Demand sets record room rates, occupancies in state hotels
The Denver Post
DENVER — There’s still room at the inn, but less of it than ever before in Colorado’s hotels.
A resurgent economy brought a record number of guests to the state’s hotels in 2014. Along with healthy occupancy levels came the highest room rates ever recorded in Colorado.
Analysts say the industry is hitting on each of its three main cylinders: business travel, convention bookings and vacationing visitors.
2014 marked the fifth consecutive year of improvement for hotel operators since the market faltered during the recession of 2008-09.
Rising fundamentals also are helping bring the industry out of years of dormancy in which few new hotels were built. An estimated 1,700 rooms will be added in metro Denver in 2015. That 3.8 percent gain in inventory is the fastest growth spurt in 15 years.
“The market is strong and I think we’ll continue to see demand (for rooms) continue to increase in 2015,” said Bob Benton of Robert S. Benton & Associates, co-author of the Rocky Mountain Lodging Report.
Colorado hotels reached an average occupancy rate in 2014 of 68.3 percent, according to the lodging report. The statewide average room rate was $135, an increase of 6 percent from 2013.
Metro Denver’s room rates grew even faster, rising 8 percent to an average of $124.
The metro average rate belies an extremely healthy luxury hotel market in downtown Denver where it’s not unusual to see rates as high as $400 a night during peak weekday business travel periods.
Analysts say the addition of new hotel rooms in Denver may produce slightly lower occupancy rates but will not reverse the rise in prices for rooms.
“Our thought is that rates can and will continue to grow,” said Michael Everett, chief investment officer of Denver-based Sage Hospitality. “We saw (in 2014) a nice combination of having a great convention year, positive office space absorption and having the leisure side of the business very strong.”
Sage’s development plans include a 170-room hotel at the Z Block project at 19th and Wazee streets, and a 155-room lodge at the 245 Columbine mixed-use development in Cherry Creek North.
Sage owns or manages 70 hotels with about 13,000 rooms nationwide.
Everett said financing for new hotels is available, but not as readily as before the recession when developers nationwide built too many rooms.
“There are continued memories of the last cycle,” he said. “You don’t have a list of 20 lenders waiting to finance you. But there is capital available for the right project in the right location.”
Richard Scharf, president and CEO of Visit Denver, said the city’s record-setting convention business in 2014 bodes well for the hotel industry.
But could rising room rates and occupancies price Denver out of the travel market?
“We’ve got a lot of different (hotel) brands and price points,” Scharf said. “In the peak travel season you may not see a family come in and want to pay a top rate, but they have plenty of options.”
Information from: The Denver Post, http://www.denverpost.com
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Summer market season begins this week in Glenwood Springs and Carbondale, with the return of the Tuesday evening Glenwood Downtown Market and Music Series and the Carbondale Farmers’ Market starting Wednesday.