United States -  Denver

Overview:

Denver, the capital and most populous city of the state of Colorado, is situated in the high plains at the eastern edge of the Rocky Mountains. These mountains, reaching higher than 14,000 feet, are the dominant feature of the area. Denver offers a diverse economy supported by the government, hospitality, banking, telecommunications, high-tech, and retail sectors, among others. Lockheed Martin, United Airlines, Comcast Corporation, CenturyLink, and JBS Swift & Company represent some of the largest private employers in the Denver metropolitan area. The healthcare sector also exhibits a strong presence in the region, with major employers including University of Colorado Health, Children's Hospital, Banner Health, and Saint Joseph Hospital. The federal government plays a significant role in the local economy, with major installations at the Federal Center, Buckley Air Force Base, and in Downtown Denver. The city's 769,000-square-foot convention center attracts many citywide conventions, while the city's special events venues and major tourism attractions help support a strong market for hotel demand.
 
The Denver metropolitan area benefits from a thriving economy and a sizeable lodging sector that spans from Downtown Denver north to Thornton, east to the Denver International Airport, south to Castle Rock, west to Golden, and northwest to Broomfield (excluding the Louisville and Boulder regions). The Downtown submarket responded well to new hotel openings in 2015, including the advent of the Crawford, Renaissance, and Aloft Hotel properties. Denver’s expanding infrastructure has played a key part in heightening RevPARs. Denver International Airport recently added new gates and welcomed a terminal-adjacent Westin hotel, while new light-rail lines are connecting not only the airport, but also other centers of business with Downtown, the Denver Tech Center, and future corridors such as Boulder. Enhanced connectivity between submarkets has spurred greater lodging options relative to demand generators and supporting amenities.
 
These factors also play a key role in attracting conventions, and Denver has solidified its ranking as a preferred major national convention destination. Hotels now dominate the landscape adjacent to the center, from a strong package of branded, full-service hotels sought by meeting planners to a variety of options such as luxury, all-suite, extended-stay, and boutique. Demand generated by sources throughout the metro area is attracted to downtown hotels where 24-7 energy, shops, restaurants, bars, and nightlife abound. Boutique and high-end hotel products have proliferated Downtown, capturing rates well above historical norms. Downtown Denver’s business climate is vibrant, with new office construction highly active in the Lo-Do/Union Station and River North neighborhoods, while conversions of older buildings are unveiled throughout this urban hub. The demand pattern reflects a healthy mix of transient corporate and government travelers that compete with convention delegates and tourists, creating a stronger weekday-weekend blend that results in peak occupancies, as well as rate premiums, a high government per diem, and few concessions.
 
The active lodging pipeline reflects these positive trends. Denver's diversified strong economy is driving new construction, with more higher-ADR boutique hotels, as well as extended-stay rooms, planned for Downtown. Proposed hotels are prevalent in several metro submarkets including Cherry Creek, the Denver Tech Center, Lakewood, DIA, and Boulder. A new Gaylord Rockies resort is likely around the corner, and typical of this chain's demand model, the sizeable resort is expected to bring a substantial, new book of business to the metro area that may benefit the market with overflow demand and peak-period compression. Similarly, the new terminal-adjacent Westin should attract national and regional group demand to Denver seeking the in-airport location for their space needs. Denver remains on a path of growth, with a forecast for continued strong levels of corporate, group, and leisure lodging demand. While the harbinger of history indicates that new hotel development and sizeable gains in available room nights will ultimately curtail the market's recent strong ADR growth trends, the near-term forecast indicates a continuation of RevPAR gains. As a result, lodging value trends are expected to taper through the next few years.
 
Given the breadth of hotel property types that sold in 2015, ranging from limited-service and extended-stay to upscale convention hotels, the pricing of Denver area transactions varied tremendously. The most notable sales in 2015 were the 1,231-room Sheraton Downtown Denver, which sold in December for $210 million ($171,000 per room), and the 403-room Embassy Suites Denver Convention Center that sold in November for $170 million ($422,000 per key).
 
* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Denver United States
Previous Year -3% (67 of 71) +1% (49 of 71)
Growth in 2017 -2% (66 of 71) +2% (36 of 71)
Growth in next 4 years +8% (50 of 71) +12% (32 of 71)

Change In Value For Market:

Denver RevPar % Change

For more information, please contact:

Bethany Cronk, MAI, MBA
BCronk@hvs.com
  • +1 720 837-8328 (w)
Brett Russell
BRussell@hvs.com
  • +1 720 877-1376 (w)