Denver’s hotel economy is among the strongest in the nation and it is forecasted to continue that trajectory, according to a new report put together by commercial real estate services firm CBRE. This year, Denver has a hotel occupancy rate of 73.7 percent, which is far better than a typical year in Denver and it is nearly 8 percentage points higher than the national average of 66 percent.
Denver has been on an upward trend since 1989. More recently, this trend has led to heightened investment from developers, and Denver’s hotel supply is forecasted to increase by 4.6 percent this year, which is also well above the 2 percent increase that is expected nationally.
According to the report, the city’s demand for hotels is set to increase as well, keeping the new supply from affecting the upward trajectory of the market. In Denver, demand for hotels is expected to grow 5.1 percent for 2018, while the national average is a step behind at 2.1 percent. Also Denver’s impressive ability to recruit tourists doesn’t appear to be slowing down any time soon, giving CBRE reason to be “bullish” on their projections for the hotel industry.
“Since Denver has performed so strongly in recent years, developers have launched many new projects that will introduce new supply in 2018 and 2019. What typically happens when there is strong supply growth is it creates competition that pushes down occupancy levels, puts downward pressure on room rates and lowers revenue growth,” said Chris Kraus, managing director of CBRE Hotels, in the report. “Fortunately, the underlying fundamentals of Denver’s economy, which translate to lodging demand, are very positive. 2018’s occupancy is forecasted to reach near record highs in Denver, and demand is expected to continue increasing this year and next at more than twice the national average.”
The increase in tourism has not only helped the hotel industry but other short-term stay options as well. According to Airbnb, there were 325,000 guest arrivals to Denver in 2017, up from 223,000 the year before.
“A growing number of travelers are using Airbnb to visit Denver, helping the city welcome a record number of visitors and complementing existing lodging providers” said Laura Rillos, a spokeswoman for Airbnb. “With 42 percent of Airbnb visitor spending occurring in the neighborhood in which a guest stays, this creates a significant economic opportunity for neighborhoods throughout the city that have not traditionally benefited from tourism.”