Experts Allay Neighboring Hoteliers' Fears About $115-Mil Westin Impact

DENVER-Existing hotel operators in the vicinity of the former Stapleton International Airport will not be hurt as much as they fear when doors open on a planned $115-million Westin Hotel at the Denver International Airport, experts say.

That’s because it won’t be a SMERF hotel, like the ones across from Stapleton, A. Corey Limbach, vice president of the San Francisco-office of PKF Consulting, told Denver City Council members who sit on the city’s DIA Stapleton Committee. SMERF is an industry acronym for social, military, religious and fraternal groups that provide the bread and butter for many hotels.

SMERF travelers typically watch their pennies or adhere to their per diems. In contrast, the Westin will attract well-heeled corporate travelers. The Westin will not be attracting consumers who prefer to pay the $80 a night to stay at one of the Stapleton hotels, he says. Nationally, airport terminal hotels have an 81% average occupancy rate and charge of $132. The Westin is projected to open with room rates starting at $141 per night, says Greg O’Stean, vice president of acquisitions and development for Starwood Hotels & Resorts Worldwide Inc., parent of Westin.

The market is just recovering from Stapleton’s closure five years ago by drawing more associations and other group businesses to Quebec Street hotels – a revenue that some hoteliers fear will be lost. Indeed, limited-service hotels around DIA are hurting the Stapleton hotels more than the Westin will, assesses Limbach. Councilwoman Happy Haynes had been quick to point out that limited-service hotels aren’t competitive with Stapleton hotels due to the absence of meeting rooms.

There will be some overlap business between the Stapleton hotels and the new Westin, Limbach admits. He predicts that hotels in the immediate vicinity and downtown will experience an estimated 9% dip in occupancy rates from the current 76%, but occupancies will recover in a year or two. “Our market feasibility study shows the new hotel will create a substantial amount of new demand,” Limbach says. He estimates the new DIA Westin and the planned 1,100-room Hyatt Regency across from the Colorado Convention Center in downtown Denver, will add an additional 300,000 room nights to the market within two years.

Following the meeting, Bruce Lange, Starwood’s area managing director, told GlobeSt.com that DIA will become a “destination” airport as soon as the new hotel opens. Today, many passengers use DIA as a connecting airport to travel to other cities and Denver is not their final destination, he says.