Colorado Hotel Market Fundamentals Remain Stable Despite Increased Construction Activity
Strong gains in population and travel spending highlight Colorado as an increasingly popular place to work and visit, boosting demand for hotel rooms in the state. Leisure travel spending has climbed by 28.9 percent over the past five years, surpassing $22 billion in 2018. More than half of those funds were spent on commercial lodging. Business travel is also bolstered by companies either entering or expanding in the state. These demand factors translate to hotel occupancy and revenue metrics that have consistently exceeded the national average since 2014. Colorado’s November annual average occupancy rate rose 90 basis points year over year to 68.1 percent, compared with the national metric that held flat at about 66.2 percent. Colorado’s annual average RevPAR grew 3.8 percent over that same span, more than triple the U.S. pace, to $98.48.
Robust gains in both occupancy and RevPAR demonstrate how demand for Colorado hotel rooms has outpaced numerous supply additions. The state’s inventory of hotel rooms has expanded by about 13 percent over the past five years, with 4,226 hotel rooms under construction. More than half of the keys underway will be delivered in Denver and Colorado Springs. Notable new projects in the Denver metro include Focfaus Property Group’s development of the 28-story, 525-room Marriott at 747 14th Street across from the Colorado Convention Center, as well as HRV Hotel Partners’ 250-room hotel at the University of Colorado, Boulder, which was approved in November. The Train Denver Hotel Project, a four-building, mixed-use development by Invent Development Partners, will add 800,000 square feet of office, residential, retail and hotel space to the RiNo area.
Colorado Springs also possesses unique hospitality demand drivers, such as the Colorado Springs Olympic Training Center and North American Aerospace Defense Command (NORAD). Notable new projects here include the 165-room Hilton Garden Inn that was completed in October 2019 by developer Adam Pietraszek of New Vision Hotels, as well as a 59-acre development headed by Western States Lodging and Nuterra Partners. This site will include a Candlewood Suites and up to 630,000 square feet of office/flex space.
— By Michael A. Fasano, associate, National Hospitality Group, Marcus & Millichap. This article first appeared in the February 2020 issue of Western Real Estate Business magazine.