Marriott to build world's tallest modular hotel in New York

NEW YORK • The world's biggest hotel company is betting that factory-built guest rooms are a key to juicing revenue - and helping guests get a better night's sleep.

Marriott International is laying plans for what it says will be the tallest modular hotel in the world, in Manhattan's NoMad neighbourhood. The hotel's 168 guest rooms will be assembled in a factory in Poland, shipped overseas and trucked into New York in the middle of the night, when the city streets can accommodate the oversized loads.

The 26-storey AC Hotel is expected to open next year. Marriott wants the tower to serve as a beacon to developers, lenders and factory owners.

"Our goal is to move the industry," said Mr Eric Jacobs, chief development officer for Marriott's select-service and extended-stay brands in North America. "Cost and time are really important to owners and developers. It's about speed to market, and any time we can move that needle, it's good for everybody."

Hotel companies, such as Marriott, would like to ramp up modular construction because it can help them open new properties faster, a key path to increasing revenue.

The method saves time because builders can do site work while rooms are being built in the factory, Mr Jacobs said.

Hotel companies, such as Marriott, would like to ramp up modular construction because it can help them open new properties faster, a key path to increasing revenue. The method saves time because builders can do site work while rooms are being built in the factory, said Mr Eric Jacobs, chief development officer for Marriott's select-service and extended-stay brands in North America.

Modular construction is not exactly new in the hotel world, but it is unusual enough to give many developers pause. Financing can be difficult to come by because the projects require more upfront expense than a traditional building, according to Mr Sanat Patel, managing partner at Avana Capital, which is providing a US$65 million (S$88 million) construction loan for the NoMad project.

At the same time, manufacturing capacity is limited, and many of the existing factories are busy building hospitals, houses and student apartments, said Mr Tom Hardiman, executive director of the Modular Building Institute, a trade group.

A shortage of construction labour that has led to longer development times has made the factory-built model especially appealing.

Marriott has been offering financial incentives for modular projects and connecting developers with architects, contractors and lenders in a bid to spur the effort on.

The AC Hotel is being developed by Concord Hospitality on behalf of owner Robert Chun.

Mr Jacobs said that within five years, modular construction could account for 25 per cent of all hotels in his pipeline, including North American outposts for brands such as Courtyard by Marriott and Fairfield Inn & Suites.

The benefit for guests is that factory-built rooms are quieter. In traditional construction, a hotel room usually shares a wall with its neighbour, but modular designs typically call for an insulated gap between rooms. "That means my collateral is really valuable, because it's done better," said Mr Patel.

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A version of this article appeared in the print edition of The Straits Times on April 22, 2019, with the headline 'Marriott to build world's tallest modular hotel in New York'. Print Edition | Subscribe