Bill Wilhelm: “I have seen a lot more conversation about the revitalization of properties and projects where you can get in and get out sooner.” Bill Wilhelm: “I have seen a lot more conversation about the revitalization of properties and projects where you can get in and get out sooner.”
LOS ANGELES—At ALIS this year, it was clear that the hotel industry was either approaching or had hit its peak, and the story was no different for new development. In an exclusive interview with Bill Wilhelm , president of R.D. Olson Construction , GlobeSt.com learned that new hotel development has also plateaued. While groundbreakings have ensured that there will still be new hotel delivery through early 2017, Wilhelm said that the pipeline is drying up and renovation projects are the new trend. “Ground up development is still active, but I have seen a lot more conversation about the revitalization of properties and projects where you can get in and get out sooner,” Wilhelm tells GlobeSt.com. “Right now, the hospitality industry has plateaued on new ground-up construction. We are still going to see another 18 months for ground-up starts because of what is already in the pipeline, but developers are starting to slow down and look for the next angle. I am starting to see more renovation and repositioning come to light.” He added that new hotel development has a lot longer turn around time to get heads on beds, and most developers aren’t sure there is enough time left in the cycle. With a renovation project, “you can take a conversion of a consisting property, and within 12 months of the close of escrow, have heads on beds,” he adds. R.D. Olson is a unique company because they have are both a developer and a builder . Roughly 30% of R.D. Olson Construction projects are done in-house and the other 70% are third-party developers. The company’s intimate knowledge of owning hotels has given them a competitive advantage in a market where development costs are on the rise and new development projects have started to tighten. “We understand, because we own them, how a hotel operates. We understand how these things works,” he says. “When you are building for yourself, you are your toughest client. It gives us a competitive advantage.” As a result of the competitive environment and the increasing need to expedite delivery, R.D. Olson is adopting a design/build or design assist approach more frequently. “It is a service that more and more clients are reaching out to us saying, ‘we have limited resources and we are trying to capitalize on the opportunity that is out there; you guys are experienced from top to bottom.’ Those are competitive elements that you bring to the table, and having that has an opportunity minimizes a lot of middlemen and brings a single source to the table,” says Wilhelm. “So, we are doing more and more design build or design assist. We are bringing to the table 30 years of experience. There is a lot of value there.” Although there isn’t a monetary savings to the developer for going this route, there is a savings in the delivery of the product and fluidity. “The savings is a product is a product that is delivered efficiently without a lot of bumps in the road,” adds Wilhelm. “In construction, if you have limited documentation, you can’t manage costs. If you are going the design build route, you have control from the beginning.” While new construction is slowing, R.D. Olson isn’t. The firm already has projects, whether new construction or renovation projects, booked through 2016 and a backlog for half of 2017.  

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