Hospitality Embracing Modular Construction To Counter Rising Costs, Gain Better Quality

Modular units are becoming more common in construction projects nationwide as developers seek the speed-to-market and consistent quality they can offer. But there are still challenges to using modular construction, which has meant some CRE sectors were slower to adopt it than others. Now may be the time for modular to shine in hotel construction.

Marriott International made news last week when it announced plans to focus on modular units at its North American hotels.

As part of the initiative, the hotel chain set up a demonstration in LA of individual, fully furnished hotel rooms built using modular construction technology.

LA is one of the nation's top markets for new hotel openings this year, with more than 5,000 rooms expected to come online, according to Hotel News Now.

Marriott recently signed a deal in Hawthorne, California, to use modular units to build a TownPlace Suites and Courtyard dual-branded hotel.

The units on display were from vendors including Champion Commercial Structures, Guerdon Modular Buildings and Oldcastle SurePods.

"In the early stages of this program, what we liked about partnering with these vendors is they're in it for the long haul," said David Walsh, Marriott's senior director of project management, Marriott Select Brands. "They see the pipeline. They see the need. They are focused on the quality we expect."

Marriott expects to sign 50 modular hotel deals this year.  There are many advantages to modular construction, Walsh said.

Quality, improving speed to market and helping overcome the current labor shortages are among them, according to Walsh.

The completely pre-assembled, ready-to-go hotel rooms at the demonstration included furniture, bedding and well-secured TVs. They arrived by semi-truck and were craned in to demonstrate the new innovative construction method.

An increasing number of developers are embracing this technology primarily because of a quicker return on investment due to a shortened overall construction schedule, according to Modular Building Institute executive director Tom Hardiman.

"The schedule is shorter because the building modules are constructed simultaneous to the foundation work, rather than in a sequential process," Hardiman said.

Modular manufacturers also are able to better recycle and reuse materials because all of the construction is in a factory setting.

Hardiman said retailers, including Starbucks, have used modular to build about a dozen stores in recent years, and modular has also been used by billionaire Warren Buffett's Clayton Homes, part of his Berkshire Hathaway portfolio.

Now, the idea is starting to catch fire in hospitality.

Another advantage to off-site modular over on-site construction is safety. Since construction of the modules takes place on one level, the number of workers who experience injuries from falling is very low, according to Hardiman.  

The on-site installation is also simplified with modular units. The modular unit is inserted into the building almost as simply as a dishwasher is installed in a kitchen, according to Walsh.

One reason hospitality has been slow to adopt modular construction is the learning curve on how to apply it to different kinds of buildings. Some hospitality experts said it does not lend well to high-rise construction. Hardiman said with wood frame, modular or conventional construction can only go four stories now in the U.S.

"Some people don’t want to try to figure out how to go higher with modular because it’s a different process," he said.

Architects Orange hospitality designer Lalaine Tanaka, who moderated a panel at Bisnow's recent Big West Coast Hospitality event, said modular expedites the delivery of projects, though she said there can be design limitations.

Hilton vice president Tim Powell said he is excited about modular construction.

"It is really an interesting concept that I think is here to stay, and it's going to grow," Powell said.

Hilton has worked with a Boise, Idaho-based company that can do a standard guest room built in that state and shipped to a job site.

"The quality control aspect is off the charts," Powell said.

The biggest savings is time being shaved off the construction process, he said.

Swinerton Builders vice president Ray Haj touted the merits of modular construction and said it is important to have the right design team for such projects.

"It definitely saves money and time at the end of the day if it's done right," Haj said.

A disadvantage to modular construction is lenders are not accustomed to it.

"Educating the lending community has been one of the challenges that our developers have experienced," Powell said.

Developers also have to have a staging area for the modules, and that can be difficult in an urban setting.

TOTO USA president Bill Strang manufactures bathroom products and has seen firsthand the merits of modular construction.

He said it is frustrating when he sees workers on a traditional construction site using his company's bathtubs as trash cans or being stepped on while at a site, which can cause him to have to change out the tubs.

"The time to market and the wasted cost that is reduced as a result of doing this kind of construction is absolutely spectacular," Strang said.

Walsh said Marriott is sold on modular. Hotel guests get as good, if not a better, hotel room and do not know the difference, which is the goal, he said.

Marriott opened its first hotel using modular in Folsom, California, last December.