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What does it cost to open a hotel?

Estimate what it takes to open a hotel, from the land and the vertical construction through the furniture, fixtures and equipment package, the franchise fee, the soft costs of design and permitting, and the pre-opening payroll and marketing you spend before the first guest arrives. See the total, a realistic range, and your all-in cost per key.

§ 01 Your numbers

Change anything. The answer updates as you type.

The rentable room count, which the industry calls keys. This is the single input that drives the whole model, because the building, the furniture and the franchise fee all scale with it while the land and the design work largely do not. It is also the denominator for the cost-per-key figure under your total, which is the number a lender or an appraiser will reach for before any other.
The hard cost of the building itself, divided across the rooms: structure, envelope, corridors, the lobby and back-of-house, mechanical, electrical and plumbing, and the room interiors before furniture. Price it from an actual general-contractor bid on your site and your brand's standards. A limited-service build on a flat suburban lot sits far below a full-service tower with meeting space, a restaurant and structured parking, and this one number is where that gap mostly lives.
The purchase price of the parcel, plus closing and any demolition or site work to make it buildable. This is a project-level lump that does not scale with the room count, and it swings enormously by market: a highway interchange in a small metro is a different order of magnitude from an infill lot in a major downtown. Use a broker's number for your actual site rather than a per-acre guess.
Furniture, fixtures and equipment, per room: the beds, casegoods, seating, soft goods, televisions and bathroom fittings inside the room, plus that room's share of the lobby, corridor and public-space furnishings. Your franchise brand sets a standard here that you have to meet, and a full-service or upscale flag pushes this well above a limited-service one. Get a quote from an FF&E purchasing firm against your brand's package.
The initial franchise fee your flag charges to join the brand, plus the brand's design review, signage, opening technology and the property-improvement items its standards require. This is separate from the ongoing royalty and marketing fees you will pay on revenue once open, which are an operating cost rather than a startup one. An independent hotel with no flag can set this line to zero and take on the marketing burden itself instead.
Architecture and engineering, the interior designer, permits and impact fees, legal and accounting, the market and feasibility study your lender will want, construction-loan interest and the developer's own costs. These run at a meaningful fraction of the hard construction cost and they are routinely underbudgeted because none of them are visible in the finished building. Treat this as a percentage of your build rather than a round guess.
The payroll, hiring and training, opening marketing, initial operating supplies, licences and the technology setup you spend in the weeks before you take your first reservation and during the ramp before occupancy stabilises. A hotel earns nothing until it opens and then earns below its steady rate for months, so this line is the bridge across that gap, and it is where an undercapitalised project quietly runs out of room.
Payroll, utilities, the franchise royalty and marketing fees, insurance, property taxes, supplies and loan payments in a normal month once you are running. Used only to size the reserve below, not added to the build ledger, because it is a recurring cost rather than a one-time one.
How many months of that operating cost you hold back as a cushion for the ramp-up period, when the hotel is open but occupancy has not yet reached its stabilised level. Lenders often require a reserve of this kind, and a thin figure here is a common reason a technically finished hotel struggles in its first year.
Estimated cost
$16,310,000

Typical range $6,524,000 – $42,406,000

  • Land or site acquisition$1,500,000
  • Vertical construction$12,000,000
  • FF&E package$1,600,000
  • Franchise fee & brand costs$100,000
  • Soft costs$450,000
  • Pre-opening burn$300,000
  • Operating reserve$360,000
  • Total$16,310,000
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$6 million to $30 million is where a typical limited-service or upper-midscale new-build lands: a moderate room count under a franchise flag, on purchased land, with the FF&E package the brand requires and real soft costs behind it. Construction per key and land usually split the majority of the number.

What this assumes, and where it could be wrong

Every one of these is a place the number could be off. They are here because you should be able to check our working, not because we are hedging.

EVERY NUMBER HERE IS YOURS, BECAUSE A HOTEL IS A STACK OF QUOTES AND NOT A STATISTIC.
The land is a broker's price, the building is a general contractor's bid on your specific site, the furniture is an FF&E supplier's quote against your brand's package, and the franchise fee is a schedule your chosen flag hands you. They differ enough between two markets, and between a limited-service and a full-service build, that a national average would mislead you rather than help. There is no federal source to look them up in, so we would rather itemise our own model in front of you than dress it up as a measurement. Every default above is ours and every one is editable. Get a broker's number for the land, a contractor bid for the building, an FF&E quote for the room count and your flag's actual fee schedule, then type those in.

A hotel is priced per key, so the room count drives almost everything. The building, the furniture and the franchise fee all scale with the number of rooms, while the land, the design work and the pre-opening burn sit as project-level lumps that do not care how many rooms you fit. That is why the ledger multiplies the per-room lines by your key count and leaves the project lines alone, then reports an all-in cost per key under the total. That per-key figure is the unit a lender underwrites on, an appraiser values on and a buyer compares on, so it is worth more attention than the headline total.

The gap between a limited-service and a full-service build lives mostly in construction and FF&E per key. A limited-service property is rooms, a breakfast area and a small lobby, and it can be built on a flat suburban lot for a modest cost per key. A full-service hotel adds a restaurant, meeting and event space, a larger lobby, more elaborate public areas and often structured parking, and each of those pushes the per-room construction and furniture numbers up substantially. Set the two per-key inputs to describe the property you actually intend to run, because the difference between them is larger than any other choice on this page.

Soft costs and pre-opening burn are the lines budgets skip, because neither shows up in the finished building. Architecture, engineering, design, permits, the feasibility study and construction-loan interest run at a real fraction of the hard cost, and the pre-opening payroll, training and marketing carry the hotel across the months when it is open but not yet full. A project that funds only the visible construction is the one that stalls just as it should be gaining momentum. Size both of these against your build rather than treating them as afterthoughts.

The reserve is for the ramp, not just for the build. A new hotel opens and then climbs toward its stabilised occupancy over many months, earning below its steady rate the whole way up. The operating-reserve line above is what covers that climb, and lenders frequently require one for exactly this reason. A thin reserve is a frequent cause of a technically finished hotel struggling in its first year, so treat the months figure as a number to get right before you break ground rather than after.

Frequently asked questions

How much does it cost to open a hotel per room?
That per-room figure, which the industry calls cost per key, is the number to focus on, and this calculator reports it under your total. It varies enormously with the type of hotel: a limited-service property on inexpensive land sits at one end, and a full-service or upscale build downtown, with a restaurant, meeting space and structured parking, sits far above it. Rather than trust a single national number, set the per-room construction and FF&E inputs to describe the hotel you actually plan to run, add your land and soft costs, and read the all-in cost per key the page gives back.
Is it cheaper to buy an existing hotel than to build one?
Often, yes, which is why acquisition and renovation is such a common route into the business. Buying an existing property lets you skip the land search, the entitlement risk and the long construction timeline, and you inherit a building that already produces revenue. The trade is that you take on whatever deferred maintenance and dated furniture come with it, and a franchise flag will usually require a property-improvement plan to bring it up to brand standard, which can be a large check on its own. To model an acquisition here, put the purchase price on the land line, set vertical construction to zero, and use the FF&E and soft-cost lines to price the renovation and the brand's required improvements.
Do I need a franchise to open a hotel?
No. An independent hotel with no flag is entirely possible, and it saves you the initial franchise fee, the ongoing royalty and the brand's mandated standards. What a flag buys you is the reservation system, the loyalty programme, the national marketing and the lender comfort that comes with a recognised brand, and those are the reason so many hotels choose to fly one. If you plan to run independent, set the franchise line to zero and expect to invest more in your own marketing and distribution instead, which is an operating cost this build ledger does not try to capture.
What is the cost people underestimate the most?
Two lines, usually. The first is soft costs, because architecture, engineering, permits, the feasibility study and construction-loan interest are all invisible in the finished building and easy to leave as a round guess when they should be a percentage of the hard cost. The second is the pre-opening burn and the operating reserve, because a hotel earns nothing until it opens and then earns below its stabilised rate for months while occupancy ramps. A budget that funds only the visible construction runs short exactly when the hotel needs cash to build momentum, which is why both of those lines sit on this page as first-class items.

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