Triple helping of posh new hotels

Strong downtown market prepares for luxury influx

John Rebchook, Rocky Mountain News

Published July 24, 2007 at midnight

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Downtown has scored a hat trick of high-end hotels with last week's announcement of a W Hotel on the 16th Street Mall.

In addition to the W, being developed by Walter Isenberg of Sage Hospitality Resources, Jeff Selby and Michael Brenneman are moving forward on a Four Seasons. And Charlie Biederman, Steve Roitman and Jim Cobb are developing a Ritz-Carlton that is already under constuction and scheduled to open by year's end.

The three hotels, with a combined estimated value near $570 million, will add more than 600 rooms to the market, increasing the entire downtown supply by almost 9 percent.

The projects also call for 238 luxury condominiums at the top of the hotels, creating a new market downtown: condo hotels, as they are known in the industry.

"These are not really hotels. These are mixed-use developments with condos that really offset a significant cost of the development," Benton said.

Condo sales reduce the cost of each hotel room, and the luxury hotels are moving ahead at a time when the hotel market is extraordinarily strong, he said.

The projects come at a time when downtown Denver's hotel market is stronger than ever by some measures.

In June, the downtown hotel market boasted a near-record occupancy rate of 81.5 percent, and a record average room rate of $161.65 in dollars not adjusted for inflation, according to the Rocky Mountain Lodging Report released Monday by Robert S. Benton & Associates. That's up from 77.9 percent and $103.48 in June 2006.

"Downtown Denver is really evolving into much more of a cosmopolitan city," Benton said. "But in a recession, the first things to get impacted are travel and hotel rooms, with luxury hotel rooms impacted particularly hard. The real key is can they sell these expensive condos?"

Tom Curley, area managing director of Starwood Hotels & Resorts, the parent of W Hotels, said Monday he thinks there is room in downtown Denver for the W and other upscale properties, noting they will "open over a staggered period of time, so the market will have time to absorb the new inventory."

Brian Phetteplace, housing program manager for the Downtown Denver Partnership, said the "condo hotel is something not seen in this market before."

He said people familiar with W Residences will consider Denver a bargain when compared with similar units in California and New York, even though the condos at the W in Denver will likely top $500 per square foot.

But longtime real estate agent Sonja Leonard Leonard, owner of Leonard Leonard & Associates, said sales of expensive downtown condos this year have been sluggish.

There have been only seven sales of downtown condos priced over $1 million so far this year, while 41 are listed in that price range, with 10 under contract, according to Metrolist data, she said. "One sale of a condo over $1 million each month is not a hot market," she said.

'Something not seen in this market before'

Downtown Denver will have three luxury-brand hotels by 2010. Here's a look:

Hotel

Developer

Details

Cost

Wow factor

Four Seasons

14th and Arapahoe streets

Jeff Selby, Michael Brenneman

45 stories, 230 rooms, 102 condos, expected to open late 2009 $350 million Most expensive private building downtown

Ritz-Carlton

18th and Champa

Charlie Biederman and partners

202 rooms, 80 condos, expected to open by year's end in the former Embassy Suites

$88 million

Anchored by an Elway's restaurant

W Hotel

16th Street Mall and Market Street, on current Office Depot site

Walter Isenberg's Sage Hospitality Resources

12 stories, 180 rooms, 56 condos, expected to open late 2010

$130 million*

Arguably the trendiest hotel chain in the nation*Estimate &Nbsp;&Nbsp;&Nbsp;Source: Individual Developers And The Denver Metro Convention &Amp; Visitors Bureau

rebchookj@RockyMountainNews.com or 303-954-5207

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