June 24, 2004 - Record gasoline prices and a glut of hotel rooms in Colorado Springs have tempered hopes for a recovery in the local lodging industry.

Occupancy rates in local hotels and motels have declined from the same month a year earlier in four of the first five months of the year. The average occupancy for the city's hotels during the first five months of the year is down 4.2 percent from a year ago.

The Broadmoor hotel, The Cliff House and Cheyenne Mountain Resort are not included in the Colorado Springs part of the report. They are considered resorts.

The May Rocky Mountain Lodging Report, released this week, shows Springs hotels generating more cash from the rooms they rent but renting fewer of them. The average rate through May is $69.70, up 6 percent from last year.

Terry Sullivan, president of the Colorado Springs Convention and Visitors Bureau, attributed the decline to budget-minded travelers who canceled plans because of record gasoline prices, which approached $2 a gallon locally just before Memorial Day.

Collections from the city's 2 percent tax on hotel room rentals during the first four months of the year are up 10 percent from a year ago. The average occupancy rate, however, has yet to reach 60 percent in any month this year. It reached 60 percent last year in February and May.

"Occupancy is not quite what we had hoped it would be," said Jackie Duff, president of the Pikes Peak Lodging Association. "It has gotten a little better in June, but we are starting to wonder whether this will last the entire summer."

Hardest hit are budget motels, especially those without a national franchise. Occupancy rates for budget-price and limited-service hotels fell more sharply than for their full-service counterparts.

"Last year was the worst year we'd ever had, and this year is even worse," said George James, co-owner of the Dillon Motel in Manitou Springs. "We haven't sold out yet this year, and over Memorial Day weekend we never had more than five rooms (of 16) sold."

Two of the many motels that dot West Colorado Avenue and Manitou Avenue in Manitou Springs were repossessed by lenders last winter, and James warned that more small-hotel operators may be forced out of business.

"We are down 60 percent from last year, and the No. 1 reason is that there are too many motel rooms," James said. "There have been 6,000 rooms built since the mid-1990s in the area, and we are not attracting 6,000 more visitors a day to fill those rooms."

Even hotels near major attractions such as the Air Force Academy are hurting.

Jay Patel, who owns a Super 8 Motel near the academy's south entrance, said rate-cutting by full-service hotels has lured potential guests away from budget-priced motels like his.

"When the larger hotels drop their rates, people can stay at those properties for not much more than they can stay at an economy hotel and get a pool, breakfast and other amenities that I don't have, so we end up having to drop our rates as well," Patel said.

At the other end of the market, times are good for The Broadmoor hotel, at least for the next month or so, said Steve Bartolin, the resort's president.

Bookings for fall, though, are "not very strong," he said.

Local attractions also report strong traffic.

Michelle Carvell, executive director of the Pikes Peak Country Attractions Association, said May traffic at the 29 member attractions was "fabulous" with some reporting gains of up to 57 percent from last year.

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