What's Happening?
Denver's hotel market, which experienced a decline in occupancy and rate growth following an early post-pandemic rebound, is expected to stabilize by 2026. The market lost momentum in late 2023 as leisure travel decreased and corporate travel plateaued.
Occupancy rates declined monthly from September 2024 through August 2025 due to softened corporate and transient demand, alongside a significant drop in government transient and group demand. A modest uptick in occupancy in September 2025 suggests a potential bottoming out, although the federal government shutdown starting October 1, 2025, poses short-term challenges. Average daily rates (ADR) have held up better than occupancy, but are trending nearly 2% lower for the year as hotels offer discounts to stimulate demand.
Why It's Important?
The stabilization of Denver's hotel market is crucial for the local economy, which relies heavily on tourism and business travel. The anticipated recovery in occupancy and rate growth by 2026 could lead to increased revenue for hotel operators and related businesses. The Colorado Convention Center's expansion and Denver International Airport's improvements are expected to boost visitation and event hosting capabilities, supporting market recovery. However, risks such as the federal funding gap and price sensitivity among travelers could hinder progress. Successful recovery will depend on strategic pricing and targeted incentives to attract visitors during off-peak periods.
What's Next?
Looking ahead, Denver's hotel market is expected to see occupancy stabilization before ADR growth, with improvements anticipated by late spring 2026. The market will benefit from stronger group bookings and normalized leisure travel patterns. Rate growth should resume as seasonal demand increases and discounting decreases. The limited new supply pipeline and infrastructure upgrades will support a cautiously optimistic outlook. However, the ongoing federal government shutdown may continue to impact booking patterns and government-related travel, posing challenges for properties reliant on these segments.
Beyond the Headlines
The expansion of the Colorado Convention Center and improvements at Denver International Airport could position Denver as a more attractive destination for large events and conventions, potentially drawing business away from other states. This shift could lead to long-term benefits for the city's hospitality industry, enhancing its competitiveness and appeal. Additionally, the strategic use of value-added incentives rather than broad discounts may help sustain revenue growth and improve the overall market health.
