Dive Brief:
- Marriott International has announced plans to use modular construction on approximately 13% of its North American hotel deals this year, according to Commercial Property Executive.
- The hotel company said in a press release that it expects to sign 50 hotel agreements this year that include prefabricated bathrooms or guest rooms in their designs. Thus far, Marriott has opened one modular hotel in California — completed two months ahead of schedule — and has four more in progress, including a Courtyard in Washington and an AC Hotel in Oklahoma.
- The hotel company said it wants to drive offsite initiatives in order to bring down building costs and help franchisees avoid the problems associated with labor shortages in the U.S. construction industry.
Dive Insight:
Proponents of offsite construction say the method is gaining popularity not because it typically reduces schedule time — as it did for Marriott at its California property — but because it puts the construction process in a controlled environment, where experienced teams handle each phase of building, much like a traditional assembly line.
Modular construction has the support of some major companies, such as Marriott, but securing loans for offsite projects can sometimes be difficult. Lad Dawson, CEO and managing partner at Guerdon Modular Buildings, told Construction Dive that one reason the modular process doesn’t fit into traditional lender calculations is because modules fall under the category of materials, as they're delivered ready to install. This throws off the typical, expected percentage of labor and materials, triggering red flags.
Nevertheless, the offsite building industry continues to grow. Prefab company Prescient announced this month that it raised $40 million from investors in a Series D funding round, bringing total investment since 2012 to $80 million. And in April, offsite construction startup Katerra announced a $130 million investment, bringing the company to a $1 billion valuation.
