Greater Denver's supply growth expected to continue beyond 2018

Wingate by Wyndham Greenwood Village Denver Tech - Greenwood Village, CO - Exterior
Downtown Denver boasts an array of impressive upper-upscale and luxury hotels: a Four Seasons; a Ritz-Carlton; the historic Brown Palace, which dates to 1892 and is now part of Marriott International’s Autograph Collection; and the Oxford Hotel, another historic property, among them. But Denver has another compelling lodging investment story to tell and it lies in the suburbs.

Like many major American cities, Denver has experienced tremendous growth in the past 20 years, a milestone often marked by the opening of Denver International Airport 25 miles from downtown in 1995. Along with that growth, numerous submarkets have sprung up in what today can more accurately be called the Greater Denver market. And with the movement of people and businesses, a subsequent wave of hotel development—mostly limited-service and select-service—has been close behind.

Six Submarkets

Underscoring that point, Lodging Econometrics—in analyzing the Mile High City market—divides Denver into six distinct hotel submarkets: the central business district, Denver Airport/East, Denver Tech Center, Denver South, Denver North and Denver West.

As of the end of the second quarter, Lodging Econometrics listed a total of 307 hotels in the Greater Denver market, accounting for 43,715 rooms. Not surprisingly, considering the spread of limited- and select-service hotels in the suburbs and the typical concentration of hotels at these price points near airports, almost a third of the Greater Denver market’s hotels (93) were in the airport submarket. By comparison, only 49 were in the downtown central business district.

Room counts paint a different picture, however. Taking into account that limited- and select-service hotels tend to have fewer keys than full-service hotels, the 49 hotels downtown, which include a Hyatt Regency full-service “big box” convention hotel, have 10,467 rooms. The 93 airport hotels, by contrast, have 12,908 rooms, only a roughly 2,500-room differential.

Seeing an opportunity to expand in a growing market through franchising, multibrand companies with limited- and select-service brands in their portfolio have moved aggressively. Given that franchises come with an area of exclusivity, having multiple brands provides more opportunities for the companies to increase their distribution. Wyndham Hotel Group is a prime example. As of mid-September, nine of its limited- and select-service brands were represented in the Greater Denver area, accounting for a total of 27 hotels.

Multiple Units

Five of the nine Wyndham brands had multiple units across the various submarkets. At the top of the list was Super 8 with seven hotels, followed by Days Inn and Ramada Worldwide with six hotels each. Travelodge and Baymont each had two hotels in the market, while Wingate by Wyndham, Howard Johnson, Hawthorn by Wyndham and Microtel by Wyndham each had one.

While most of the full-service hotels, though not all, tend to be located downtown, a Ramada and a Days Inn are located there, as well. Ramada properties also can be found in midtown, at the airport and in the suburb of Englewood, while a Ramada line extension called Ramada Plaza has a Denver Central hotel and one in Northglenn, a suburb in Denver North.

Other submarkets where Wyndham is represented include Stapleton (Super 8), Wheat Ridge (Super 8 and Howard Johnson), Federal Center/Lakewood (Baymont), Aurora, site of Denver International Airport (Travelodge, Ramada, Baymont and Days Inn), Golden (Days Inn), Henderson (Super 8), Greenwood Village, headquarters of the Denver Tech Center (Wingate, Days Inn and Hawthorn Suites), Westminster (Super 8), Parker (Super 8), Brighton (Super 8), Boulder (Days Inn) and Castle Rock (Days Inn). Distance from downtown can be as much as 25 miles.

Based on Lodging Econometrics’ construction pipeline, Greater Denver’s hotel inventory is expected to continue to grow through 2018 and beyond. Five hotels are expected to come on line this year, followed by 10 in 2016, 21 in 2017 and another 16 in 2018 and beyond. The airport is expected to experience the largest growth surge of any submarket in 2017 when 12 hotels, accounting for 1,189 rooms, are expected to open.