Hotel Rates Continue to Rise

It was the first time this year that the occupancy rate hadn't bested the same month a year ago. And year-to-date, the occupancy rate is still slightly ahead of last year's pace, at 57.3%, compared with 56.1% in the first quarter of 2004.

However, the average room rate is continuing its trend of improving since last year's performance. The average room rate in March was $85.29, compared with $81.53 in March 2004, although that is down from $90.56 average room rate in February. However, as previously reported by GlobeSt.com, February's hotel market benefited from the NBA Final Four tournament in Denver.

Year-to-date, the average room rate is $86.53, compared with $80.44during the first three months of 2004. Downtown boasts the highestaverage room rate, as it usually does, at $121.21. It was the only submarket to break the $100 per night barrier. The average room rate downtown was 57.6% in March.

The highest occupancy rate was found with the 63,405 available roomnights in hotels near Denver International Airport, at 76.1%. That was by far the highest occupancy rate, driving up the entire northeast submarket to 68.8%. The average room rate at hotels near DIA is $82.17 per night.

The Boulder hotel market show an average room rate of $93.37, the second highest in the market. The average occupancy rate in March in Boulder is 53.1%. The occupancy rate for the entire south and southeast suburban corridor is 60.1%, with an average room rate in March of $79.09.

With 271,670 available room nights, the southeast corridor is thelargest in the metro area. Downtown follows, with 160,609 room nights. The entire Denver-area market has 858,114 available room nights, 504,393 of which were occupied in March.

Benton, however, tells GlobeSt.com that he doesn't think that the drop in vacancies was caused by hotels charging too much. Rather, activity most likely occurred because of the events taking place during that time, such as the Easter and spring break holidays.

"I think the market is still strong and healthy and hotels continue to perform well. I think we'll continue to see improvements in April and the rest of the year, unless something dramatic happens with the economy. The hotel market is driven by the health of the economy."