Denver Hotel Market to Reach Near Record Occupancy in 2018
DENVER – Hotel supply and demand growth in Denver is expected to double the national average in 2018. Supply is forecasted to increase 4.6 percent this year, compared to 2.0 nationally, that’s according to CBRE Hotels’ Americas Research (CBRE) that provides capital markets, consulting, investment sales, research and valuation services to companies in the hotel sector.
Demand for hotels in Denver is expected to grow 5.1 percent in 2018, versus 2.1 percent nationally. In terms of average daily room rates, CBRE forecasts those to rise 1.7 percent in Denver in 2018, reaching $133.43, before falling slightly in 2019. Revenue per available room (RevPAR) in Denver is expected to follow a similar pattern, rising 2.1 percent to $98.29 in 2018 before falling 0.6 percent next year.
“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. 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,” said Chris Kraus, managing director with CBRE Hotels.
Denver hotel occupancy forecast for 2018 is 73.7 percent. That’s well above average for Denver and almost eight points higher than the national rate, which is forecast to be 66.0 percent this year and grow to 66.2 percent in 2019. The U.S. annual hotel occupancy level has risen and set a new record every year since 2015.
“We continue to be impressed by the ability of the U.S. economy to support demand growth for accommodations away from home,” said R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research. “We are bullish on the performance of U.S. hotels during 2018 and the depth of the fundamentals supporting our forecast. The continual achievement of record occupancy levels, combined with improved ADR growth, should provide all industry participants with a sense of comfort. The magnitude of revenue and profit growth may not be spectacular, but it appears to be very sustainable.”