Charles Albert, who has run an inn in Durango for 40 years, has joined a migration that began several years ago as motels move from north Main Avenue to south Durango.
Speaking from the construction site of the 82-room, dual-branded Sleep Inn/MainStay Suites hotel going up on Escalante Drive near Goodwill, Albert said 435 new hotel rooms are currently under construction in Durango but “we feel there’s going to be enough business for everybody.”
In addition to Albert, the hotel is co-owned by his son and daughter-in-law, Luke and Jennie.
“We looked at current occupancy and the income generated by each room, and the numbers come out not great, but OK,” Albert said of his planning before going ahead with development of the Sleep Inn/MainStay Suites.
He added: “We think of this as a long-term investment. When all the new inns open up, we might be a bit overbuilt, but tourism will continue to grow and business travelers are increasing.”
Albert said he expects tourist visits to Durango to increase by 6% in 2020 and 2021.
According to Albert’s research, Durango has 1,894 motel and hotel rooms for rent currently, and the 435 rooms now under construction will add 23% more rooms to the market. Albert said his numbers don’t include the 103 rooms expected to be added to the market by a hotel being developed by Mountain Capital Partners in the Gelande overflow parking at Purgatory Resort that is expected to open by early 2021.
In Durango, Albert estimates the average annual revenue per room generated in 2019 will be $23,893.
In 2020, Albert expects total income from all motel and hotel rooms in the city to come in at $57.08 million.
With 435 new rooms soon to come online, Albert said he expects the new supply will keep average room rates from increasing rapidly, but he doubted the new rooms will actually lead to a lower average on room rents in Durango.
“The new rooms will serve as a cap to keep rates from going up rather than a cut in rates,” he said.
John Horrocks, a supervisor with Durango Electrical Service, noted labor issues have been challenging for contractors with several motels going up simultaneously.
“We’ve had an ad up for a journeyman electrician for a while, and we haven’t hired one,” he said.
He noted he recently persuaded an employee to stay with the company after he was offered a job for $28 an hour, $4 more than he currently earns. “I had to explain to him we were offering a 401(k) program and health insurance,” Horrocks said.
Albert said the added inns in Durango will drive up labor costs for motels in Durango.
“Wages will have to go up. That’s the way it is,” he said. “When the state’s minimum wage went up, it didn’t affect us here. Everyone was already making that.”
Beyond the 103-room Gelande Hotel in Purgatory, Albert said he didn’t expect any new hotels would be going up in the Durango area in 2020.
“We’ll have to see if the market can digest the new rooms being constructed now,” he said.
The biggest problem to development on Escalante Drive – paying for $1.5 million in improvements required by the city – has been overcome by three different property owners sharing the costs.
Additional development on Albert’s land also helps make the economics work for construction of the Sleep Inn/MainStay Suites.
Besides developing the two motels, Albert is developing a medical office building on his plot, and he will sell a portion of his land where he expects a restaurant to be developed.
“It makes sense to share the area with a medical office building. They need parking during the day, and we need the parking at night,” Albert said.
He expects the Sleep Inn/MainStay Suites to open in April or May 2020.