Denver Hotel Market Shows Signs of Recovery
The continued rollout of COVID-19 vaccinations and additional stimulus funds have strengthened the foundation for the recovery of the U.S. lodging industry. According to the February 2021 edition of Hotel Horizons®, CBRE Hotels Research is forecasting an average national occupancy level of 43.0% during the first half of 2021, accelerating to 55.1% in the second half of the year.
In the Denver MSA, hotel occupancy is forecast to average 48.8% in 2021, up from 39.2% in 2020. This still is well below the market’s pre-pandemic occupancy of 73.1%, but it marks the beginning of a recovery in the sector.
“The quicker-than-anticipated national rollout of COVID-19 vaccines coupled with the December COVID Relief Bill have improved the outlook for the U.S. hotels market. We expect hotels and drive-to destination resort areas catering to leisure travelers to continue to see the fastest gains in occupancy. We anticipate business travel to pick up in the latter half of the year, benefitting urban and suburban upper-priced properties,” said Julie Purnell, executive vice president, CBRE Hotels Advisory.
The Denver MSA’s average daily room rate (ADR) is expected to rise just slightly (0.7%) this year to $97.52. Resulting RevPAR, however, is expected to climb 25.6% to $47.61 by year-end 2021. The Denver MSA hotel market is projected to reach full recovery in 2024 with forecasted occupancy, ADR and RevPAR all surpassing 2019 levels.
“Based on our forecasts, the worst of the top-line declines are now behind us. We are beginning to see green shoots of a recovery in air travel data, booking patterns, and revenue per available room (RevPAR),” said Rachael Rothman, head of Hotels Research & Data Analytics for CBRE.
Growth Beyond 2021
One factor supporting enhanced lodging performance in the second half of this year and beyond is a reduction in the traditional lodging supply. The combination of permanent closures and fewer projects starting construction has resulted in a reduction of CBRE’s national hotel supply forecast for 2021 to a gain of just 0.9% for the year. In the Denver MSA, hotel supply is forecasted to grow 3.4% in 2021 before slowing to 2.8% growth in 2022 and 1.1% in 2023. CBRE estimates national supply growth will remain below 1% through 2023.