PKF Hotel Market Demand and Financial Analysis - DIA Business ...
PKF Hotel Market Demand and Financial Analysis - DIA Business ...
PKF Hotel Market Demand and Financial Analysis - DIA Business ...
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The Westin Denver International Airport<strong>Hotel</strong> <strong>Market</strong> <strong>Analysis</strong>The ADR of the Denver lodging market fluctuated between approximately $65 <strong>and</strong>$75 between 1995 <strong>and</strong> 2004. Beginning in 2005, management of hotels throughoutthe region focused on increasing rates as dem<strong>and</strong> returned to the local market.This focus on increasing ADR resulted in rate growth of 8.4 percent in 2005 withADR increasing from approximately $75 to $81. Significant rate growth of 11.0,10.4, <strong>and</strong> 6.5 percent was achieved in 2006, 2007, <strong>and</strong> 2008, respectively, whichresulted in an ADR of approximately $106 in 2008. As dem<strong>and</strong> declined year-overyeardue to the recent economic downturn, management discounted rates, whichresulted in a decrease in ADR of 12.0 percent in 2009. As dem<strong>and</strong> returned to thelocal lodging market, modest increases in ADR were achieved in 2010 <strong>and</strong> 2011,resulting in an ADR of approximately $98 through year-end 2011. As the economycontinues to improve <strong>and</strong> dem<strong>and</strong> returns to the Denver lodging market, rate growthof between approximately 4.0 <strong>and</strong> 7.0 percent is projected over the next five years,resulting in an ADR of approximately $127 in 2016. This ADR growth is deemedreasonable as the market operates on a stabilized level <strong>and</strong> management focusesprimarily on increasing room rates.D. COMPETITIVE LODGING MARKET ANALYSISWithin the greater Denver lodging market, the proposed Subject is projected tocompete primarily with the nationally-affiliated, full-service <strong>and</strong> some focus-servicehotels located proximate to the Denver International Airport (<strong>DIA</strong>) (in theAirport/East submarket). As the Subject will represent the highest quality hotel inthe Airport/East submarket, it is also projected to compete secondarily with thenationally-affiliated, full-service hotels located in downtown Denver (Central<strong>Business</strong> District submarket). Accordingly, we have presented an overview of themost direct competitors located in the local Airport/East market as well as thesecondary competitors located in the Central <strong>Business</strong> District lodging market.Lastly, as the Subject will represent an in-terminal hotel, or hotel physicallyconnected to a major international airport, we have also presented an overview ofthe performance of the in-terminal lodging market within the United States <strong>and</strong>Canada. Our review of the other in-terminal hotels is presented later in this section<strong>and</strong> serves more as a test of reasonableness against the unique performance forthe select number of hotels that are physically connected to a major, internationalairport.1. Competitive Airport Lodging <strong>Market</strong>The airport lodging market primarily includes those hotels located on Tower Road,approximately eight miles southwest of <strong>DIA</strong> <strong>and</strong> the group of hotels located in <strong>and</strong>around Gateway Park along 40 th Street, approximately 12 miles southwest of <strong>DIA</strong>.For the purpose of this analysis, we have focused on six hotels in these twolocations as representing the primary competitive market for the proposed Westin.Competitive properties were identified on the basis of product quality, room rateIV-5
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