X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

DENVER-A preliminary study by a hotel consultant indicates when the 1,100-room Hyatt Regency convention center opens in 2006, it will need to average daily room rates of $159 at a 60% occupancy rate to cover debt service. By 2008, it would need $170 per night, according to Greg Hartmann, managing director of HVS International, hired by bond firms to assess the hotel’s economics.

The hotel, including debt service, could cost $350 million. It flies in the face of a standard rule of thumb that says it would need room rate of $350 per night. However, Hartmann dismisses that old rule of thumb that for every $1,000 spent per room, the hotel needs a room rate of $1 per night. He notes that rule was used in the 1970s, when interest rates were at 15% and little revenues were generated by parking and food and beverage.

Also, because the city will finance the Hyatt, it doesn’t need the 15% return a private developer demands. In addition, the city will be able to get a more favorable interest rate than a private developer, he points out.

“If I could project the room rates with a calculation that would take two seconds, my job would be pretty easy,” he tells GlobeSt.com. “The truth is that it takes months of research and analysis to come up with a projection.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.