Downtown Denver Hotels Are Setting Occupancy Records
Reporter- Denver Business Journal
Downtown Denver hotels are setting historical records for their occupancy rates this year, aided by boosts in business and leisure travel this summer that have come after years when room demand has grown much more quickly than room supply.
Seventy-five percent of rooms in the downtown area have been filled year-to-date, a significant boost over the 62 percent rate of rooms nationwide, said Amie Mayhew, president of the Colorado Hotel and Lodging Association.
That includes an average occupancy of 86.3 percent in the months of June through August, an economic boost that exceeded projections of even the city's optimistic general managers.
"Things are good. People are back, and they're spending money," Mayhew said. "This has never happened before to this rate in Denver."
The hotel industry got rocked as bad as any other sector during the Great Recession, with many areas of the state reporting double-digit-percentage drops in occupancy, average daily rate or the all-important statistic of revenue per available room (known as revpar). Because of that, financing for new properties dried up, and the pipeline of rooms was slow to increase even as travelers began to return to Denver in 2011 and 2012.
That combination of high interest and shrinking room availability not only drove up occupancy but allowed hotels to raise their room rates to meet the new demand, Mayhew noted. Average daily rate downtown was $178.10 between June and August — a 10.7 percent bump from last year's average of $160.89.
Also helping in the boost: The introduction since May of two new luxury hotels downtown, the Renaissance Denver Downtown City Center Hotel in the old Colorado National Bank Building and The Crawford Hotel in the refurbished Denver Union Station complex.
Both hotels routinely charge more than $250 per night on weeknights, and both have found significant draws of guests.
Fred Kleisner, general manager of the Crawford, declined to give specific occupancy rates for his hotel since its June debut but said that initial projections "are being well exceeded." That demand has allowed the hotel to raise its room rates already.
"It is an incredible summer. And the projections going forward are really the result of a strong economy," Kleisner said. "It really points to the resurgence of LoDo as the new epicenter of Denver."
Older hotels outside of Denver also are doing well, as revpar climbed 14.7 percent throughout the area over the summer, from $134.06 in 2013 to $153.75 this year.
Marcel Pitton, managing director of The Brown Palace Hotel, said his property has seen a boost in convention attendees, leisure travelers and people coming to town for business meetings, specifically representatives of the state's growing oil and gas industry.
And while the Brown Palace had a very good summer, he said its year-to-date numbers are up thanks in large part as well to a record first quarter — a time of year when the hotel business downtown usually is way down as people leave the city and head up to the mountains.
While his hotel raised average daily rate slightly this year, he expects the Brown Palace, like other downtown hotels, will be able to do so even more next year because of the revenue increases of 2014, he said.
"Hotels across the board are pushing rates on occupancy," Mayhew said.