Durango’s lodging industry is looking at ways to make room for 475 new hotel rooms that will come online in the next 1½ to two years.
“It’s scary as a lodger. It’s too much, too soon, but at the same time, we welcome them,” said Phoebe Ogden, general manager of the 116-room Holiday Inn & Suites, 21636 U.S. Highway 160, which was the first hotel built in Durango in more than 10 years when it opened in January 2013.
Recent additions since the Holiday Inn came online – the Homewood Suites with 78 rooms, the Fairfield Inn & Suites by Marriott with 81 rooms and La Quinta Inn & Suites with 96 rooms – all made the market more competitive, and Ogden expects that trend to continue when six hotels now approved and in the development stage eventually open their doors.
The Holiday Inn’s rooms rented from $119 to $230 in 2016. The room rate dropped to a range between $99 and $199 this year, she said.
Ogden, who also serves as vice president of the Durango Area Hotel and Lodging Association and is a member of the Durango Area Tourism Office board of directors, said from a broader economic perspective, the new hotels will enhance opportunities for visitors and more competitive room rates will benefit their pocketbooks.
Frank Lockwood, executive director of the Durango Area Tourism Office, said he expects remodeling will occur at older hotels to deal with the new competition.
Existing hotels that offer rooms in the same price range as new hotels will likely have to upgrade their facilities and rooms, provide more amenities or lower their room rates, he said.
Pressure, he added, also could be placed on older hotels on north Main Avenue, which now provide Durango’s lowest daily room rates.
Rod Barker, president and CEO of the Strater Hotel, 699 Main Ave., said the unique position of his hotel, a historic property downtown, protects him from the added competition compared with brand-name hotels.
But the new rooms, he said, intensify the pressure to diversify the tourism base by building a conference and performing arts center.
The lodging industry is rallying behind the effort to get a foothold in the $325 billion industry to host business and trade association meetings and conferences.
“We turn away a lot of business because we don’t have the facilities, other than at Sky Ute Casino, to accommodate groups over 250,” Ogden said. “We get calls all the time from people wanting to bring meetings to Durango, but there’s just no way,” she said.
Barker said trade associations and conventions typically occur in October and November, and from February through May – a period when monthly occupancy rates in Durango generally range from 40 percent to 70 percent.
DATO and lodge owners are aiming for the April ballot to ask voters to approve an increase in the lodgers tax from 2 percent to 6 percent, which would increase tax revenue from $1 million annually to $3 million, with most of the extra revenue to be used to promote tourism.
Because visitors pay the tax, Ogden is optimistic voters will pass the increase if the measure makes the ballot.
Lockwood said the effort to increase the lodgers tax depends on an agreement with the city to narrow the scope of how revenue from the tax can be used. He said hoteliers want clear wording that the bulk of the tax revenue would go to tourism promotion and to support operations of a new conference and performing arts center.
Currently, about $250,000 in lodgers tax collections supports city transit operations.
STR Global, which provides analytics to the hotel industry, lists 2,575 hotel rooms in La Plata County in 2018. In 2011, it listed 2,370 hotel rooms in the county.
Roger Zalneraitis, executive director of the La Plata Economic Development Alliance, noted that La Plata County, in 2018, is barely exceeding the 2,500 hotel rooms it had in 1990, according to data from STR Global.
Another indicator he compiled – examining the number of jobs in the county compared to the number of hotel rooms – also fails to indicate the county has too many hotel rooms. Jobs are used as a measure of needed hotel rooms to meet business travel generated in a community.
According to Zalneraitis, La Plata County had 19,786 jobs in 1990, which amounted to 7.9 jobs per hotel room. In 2018, the county has 41,869 jobs, which amounts to 16.3 jobs per hotel room.
“Even with six new hotels in the pipeline, we may only get back to the level of hotel supply we had 15 years ago, not nearly the same level that we had 25 to 30 years ago. So even though it looks like there are a lot of new hotels, in reality, we may simply be trying to catch up with demand rather than overbuilding,” Zalneraitis said in a recent newsletter sent to members of the alliance.