Most businesses have taken a hit this year, and Denver’s hotel industry is no exception. Seven months after COVID-19 prompted stay-at-home orders and caused business travel to decline, hotels are still trying to make up for lost revenue.
According to Visit Denver, hotel occupancy in the metro area declined approximately 42 percent year-over-year, from September 2019 to September 2020. “In downtown Denver, the largest impact is the loss of convention and meeting business due to statewide meeting size mandates and the [Colorado] Convention Center being used as an alternate care facility,” says Richard Scharf, president and CEO of Visit Denver. “The traditionally high-volume, lucrative business traveler market has also been negatively impacted.”
The average daily rate dropped 28 percent this year as hotels slashed prices to fill rooms, according to Visit Denver. The Source Hotel in RiNo dropped rates 30 percent to make up for the 40 percent decline in occupancy, says general manager David Stutz. “Business did rebound better as summer continued and we saw spikes in business on the weekends,” Stutz says.
Sage Hospitality Group—which manages 16 hotels in the state, such as the Crawford Hotel at Union Station and JW Marriott in Cherry Creek—temporarily closed all but two Colorado hotels in March and April. These hotels reopened in late May and early June as statewide restrictions were lifted. “I think most hotels in that early part of the pandemic recognized that you would lose less being closed than being open,” says Walter Isenberg, CEO of Sage Hospitality Group. “And as that calculus changed, people started opening.” (Year-over-year revenue was down 97 percent in April, he says.)
Isenberg says since April revenues have improved month-over-month, but company-wide Sage Hospitality, which manages 52 hotels, is still seeing occupancy rates down 65 to 70 percent. To rent rooms, several Sage properties are getting creative by offering day rates for those who want to work away from home. The company also has a contract with the University of Colorado Boulder to rent hotel rooms as dorm rooms.
The types of hotels people are staying at have also changed as visitors look for more amenities rather than conference rooms and convention spaces. JW Marriott in Cherry Creek, for example, outperformed many hotels downtown Denver, and hotels like the Oxford and the Crawford did better than branded hotels like the Courtyard by Marriott, Isenberg says. “The primary reason that properties are outperforming is because nearly 100 percent of the business that we’re seeing is leisure,” he says. “There are no conventions. There’s virtually no meeting business, and there’s no corporate travel.”
Gaylord Rockies Resort & Convention in Aurora is also seeing visitors book rooms for different reasons than normal. “Summer was a little different for us this year as our guests were predominately leisure guests who were at the hotel to enjoy our amenities,” says Deanne French, marketing director for Gaylord Rockies. “It was a summer of staycationers.”
While the summer months were used to rebound, hotels are now looking ahead to the holiday season. French says the holiday season is a bright spot for Gaylord Rockies as the hotel prepares for Christmas at Gaylord Rockies, which includes photos with Santa Claus and outdoor ice bumper cars. However, not all area hotels are excited for the months ahead. “The holiday season looks sparse, although we are hopeful it could surprise us with pent up demand,” Stutz says about the Source Hotel.
Regardless of the losses and changes this year, Isenberg predicts the industry will recover, though he says it will take time. He estimates hotels nationally will return to pre-pandemic levels by the second half of 2023 or first half of 2024.
“The hospitality industry has huge pent up demand,” says Scharf. “But the speed of recovery will be based on the economy, travel safety protocols, and impact of better COVID-19 treatments, rapid testing and a vaccine.”