Expenses Involved in Constructing a Boutique Hotel from Scratch

Sara Hospitality | Dec 27, 2023

Do you want to build your boutique hotel? As part of your financial plan, hoteliers must consider all the startup operating costs to start or run a hotel. It allows you to comprehend the profits you will make with the business. The allure of boutique hotels lies in their unique, personalized experiences, cozy environment, and custom hotel furniture. If you are an aspiring hotel owner who dreams of building a boutique hotel, you need to consider one aspect: how much it costs to build a boutique hotel from scratch. 

The average cost of building hotels varied from $1150000 to 1.5 million per room. It takes hotels at every stage level, from midscale to luxury, including boutique hotel projects. There is a huge variance, and prices are correct for hotels, which majorly depends on certain things:

  • Where the hotel is
  • What kind of experience do you want to provide to guest
  • Design consideration wishes to complement your brand

Moreover, if you plan to install the best and most unique furniture pieces, we are a leading hospitality furniture manufacturer who helps you create the best works per your needs. So, in this article, we discover the actual cost of building a boutique hotel from scratch and bring vision into reality. 

Boutique Hotel Costs: Research Comes Before Budget

If you are building a boutique hotel, then it is better to start with research. You must spend significant money to discover what you need to know, but it is well worth it. Where should you locate the hotel that appeals to the audience you desire as a guest? What niche are you trying to fill so you will gain a competitive position? What amenities are appealing to the guests? Therefore, it is always better to create a profile to discover what an ideal guest looks like and make a hotel appealing and pleasing to visitors. 

How to Craft a Budget?

It is a question that comes into the mind of every hotelier owner: what is included in the building budget? More than you think because you can’t open a hotel till you have moved well beyond the development stage. An opening of the hotel includes its expenses. But, to start with construction, you already know the prime location, careful planning, and research. 

The outline of the process are:

1. Adding Up FF&E Cost

The furniture, fixtures, and equipment include carpet in each room, equipment in tables, kitchen, and chairs in the dining room. The broad variation is possible in the cost that enables accounts for widely varying per-room amounts.

2. Obtaining Land

You can discover the land on which you want to build your dream for about 14% of your hotel budget. 

3. Keeping Aside Working Capital and Opening Expenses

It is not a direct construction cost, but the hotel won’t start without it. It is not a huge expense. So, hiring required people and putting together supplies will probably account for 1% to 4% of the budget. It belongs to the upfront budget. 

4. Accounting for Hard Costs

The construction cost is increasing quickly, and the price is nearly 5.1% yearly. It is lower than the growth rate but deep and steep. 

5.  Accounting for Soft Costs

The research suits this category, allowing financing costs, legal fees, and taxes. If you create a hotel in a famous area for its wildlife, you will pay for higher costs due to environmental concerns.  

Unique World of Boutique Hotel Construction

Boutique hotels are famous for their distinctive character and design. Thus, the cost of building a boutique hotel is determined by many factors that set them apart from conventional hotels:

1. Size and Number of Rooms

Boutique hotels are usually smaller in scale in comparison to their larger counterparts. However, the number of rooms and suites and their structure and layouts affect construction costs. 

2. Materials and Quality

Using high-quality materials and finishes is a priority in boutique hotel construction. This premium selection will improve the guest experience but enhance expenses. 

3. Location

The boutique hotel location plays a vital role in cost determination. Prime locations in busy urban areas or scenic waterfronts usually come at a premium that impacts the overall budget.


4. Design and Ambience

Boutique hotels are known for their unique, aesthetically pleasing designs. Unique interiors and furnishings, including original artwork, characterize boutique hotels. However, these can also increase construction costs.

5. Amenities and Services

Boutique hotels are characterized by their attention to detail, personalized services, and unique amenities. These features can have a positive impact on both construction costs and operating costs.


Building a boutique hotel is a labor of love, and comprehending the cost of creating one is fundamental to your success. The correct cost estimation empowers the plan, budget, and project execution with confidence. At Sara Hospitality, we specialize in offering recommendations and advice to hoteliers and buildings through the intricate world of construction costs.