|By Julie Dunn, The Denver Post
Knight Ridder/Tribune Business News
Apr. 21, 2006--Fears about an overbuilt downtown Denver hotel market are dissipating as a new report shows occupancy and room rates continuing to rise.
Downtown occupancy rates rose more than 13 percentage points in March compared with a year ago, evidence the market has already absorbed the 1,100-room Hyatt Regency Denver at the Colorado Convention Center, which opened in late December.
The $285 million Hyatt Regency saw its highest average occupancy rate to date last month, at 85.4 percent -- far exceeding industry expectations. The hotel has been booking more smaller, short-term corporate meetings than expected, said director of sales and marketing David Gauthier.
"I think a lot of people have really begun solidly recognizing Denver as a first-tier city for convention and corporate business," he said.
In the first three months of the year, downtown Denver's average hotel occupancy rate grew by 7.3 percentage points, to 64.4 percent, according to the latest Rocky Mountain Lodging Report released Thursday. Average room rates increased by $5.79, to $129.80.
Industry experts pointed to the rebounding economy and increased traffic at the Colorado Convention Center as two reasons behind the overall growth.
The convention center, which opened a $310 million expansion in December 2004, hosted 12 large meetings during the first quarter, compared with six during the same period last year. Experts attribute part of the increase to larger conventions that require a hotel of the Hyatt Regency's size and location across the street from the convention center.
The strength of the local market is "fairly phenomenal," considering the increase in inventory, said Robert Benton, author of the monthly lodging report.
There are roughly 900 more hotel rooms downtown now than there were in March 2005, including added rooms from the Hyatt Regency and the 229-suite Residence Inn by Marriott at 18th and Champa streets, which opened in January. Downtown lost 600-plus hotel rooms in the past several months because of the closure of the Executive Tower Inn and the Embassy Suites for renovations.
Hotel occupancy and room rates in Denver and across the state have been trending up since mid-2004, said Benton.
In March, statewide occupancy rates rose by 5.5 percentage points over the same month last year, to 65.4 percent. Room rates increased $5.58, to $129.82. In the metro area, occupancy rates rose by 6.3 percentage points, to 65.1 percent. Average room rates jumped $10.57, to $95.86.
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