Will the surge in hotel construction carry resorts with it?

In its latest estimate, Lodging Econometrics forecasts that 677 hotel projects with 79,518 rooms will open in 2024, up 1.4 percent from the previous year. The LE predictions for new hotel construction and openings show this trajectory continuing through 2025, with another 799 new hotels/85,654 rooms opening by year-end 2025. Further growth is anticipated through at least 2026.

The resort corner of the hospitality sector has been a bit slower to expand than the whole for the past few years. But don’t tell that to Bill Wilhelm, President of R.D. Olson Construction, which last month began construction on a 12-building resort to be operated under the Appellation brand on eight acres in the North Village of Healdsburg, Calif.

In an interview with BD+C last week, Wilhelm said that his firm has seen “increasing demand” for hotel projects, following a strong 2023. Right now, that demand favors new construction over renovation, although Wilhelm believed that the latter would eventually pick up.

He conceded, however, that the Healdsburg market, in California’s wine country 80 miles from San Francisco, might soon be tapped out as far as new resort hotels go. “If you haven’t gotten in yet, you’ve probably missed the boat.”

A chance meeting spawns resort concept

R.D. Olson’s’ involvement with Appellation Healdsburg dates back several years. On August 28, 2019, Wilhelm was having lunch with Comstock Development’s Robert Comstock and his daughter Kelly. Wilhelm recalled that Comstock was impressed with another hotel that Olson had built, and wanted to talk with him about the two firms working on a project.

During that lunch meeting, restaurateur-chef Charlie Palmer and hotelier Christopher Hunsberger walked in, and joined Wilhelm and Comstock at their table. At the time, Palmer and Hunsberger were working together under the MAKR Hospitality flag. After a few minutes of chitchat, recalled Wilhelm, Comstock declared “then and there” that the four of them would collaborate. That led to some initial brainstorming about developing a new high-end resort hotel concept.

Palmer and Hunsberger subsequently launched Appellation in June 2022, and the Healdsburg hotel is one of the first three––the others being in Sun Valley, Idaho, and Pacific Grove, Calif.––to debut as leisure destinations under that brand. Appellation has also proposed building a 93-key resort hotel in Petaluma, Calif., which pending approval would open in 2026.

Appellation Healdsburg, which is scheduled for completion in the summer of 2025, will have 108 guestrooms, two pools, a fitness center, a spa, lobby and rooftop bars, an expansive lawn, and 15,500 sf of event space, along with 12,500 sf of retail space that’s part of a mixed-use promenade accessible to the community.

The AEC firms involved in this project include Hart Howerton (architect), EDG Interior Architects + Design, IMEG (SE), EXP (MEP), Carlile Macy (CE), and Kleinfelder (soil engineer).

Appellation Healdsburg is being marketed as a “food first” hotel, with one of its buildings a “grange,” or large barn that offers food and cooking experiences to hotel guests. (Wilhelm said Palmer is considering expanding this concept to other markets.) Among the campus’ high-end amenities will be a restaurant that serves signature Charlie Palmer cuisine.

“This will truly be a destination hotel with luxury in every detail and world-class dining experiences, resort amenities, and wine country lifestyle for its guests,” said Wilhelm, in a prepared statement about the groundbreaking.

Labor shortages impacting hotel construction

R.D. Olson’s previous hospitality and renovation projects include The Peninsula Hotel in Beverly Hills. The Lido in Newport Beach, the Sheraton at the Park in Anaheim, and the W Hotel is Westwood. Wilhelm told BD+C that guests, in general, are favoring hotels whose amenities include open spaces, rooftop bars, and restaurants.

Construction spending for lodging-related projects stood at $22.75 billion in February, up 14.2 percent from the same month in 2023, according to the Census Bureau’s latest estimates. Wilhelm told BD+C that he’s “optimistic but conservative” about the prospects for the hospitality sector. He elaborated that while many developers “are ready to go” on hotel projects, “it all comes down to financing,” and, in some cases, local regulations that, for example, require affordable housing components. (The Healdsburg development includes 53 units of workforce housing, according to Appellation’s website.)

Wilhelm also fears that projects will break ground without having adequate resources, like jobsite manpower. He spoke about the University of R.D. Olson, whose 27 courses provide skills training and certifications, such as its OSHA-30 program. And while he conceded that prefabricated  modular solutions have yet to make a serious dent in hotel design or construction, Wilhelm said his firm is “always  looking for prefab opportunities” as a way to ease manpower shortages and keep projects on schedule.