Hospitality Strong Despite Influx Of New Hotels
An influx of new hotel rooms in recent years has softened the downtown Denver hotel market, but strong market fundamentals have kept the market attractive to investors and developers alike.
Hotel companies across the country are forecasting lower revenue per available room, or RevPAR, growth in the coming year, but Denver’s market remains strong, growing up to 8.7% locally.
That is despite the addition of the 1,501-room Gaylord Rockies Resort & Convention Center in Aurora, said McWhinney Chief Investment Officer for Hospitality Dave Johnstone, who participated in a panel at Bisnow’s Denver Hotel & Lodging Forum last week.
“The Gaylord has actually provided a nice lift,” Johnstone said, noting that by the time a guest pays the resort fee, taxes and parking, the bill comes to at least $300 a night. The Gaylord is planning to add another 1,000 rooms and more meeting space.
Johnstone said that with all of the hotels that opened downtown in the last year, and with nine hotels proposed for River North and another 1,500 rooms expected to come online downtown, he's nervous about the downtown market.
“The Crawford was flat the last couple of years,” he said. “The Born opened, Indigo opened, there’s a 550-room Marriott going in. Financing is easy today, so many of these projects will get done.”
Metro Denver’s occupancy is 10% over the national average, which is attracting a lot of capital from outside the region, said Skyler Cooper, Marcus & Millichap National Hospitality Group's national director. So far this year, there have been 14 hotel sales — 33% of which have been boutique or independent.
The boutique hotel industry grew 8.6% between 2013 and 2018 and posted $17B in revenue last year, according to a report by IBISWorld, a company that provides business information and market research on thousands of industries worldwide.
“Independent hotels that were once unattractive are now the most attractive, premier assets,” Cooper said. “We have buyers. A year ago, there were six or seven hotels for sale. There are over 120 hotels listed for sale in Colorado now.
