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While Nothing Statistically Warrants Building More Hotels at the Colorado Springs Airport,
Four New Properties with 438 rooms Are Under Construction
By Wayne Heilman, The Gazette, Colorado Springs, Colo.McClatchy-Tribune Business News

Mar. 26, 2007 - The Colorado Springs Airport has become a magnet for new hotels, with four new properties under construction with plans to open this summer.

The four hotels will expand the number of available rooms within three miles of the airport by 438, or 56.8 percent. And the building might not stop there. Airport officials plan to seek bids this summer from developers for a hotel in the airport's new business park.

The hotel builders say there's enough demand for their new rooms, but Terry Sullivan, chief executive of Experience Colorado Springs at Pikes Peak, worries that the flood of new rooms this summer might trigger a price war that could spread across the region. While that's good news for travelers, it threatens the already struggling local hotel industry, he said.

"There is nothing statistically that warrants building more hotels in the entire region, let alone in that particular location," Sullivan said.

The building boom began nearly a year ago, when a partnership controlled by the local Pietraszek family began construction on a 90-room Hilton Garden Inn. The family added 29 rooms to the project to meet new requirements set by Hilton Hotels Inc.

Days after work began on the Hilton Garden Inn, Kansas-based hotel developer RHW Management Inc. began construction on a 101-room SpringHill Suites and 97-room TownePlace Suites.

Earlier this month, a Kansas-based partnership began construction on a 121-room Value Place Hotel scheduled to open in August. The three-year-old chain has more than 500 hotels under construction or in the planning stages.

None of the owners of the new airport-area hotels said they worry about an overbuilt market or price war.

"We've done extensive studies of that market and believe we will be able to retain occupancy and decent room rate as well," said David Montero, regional manager for RHW in the Springs, where the company will operate six hotels once its two airport hotels are open.

Tami Long, manager of the Hilton Garden Inn now under construction, said the Hilton name will help attract guests to the hotel, along with 7,000 troops moving to Fort Carson from Texas by 2009 and the expansion next month of ExpressJet Airlines to the Springs.

Value Place Hotels is targeting a different market niche -- small-business owners who thatrent rooms for weeks at a time while working on projects, said Charles Bruce, senior vice president of the Wichita, Kan.-based chain.

"The Colorado Springs market is really attractive to us because most of our competition is building hotels for travelers from Fortune 1000 businesses," Bruce said.

"We are giving a more affordable choice to the small-business owner traveling on their own dime."

Airport officials plan to seek bids by July for a developer of a 25-acre site in the airport's business park for a full-service hotel with up to 300 rooms, said John Faulkner, who heads airport planning and development.

Construction is likely to begin until next year on that hotel -- which would include extensive meeting space, restaurants and other amenities, Faulkner said. The hotel likely wouldn't open until at least 2009, he said.

"We believe that a lot of the demand for this hotel will be internal from the business park," Faulkner said.

"The Colorado Springs hotel market hasn't grown as much as the rest of the nation, and developers may be expecting it will get a greater share of the market."

Aerospace Corp. and Northrop Grumman Corp. already have begun construction on offices in the business park, which eventually is expected to bring up to 5,000 new jobs in office buildings and industrial plants when development is completed within 10 years.

Peterson Air Force Base also plans to add 100 rooms by 2011 to the 164 hotel rooms already on base, said Tech Sgt. Matt Gilreath, a Peterson spokesman.

Most of the nine hotels now operating near the airport were built in the mid-1990s, just after the airport built its new passenger terminal and traveler numbers were surging with the growth of Western Pacific Airlines.

The carrier went bankrupt in 1998.

Airport hotels now survive by renting rooms to visiting military personnel and government contractors with nearby offices, said Zan Wagner, general manager of the 200-room Radisson Hotel Colorado Springs Airport, the oldest and largest in the airport area.

"Most of our business is on a per-diem (per day) rate set by the federal government at $80. That is down from $104 a couple of years ago," Wagner said.

"There is very limited demand out here, and to put 400 more rooms here is asinine. It doesn't make any sense."

Unless that rate increases in the federal fiscal year that begins Oct. 1, the new hotels probably won't be able to generate enough revenue to recoup their owners' investment, Wagner said.

The airport area doesn't attract many well-heeled tourists, he added.

"We really aren't in the right area for tourism," Wagner said. "There is only a limited supply of people who want to stay" near the airport.


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Copyright (c) 2007, The Gazette, Colorado Springs, Colo.

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