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Hotel Construction Booms Across U.S.


And as the economy has improved, more people are traveling for business and pleasure, causing a jump in hotel bookings nationwide.

And as Colorado Public Radio's Ben Markus reports, lower vacancy rates mean higher room prices and a push for developers to build more hotels.

BEN MARKUS, BYLINE: Business is good these days for commercial real estate agent David Gleason. And that means he's traveling for work again.

DAVID GLEASON: You know, the last two years, I've probably done more travel for business than I've done in the last 10 or 15.

MARKUS: Gleason's from Lafayette, Louisiana - and he's in Denver for a real estate convention. Outside his hotel downtown, he says it's good to be traveling again. Networking is crucial for his business and networking over the phone just doesn't work.

GLEASON: No. You could attempt it, but it's way more successful to meet people in person so they can put a face to the name, absolutely.

MARKUS: But it comes at a cost. Gleason's says he's paying a little more than he expected for his room at the Sheraton. That's because Denver's hotel market is red hot - more than 80 percent of rooms were filled last month. And that justifies higher prices and new construction.


MARKUS: Crews hammer away at a $50 million project converting the historic Union Station downtown into a full service hotel and transportation hub.


MARKUS: The developer is Sage Hospitality, run by Walter Isenberg. Hotel room revenue is up by more than a third in Denver. And he says the recovery in the hotel industry is top-down. Conventions, corporate and leisure travel are all back.

WALTER ISENBERG: Those are the three legs of the stool, and we're seeing tremendous growth frankly, in all of those three areas.

MARKUS: And tremendous growth in building. In Denver, the number of hotel rooms under construction is three times what was being built just a couple years ago. Projects are going up in other destination cities too, like Miami, Nashville, and New York City. Across the country, the number of rooms under construction is up 50 percent.

Isenberg says the recession was a bleak time for hotels - revenue fell at rates not seen since the Great Depression.

ISENBERG: That puts it into perspective about how bad things really were. So it feels pretty good today.

MARKUS: Now as demand is increasing, there aren't a lot of new rooms to relieve the pressure. Isenberg says that's led to big revenue gains for the hotels that are open, and not a moment too soon.

ISENBERG: If the downward trend had continued much beyond '09 and '10, I might be a barista at Starbucks.

JAN FREITAG: The last couple of years have been so, so good for the existing operators, that it peaked a lot of people's interest.

MARKUS: Jan Freitag is with Smith Travel Research, based in Nashville. Those people he's talking about are banks.

FREITAG: A lot of money that was on the sidelines before is now ready to invest again.

MARKUS: A lot is relative. Banks are financing less than half the number of projects they were at the peak of construction, in 2008.

But they aren't investing everywhere, mainly in the best locations of promising big cities. Freitag is based in Nashville, another hot hotel construction market, where the sprawling Music City Convention Center was recently completed.

Which is right downtown, and just a block away from Broadway, where all the honky-tonks are. And then lastly, having a TV show that has your name on it certainly doesn't hurt.

Hit dramas aside, new hotels are inherently risky ventures. Times are good now, but there's no guarantee those rooms can be filled when the new hotel opens, sometimes years after construction starts.


MARKUS: At the Union Station project in downtown Denver, hotel owner and developer Walter Isenberg says the industry seems to always respond to higher room revenue by building too much.

ISENBERG: I think our industry always figures out how to screw up a good run up...


ISENBERG: ...by overbuilding.

MARKUS: So the good news for travelers is that developer enthusiasm could keep prices in check.

For NPR News, I'm Ben Markus in Denver. Transcript provided by NPR, Copyright NPR.

Ben Markus

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