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Posted: August 01, 2008

State of the State: August

Energy industry drives surge in Grand Junction lodging

Bob Kretschman

Most evenings, parking spots at Grand Junction hotels are filled with trucks bearing energy-company logos.

A substantial number of lodging customers in Grand Junction work in the Western Slope energy industry, and hotel operators say the additional business has consumed most of the extra rooms in the hotel market. Room rates are rising, and new hotels are opening in response to the additional demand.

"The energy business has taken up a lot of the excess capacity in the market," said Steve Reimer, who co-owns two downtown Grand Junction hotels with his brother, Kevin. The Reimers are proposing a new downtown hotel to take advantage of the growing demand.

Through the first five months of 2008, Grand Junction’s lodging tax receipts are up 22 percent from the same time one year earlier. Lodging tax collections have grown by double-digit percentages annually since 2005, culminating in a 23.6 percent increase in 2007.

Lynne Sorlye, general manager of the Holiday Inn in Grand Junction, credited energy-related business traffic for much of the increase.

"A lot of people don’t realize the scope of the energy industry," Sorlye said. "There’s a ripple effect."

Energy-related guests include the employees of large, well-known companies, as well as workers and sales representatives for smaller firms that supply niche products or services to the energy industry, such as safety training or highly specialized equipment, she said.

Sorlye said that last winter, about 70 percent of her 291-room hotel's guests were business-related travelers. No reliable data exists on the mix of business and leisure visitors on a citywide basis.

The strong demand for hotel rooms in Grand Junction has pushed lodging rates higher. According to the Rocky Mountain Lodging Report, Grand Junction’s average room rate increased to $83.34 in April 2008 from $77.01 in May 2007.

"That’s good in general. Our hoteliers are making a little more money, and we’re selling out on nights we didn’t expect to be selling out," said Jennifer Grossheim-Harris, marketing and public relations coordinator for the Grand Junction Visitor and Convention Bureau.

Two new hotels — a 136-room Marriott Courtyard and a 104-room Marriott Residence Inn — opened just over a year ago. Those hotels boosted the number of rooms in the city by 10 percent. This year, construction is expected to start on a new Hyatt Place hotel near Grand Junction Regional Airport, and the Reimers hope to build a 120-room Hilton Garden Inn downtown that will open in about two years.

Adding hotel rooms during an energy boom is risky because an industry downturn could diminish business traffic.

"You have to be careful with how many rooms will be priced at $125 and up," Reimer said, noting that if the market turns, hotels will have to cut rates.

Still, Grand Junction’s tourism industry can help stabilize a downturn in business-related visitors. For example, Reimer said downtown hotels serve many visitors who come for conventions and shopping. Grossheim-Harris said the community has strong attractions — such as wineries, recreational activities, shopping, and special events — that generate considerable non-business lodging traffic throughout the year. --By Bob Kretschman

On the Record
"Denver finally gets to host a Super Bowl."

--Comment posted by reader "Roughly Right" at the Wall Street Journal’s website following news about Sen. Barack Obama’s decision to move his acceptance speech for the Democratic nomination for president from the 20,000-seat Pepsi Center to 76,000-plus capacity Invesco Field at Mile High.

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Bob Kretschman is the Western Slope correspondent for ColoradoBiz.

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