room in the USA? – Hotel with 10 to 24 Units

Cost Per Unit (USD$ per Unit):

• Best Quality: $52,372.80 – $68,378.10
• Good Quality: $44,621.10 – $58,013.70
• Average Quality: $38,015.70 – $49,504.50
• Low Quality: $32,017.70 – $41,499.50

Total Cost of Building Motels with Different Numbers of Units (Standard Double Room)

• Motel with 10 Units: $523,728 – $683,781
• Motel with 11 Units: $575,100.80 – $750,159.10
• Motel with 12 Units: $626,473.60 – $816,536.20
• Motel with 13 Units: $677,846.40 – $882,913.30
• Motel with 14 Units: $729,219.20 – $949,290.40
• Motel with 15 Units: $780,592 – $1,015,667.50
• Motel with 16 Units: $831,964.80 – $1,082,044.60
• Motel with 17 Units: $883,337.60 – $1,148,421.70
• Motel with 18 Units: $934,710.40 – $1,214,798.80
• Motel with 19 Units: $986,083.20 – $1,281,175.90
• Motel with 20 Units: $1,037,456 – $1,347,553
• Motel with 21 Units: $1,088,828.80 – $1,413,930.10
• Motel with 22 Units: $1,140,201.60 – $1,480,307.20
• Motel with 23 Units: $1,191,574.40 – $1,546,684.30
• Motel with 24 Units: $1,242,947.20 – $1,613,061.40

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Table of Building Costs Per Square Foot for Motel with More than 24 Units – USA National Average

Note: Add 2% for work above the first floor. Work outside metropolitan areas may cost 2 to 6% less. Add 8% when the exterior walls are masonry. Deduct 2% for area built on a concrete slab.

Building Cost Breakdown for Motel with More Than 24 Units – USA National Average:

1. Foundation (4%)
   • Best: $6.14 – $8.00
   • Good: $5.23 – $6.83
   • Average: $4.46 – $5.81
   • Low: $3.73 – $4.88
2. Framing (20% of total Cost)
   • Best: $30.68 – $40.01
   • Good: $26.17 – $34.13
   • Average: $22.30 – $29.08
   • Low: $18.69 – $24.40
3. Windows (2% of total Cost)
   • Best: $3.07 – $4.00
   • Good: $2.62 – $3.41
   • Average: $2.23 – $2.91
   • Low: $1.87 – $2.44
4. Roofing (8% of total Cost)
   • Best: $12.27 – $16.00
   • Good: $10.47 – $13.65
   • Average: $8.92 – $11.63
   • Low: $7.47 – $9.76
5. Overhang (2% of total Cost)
   • Best: $3.07 – $4.00
   • Good: $2.62 – $3.41
   • Average: $2.23 – $2.91
   • Low: $1.87 – $2.44
6. Exterior Walls (10% of total Cost)
   • Best: $15.34 – $20.00
   • Good: $13.08 – $17.07
   • Average: $11.15 – $14.54
   • Low: $9.35 – $12.20
7. Flooring (5% of total Cost)
   • Best: $7.67 – $10.00
   • Good: $6.54 – $8.53
   • Average: $5.57 – $7.27
   • Low: $4.67 – $6.10
8. Interior Finish (23% of total cost including finish carpentry, wiring, lighting, etc.)
   • Best: $35.27 – $46.05
   • Good: $30.22 – $39.41
   • Average: $25.61 – $33.38
   • Low: $21.46 – $28.03
9. Baths (15% of total Cost)
   • Best: $22.99 – $30.00
   • Good: $19.61 – $25.60
   • Average: $16.72 – $21.81
   • Low: $14.03 – $18.30
10. Plumbing (9% of total Cost)
    • Best: $13.80 – $18.00
    • Good: $11.77 – $15.36
    • Average: $10.03 – $13.08
    • Low: $8.41 – $10.98
11. Special Features (2% of total Cost)
    • Best: $3.07 – $4.00
    • Good: $2.62 – $3.41
    • Average: $2.23 – $2.91
    • Low: $1.87 – $2.44

Notes:

• When masonry walls are used in lieu of wood frame walls, add 8% to the appropriate cost.
• Add 2% for work above the first floor.
• Work outside metropolitan areas may cost 2 to 6% less.
• Deduct 2% for area built on a concrete slab.

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How Much Does it Cost to Build a 330 sqft Motel Room in the USA? – Hotel with More Than 24 Units

Cost Per Unit (USD$ per Unit):

• Best Quality: $50,554.40 – $66,016.50
• Good Quality: $43,200.50 – $56,366.80
• Average Quality: $36,794.40 – $47,946.70
• Low Quality: $30,790.10 – $40,260.30

Total Cost of Building Motels with Different Numbers of Units (Standard Double Room)

• Motel with 25 Units: $1,263,860 – $1,650,412.50
• Motel with 30 Units: $1,514,632 – $1,980,495
• Motel with 40 Units: $2,019,509.60 – $2,641,993.60
• Motel with 50 Units: $2,524,387 – $3,303,742.50
• Motel with 60 Units: $3,029,264.40 – $3,965,491
• Motel with 70 Units: $3,534,141.80 – $4,627,239.50
• Motel with 80 Units: $4,039,019.20 – $5,288,988
• Motel with 90 Units: $4,543,896.60 – $5,950,736.50
• Motel with 100 Units: $5,048,774 – $6,612,485
• Motel with 120 Units: $6,058,528.80 – $7,935,982
• Motel with 150 Units: $7,573,161 – $9,919,977.50

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Calculating IRR and Rental Yield for a “Best” Class Motel Investment

When considering investing in a motel, two key financial metrics to evaluate are the Internal Rate of Return (IRR) and the Rental Yield. Let’s explore these metrics using the example of a “Best” class motel with 9 units, based on the provided data.

Estimated Project Funding

The total cost for a 9-unit, best class motel ranges from $486,164.70 to $634,095.00. For this example, we’ll use the higher end of the range, assuming an estimated project funding of $634,095.00.

Hotel Mortgage

Assuming a 70% loan-to-value ratio, the mortgage details would be:

• Property Value: $634,095.00
• Down Payment (30%): $190,228.50
• Mortgage Amount (70%): $443,866.50

Rental Yield

To calculate the rental yield, we need to estimate the annual rental income. Assuming an average daily rate (ADR) of $100 per room and a 70% occupancy rate:

• Annual Rental Income per Room: $100 x 365 days x 70% occupancy = $25,550
• Total Annual Rental Income (9 rooms): $25,550 x 9 = $229,950
• Rental Yield: Annual Rental Income / Property Value
  • $229,950 / $634,095 = 0.3626 or 36.26%

Please note that this rental yield calculation is based on assumptions and may vary depending on actual ADR, occupancy rates, and operating expenses.

Internal Rate of Return (IRR)

Unfortunately, the given data does not provide sufficient information to accurately calculate the IRR. To determine the IRR, we would need details on annual cash flows, operating expenses, and the potential sale value of the property over the investment horizon.

In summary, for a “Best” class motel with 9 units:

• Estimated Project Funding: $634,095.00
• Hotel Mortgage: $443,866.50 (assuming 70% LTV)
• Rental Yield: 36.26% (based on assumptions)

To make a well-informed investment decision, it is crucial to gather more detailed financial information, particularly regarding cash flows and expenses, to calculate the IRR and gain a comprehensive understanding of the investment’s potential returns.

The return on investment (ROI) potential of building a motel in the USA would depend on several factors, including the motel’s occupancy rate, average daily rate (ADR), operating expenses, and the time it takes to reach a stable occupancy level.

To calculate the ROI, you would need to estimate the annual net operating income (NOI) of the motel (total revenue minus operating expenses) and divide it by the total cost of building the motel.

For example, if the total cost of building a motel with 9 units is $634,095.00 and the annual NOI is $100,000, the ROI would be approximately 15.77%.

However, it’s important to note that this is a simplified calculation and the actual ROI could be higher or lower depending on various factors such as the motel’s location, competition, management efficiency, and market conditions.

It’s also worth noting that the data provided in the document does not include land acquisition costs, financing costs, or any potential cost overruns during construction, which could significantly impact the total investment and the ROI.

Therefore, while the data provides a useful starting point for assessing the potential costs of building a motel, a more detailed feasibility study would be necessary to accurately assess the ROI potential.