Denver hotels performed better in 2013, but growth was modest

Denver hotels booked their best performance in years during 2013, approaching — but not yet surpassing — pre-recession peak levels for room rates.

Tourists and business travelers came in greater numbers last year, occupied more rooms and paid more, pushing the industry to its fourth consecutive year of improvement. While hotels performed well, analysts said they had hoped for a greater jump in room rates than the 3 percent gain from 2012 to 2013.

"The hotel-and-lodging market got stronger during 2013, but we're still not seeing much room-rate growth," said analyst Bob Benton of Parker-based Robert S. Benton and Associates.

The average metro Denver room rate rose to $115 last year, up from $112 in 2012, according to the Rocky Mountain Lodging Report released Friday. Rates reached a historic high of $118 in 2008, then fell as the recession cut into business and discretionary travel.

Benton said the industry still is experiencing a recession-related hangover, with travelers — business and recreational — shopping for deals and keeping a lid on room-rate increases.

But even modest gains in the industry are leading to more development. About 600 Denver hotel rooms were added last year. Projections call for a bigger boom this year, with an estimated 1,600 rooms to open.

Benton said room rates could grow by 4 percent to 5 percent this year, despite the added supply from new development.

Metro Denver's hotel-occupancy rate averaged 70.8 percent last year. That marks the first time since 1998 that occupancy has topped 70 percent.

Denver had a 2013 increase of 2 percent in convention and group-meeting attendance, according to Visit Denver, the city's convention and visitors bureau. The resulting economic impact was $665.7 million.

Richard Scharf, chief executive of Visit Denver, said the increase might have been larger except for a combination of factors including Colorado flooding, federal budget cuts and the 16-day federal government shutdown in October.

"There are still a lot of business travelers sitting on the sidelines, not booking trips," Scharf said.

Flooding took a toll on the lodging business in Estes Park. The town's average occupancy rate for 2013 was 48 percent, compared with 53 percent in 2012.

Statewide, hotel occupancies rose to 64 percent in 2013, compared with 62 percent a year earlier. The average room rate was $128, up from $123.

Reported by:  Denverpost.com