Utah's hotel industry booming

A killer virus, the war in Iraq and terrorist attacks once jolted confidence in U.S. travel safety. Now, a strong economic recovery and fond memories of 2002's Salt Lake Olympic glory are erasing old fears and boosting Utah's hotel industry.

In fact, Salt Lake's hotel rooms are filling up fast.

In 2005, the city's overall occupancy rate climbed to 69.1 percent, up from 62.9 percent in 2004, according to the Rocky Mountain Lodging Report, which tracks hotel trends in Utah, Colorado, Wyoming and New Mexico.

The 2005 rate is approaching those of the 1990s, when occupancy rates for the city floated in the mid-70 percent range. In 1994, Salt Lake's occupancy rate climbed to 80.1 percent, its highest ever, according to Robert Benton, sponsor of the lodging report.

"You are at an occupancy level where developers are going to start looking at the market and start looking at new projects and planning for new projects," Benton said. "Occupancies in Salt Lake have been improving since the 1999-2000 period. The market is not overbuilt."

Occupancy rates between 70 percent and 75 percent are considered good for a typical hotel, Benton said. Rates surpassing 80 percent indicate an establishment can raise room rates.

Salt Lake's occupancy rate in 2005 outperformed Albuquerque, which ended the year at 64.8 percent, and Denver at 64.1 percent, the lodging report said.

In addition to higher occupancies, average room rates for Salt Lake City also increased in 2005 to $76.85, up from $75.71 a year earlier.

"People remember Salt Lake City, but you've also had good snow. You had a record number of skier days last year," Benton said. "Commercial travelers are coming back. Now you've got group business coming back. The leisure market is coming back."

Steve Lindburg, general manager of the Hilton Salt Lake City Center and past president of the Utah Hotel and Lodging Association, said Salt Lake's hotel industry is healthy and growing.

"We became overbuilt just before the Olympic Games," Lindburg said. "In the years since then, we're starting to see a good balancing point. I think what we are going to see is demand is going to keep creeping up as long as the economy keeps going."

Lindburg said he considers an occupancy rate less than 65 percent a "bad" rate. The 499-room Hilton is currently running at a 72 percent occupancy rate, Lindburg said. Its average room rate was up 11 percent in 2005 compared to 2004.

"What we are seeing now is the average rate people pay for a room is actually growing pretty significantly," Lindburg said. "I think we are seeing positive demand growth as we move into 2006 and beyond.