Hotel Occupancies Still Taking Big Hit

DENVER-Occupancy rates in Denver area hotels fell to an average occupancy rate of only 54.8% in September, the lowest in recent memory and a far cry from the 72.8% occupancy rate in September 2000, shows a report by John Montgomery, president of Horwath Horizon Advisors/Montgomery & Associates. ”We’re about 80% done tabulating the October numbers and it looks like that will come in around 58%, compared with 67.6% last October,” Montgomery tells GlobeSt.com.

While the area will still be reeling to some extent from the decline in travel caused by the Sept. 11 terrorist attacks, the market is showing some signs of recovery, he notes.

”A week after the attacks, the market dropped by about 37% and now it’s maybe down 15%,” Montgomery tells GlobeSt.com. ”If you look at national statistics, and sort of read between the lines, the market was softening before Sept. 11. I would say that maybe 5% or 10% of the drop is coming from the economic softness that was apparent before the attacks, and the rest can be attributed to Sept. 11.”

The recent American Airlines crash, however, doesn’t seem to have affected travel in the US or in Denver, he says.

”I don’t think you can really ever get into a debate of a ‘good’ crash vs. a ‘bad’ crash,” Montgomery tells GlobeSt.com. ”But as the preliminary evidence seems to suggest that terrorism wasn’t involved, I think most people look at it as an act of God. It’s like the stock market. It went to heck immediately after the crash when people worried about terrorism, but then quickly rebounded. If there had been indications it was a terrorist attack, I think it would have had a very, very significant impact on the hospitalityindustry.”

Montgomery, however, says the Denver area hospitality industry is suffering somewhat more than the national market for these reasons:

* The Denver area relies heavily on air transportation.

* Unlike many cities in the Midwest, East or in California, the metro Denver market lacks a significant population base n the immediate area. For example, Salt Lake City and Albuquerque are a day’s drive from Denver.

* The Denver area is a large convention destination market.

* The Denver market has a strong relationship to Colorado’s ski resorts. Ski resorts not only are being hammered by tourists’ fear of flying, but by a lack of snow.

Rich Grant, of the Denver Metro Conventions & Visitors Bureau, however, doesn’t think Denver was hit any harder than other cities.

”Look at Disney World,” Grant tells GlobeSt.com. ”And in Miami, 91% of their tourists arrive by air. I was just in Washington, DC, and Mount Vernon visits are off by 65%. I mean, Washington, DC is just devastated. Their hotels are hurting. You don’t have all of these school kids from across the country canceling tours. Nobody is better off.”

But he says Montgomery’s numbers seem accurate.

”All I can say is that is about what we had expected,” Grant says. ”We’re doing what we can to bring business back. We have 30 hotels making calls and promoting packages of $99 or under a night. It’s the most hotels we’ve ever had working together in our history.”