Colorado Hotels Are Doing Better But Still Haven't Reached Pre-Pandemic Territory
Denver-area hotels continue to show improvement as the city’s economy inches away from the damage done by the pandemic, with hotels in the metro area logging an average occupancy rate of 58.5% in February, according to data from the Colorado Hotel & Lodging Association.
That’s compared to 51% in January 2022 and 33% in January 2021, reflecting a slowing in the rate of improvement from the spike in occupancy that occurred as Covid vaccines became available.
While still below pre-pandemic levels that hotel operators would prefer, the upticks in occupancy allowed Denver hotels to charge an average daily rate of $132.45, up from about $120 in February 2022.
Submarkets with lots of entertainment attractions like midtown, northeast Denver and the downtown Theater District all outperformed the city average. But business centers such as the commercial district and the Golden Triangle neighborhood underperformed compared to citywide averages.
The return of some of the convention traffic that has long boosted downtown’s hospitality industry likely contributed to some of the improvement. For example, Denver welcomed the in-person return of the Great American Beer Festival last fall, an annual event that draws thousands of visitors. GABF will be back in 2023 along with other major conventions like the Great American RV Show in April.
Capital markets interest in downtown hotel properties has crept back up, in spite of high interest rates nationwide and an uncertain real estate market, perhaps drawn by more favorable pricing for buyers.
In December, Crescent Real Estate purchased the Hotel Monaco for $69.75M, representing a roughly 9% loss for former owner Xenia Hotels & Resorts, which purchased the property for $75M in 2013.
And local developer Continuum Partners sold an interest in its Kimpton Born Hotel near Union Station to Aspen Hospitality, which will rebrand the property as a Limelight Hotel, a popular destination in Aspen and Steamboat Springs.
Overall, Colorado’s hotels logged an average occupancy rate of 62.9% in February compared to the 59.5% rate in February 2022, according to CHLA data. Hotels in resort towns like Aspen, Vail and Telluride led the way with occupancy rates of more than 70% during the month as well. However, other destinations like Estes Park and Grand Junction struggled to attract visitors, suggesting continued struggles for some smaller cities.
Estes Park in particular struggled to attract new visitors. The town had an average occupancy rate of just 23.1% in February compared to a 26.7% occupancy rate in February 2022. Meanwhile data from Visit Estes Park, the city’s tourism arm, shows that the town’s total number of search impressions is down about 14% and its direct hotel booking referrals are down 1% as well.
But those figures could improve when March’s data is released next month. Estes Park hosted Colorado’s annual Frozen Dead Guy Days festival over St. Patrick’s Day weekend instead of Nederland, which has hosted the event for the last two decades.
