was the number of luxury developments where all-in costs exceeded $ 2 million per room. This has been exacerbated by higher interest rates that make financing these projects even more onerous.
“ It’ s very difficult to make luxury work,” said Major, his assertion backed also by the finance community. Peter Berk, president of PMZ Realty, a New York-based firm that focuses on hotel debt and equity financing, has worked on myriad deals and financed more than $ 10 billion of commercial real estate over the years. In the current cycle, he is seeing limited luxury deals get done, and it goes beyond just higher interest rates and cost of construction, he said.“ The labor, insurance and other operating costs just to operate a hotel at that level requires a RevPAR that does not align with those development costs. Even in major cities, such as New York or L. A., few hotels justify that type of cost, and those that are currently under construction were planned
DEVELOPERS HAVE FOUND THAT MIXED- USE PROJECTS WITH BRANDED RESIDENCES CAN PROVIDE ADDED BENEFITS WHILE HELPING TO DIVERSIFY THEIR PORTFOLIOS
– DANA JACOBSOHN, CDO OF NORTH AMERICA LUXURY BRANDS AND GLOBAL MIXED- USE, MARRIOTT INTERNATIONAL
Sept / Oct 2025 hotelsmag. com 21