More hotel construction possible despite problems

Hotel construction may increase in the next several months.

Commercial property management companies working with hotels may notice a higher level of development during in the next several months.

The level of hotel room demand is on the rise, and the available supply is dropping, which could encourage some to ramp up development, according to a hotel development panel at the Hunter Hotel Investment Conference. Despite this, there are still multiple issues present in the construction sector that may slow this process.

Lumber is a significant expense for many construction companies, and this is hurting construction production and affordability, said Jeff Jernigan, president of Pinkerton & Laws, according to National Real Estate Investor. This figure rose more than 50 percent since the end of 2012.

"And we're not only dealing with commodities," said Jernigan, according to the news source. "Our biggest problem is labor. There is such shrinkage on the labor side, we just don't have capacity."

There are many subcontractors that are having problems stay in business in the construction industry, which has hurt many businesses, the panel explained. There is also a lack of skilled labor, especially in the South, as these people are opting for jobs in the energy sector, as they can pay more. Other laborers are blocked out from taking advantage of the available construction positions due to the changing immigration laws in some states in the South.

One aspect that could help developers improve the level of hotels in the market is the continued level of financing available, the panel noted. This is important, but some developers will need to take more care to be creative and take financing from multiple sources.

Hotel prices continue increases in 2012
While more development may be possible in the coming months, the hotel sector experienced other positive conditions in the past year.

Overall hotel prices jumped 3 percent worldwide, according to the Hotel Price Index from This was slightly less than the 4 percent recorded one year earlier, but figures in the United States continued to ramp up.

The top city for hotel price was Big Sur, California, which had an average daily rate of more than $770, the report noted. Oahu, Hawaii, experienced an increase of nearly 70 percent in 2012 from one year earlier. Much of the gains across the country was to consumers spending 5 percent more in hotel expenses in 2012.

Disclaimer: All data and information provided on this site is for informational purposes only. makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, opinions or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.