Add this to the numbers showing that Denver's a booming city: The hotel occupancy rate is at an all-time high.
Smith Travel Research reports an unprecedented 76 percent of rooms were filled in the Denver area last year.
“Which is astounding,” said Walter Isenberg who runs Sage Hospitality, the company that operates hotels like the Oxford and the Crawford downtown. “I mean, the national occupancy is 65 [percent], so it’s really quite remarkable.”
Stephen Skerritt-Davis is part of the reason why. He's from Baltimore and he was strolling down the 16th Street Mall recently during a break at a convention he was attending. It’s been years since he’s traveled to Denver, and he says all of the changes to the city surprised him.
“I’m impressed by how much is here actually,” said Skerritt-Davis. “It’s surprising that there’s so much happening downtown, especially the 16th Street Mall.”
Downtown Denver has indeed undergone a transformation, with $4.8 billion in development in just the last five years, according to the Downtown Denver Partnership. Dozens of new restaurants are opening every year -- 74 in 2014 alone -- some of them led by celebrity chefs like Jen Jasinski.
That gives convention center visitors plenty of places to spend money.
“Obviously, in January, to have those conventions is great,” Isenberg said, adding that Denver’s market is especially strong because conventions, business and leisure travel are all big right now. So big, in fact, that Denver hotel room prices hit record levels last year.
Isenberg says he would have been skeptical if, a decade ago, someone had told him rooms here would cost an average of $121 a night, according to Smith Travel Research. “I probably would not have believed them.” Back in 2006, the average room price was $90 a night.
Sure, legal marijuana has attracted many travelers to Denver. But Isenberg says the city was becoming a destination before pot stores opened.
Denver's experience appears to be part of a national trend, as well. According to Jan Freitag, a senior vice president at STR, the U.S. hotel market is on roll.
“It was a record year in 2014, it was a record year in 2015, and we’re actually expecting a record year in 2016,” Freitag said. In 2015, the hotel industry set records for occupancy, 65.6 percent; room rates, $120.01 a night; and revenue per available room, $78.67.
He says that’s because the economy is strong. Perhaps most importantly, unemployment is very low, at just 5 percent nationally.
Freitag says the danger for the hospitality industry is travel is usually one of the first things people cut if the economy sours, but even the recent turmoil on the stock market doesn’t have him overly concerned.
“I have a really hard time coming up with anything that is distinctly negative that could derail where we are today,” said Freitag.
And he adds that it’s telling that hotels are breaking records for occupancy in cities from Denver to Nashville despite the rise of Airbnb and similar businesses disrupting a traditional hotelier model.
“It sounds like Airbnb is not a real life competitor on the day to day, the day to day business traveler,” said Freitag. “But I think they’re a force to be reckoned with when it comes to the longer-term stay, the extended stay people who stay in town for five nights, or even 30 nights.”
If the hotel industry is worried about short-term rental services they’re not showing it by building fewer hotels. STR says there are 14 new hotels to the 312 that already exist in the Denver metro area, many in and around downtown Denver.
Hotelier Isenberg says that’s where the demand and highest room prices are.
“You could argue that the new supply downtown is justified,” said Isenberg. “There’s a lot of new supply downtown, and we just need to be cautious.”
Cautious about overbuilding -- something he says is easy to do after a banner year for hotels, because guys like him don’t just run hotels. A big part of their business is building them.
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