Hotel Market Occupancy Rates Improve in 2004

The report shows that the Denver International Airport area ended the year with the highest overall occupancy area with 68.5% of the rooms near DIA occupied, compared with 67.5% at the end of 2003. That was followed by the hotels at Stapleton at 67.5%, a big jump from the 61.3% occupancy rate in 2003. Downtown was virtually flat, at 64.3% compared with 64.4% in 2003.

"It is our belief that this percentage occupancy level will improve in 2004 and then decline somewhat with the addition of new lodging supply, which will impact the market in 2006 and 2007," says John Montgomery, president of Horwath Horizon Hospitality Advisors LLC/Montgomery & Associates.

As far as room rates, the Downtown submarket was the only one where the average room rate broke $100. It ended the year at an average room rate of $113.77, virtually unchanged from the average room rate of $113.77 in 2003.

In an unusual twist, the number of hotel rooms on the market in 2004 actually dropped by slightly more than 800 from 2003. There were 34,633 hotel rooms on the market compared with 33,830 in 2003. The Regency hotel in north Denver closed, accounting for about half the rooms. The Regency had been closed by the city for code violations, before a local developer, V. Robert Salazar, bought it with plans to turn it into student housing for the Auraria campus in Downtown. Other small hotels closed to make way for retail or mixed-use developments, Montgomery tells GlobeSt.com.

Overall, 2004 was a turning point for the metro-area hotel market, Montgomery says. He says significant events that will take place this year to 2006, include the opening of the expansion of the Colorado Convention Center in December; the late 2005 opening of the 1,100-room Hyatt Regency convention center hotel; a number of new hotels in downtown; completion of the T-Rex highway project in 2005; and the opening of the new southeast light-rail line in 2006.