Aspen’s Economic Challenges: Part #1 - Lodging

Apr 15, 2013

Part 1 of a 3 part series.

Residents of Aspen often hear and say that they live in paradise; it is a town like no other.  And yet, the Aspen of this description is facing challenges in coming years. That’s the conclusion of a report issued last week by the Aspen Chamber Resort Association.    ACRA’s Economic Sustainability Report revisits issues considered by a similar study done ten years ago.

In three stories we will look at several issues in the study and we begin with the Aspen that visitor’s experience… at the heart of this issue is lodging.  The study ten years found a, quote, deteriorated inventory of lodging.   The current study found progress has been made but that, quote, significant problems remain with Aspen’s transient bed base.  These are so-called hot beds – hotel rooms and other short term rooming properties.

“The quality of our bed base and the quantity but more importantly the quality is so important to our sustainability as a resort.  When people come here they should feel like they are getting value.  Our product should meet their expectations.”

That’s Chris Bendon, Community Development Director for the city of Aspen.  The city, while not in the business of operating hotels, nevertheless has a degree of control over how lodges do business.  The city’s land use plan, business codes and building codes shape the climate for lodging operators.  Another major factor for lodges is what it costs to do business here.

“The lodging economics are pretty severe, especially now, but they have always been.”

An example of the challenge facing lodges is the Lenado Hotel which was put up for sale earlier this year.  When it opened in 1984 the design by architect Harry Teague was cutting edge and the homey atmosphere attracted a steady clientele.   Dayna Horton is a Broker Associate with Aspen Snowmass Sotheby’s which lists the Lenado for 15 and a half million dollars. 

“At this point what’s happened with the economy here is that this has neared the end of it’s useful life.”

The original owners still run the hotel, which has 19 rooms.  And they’ve done it with personalized mom and pop attention to the care of guests.  After almost thirty years, Horton says physical updates are needed.  As other lodges in town remodeled and new lodges opened, the Lenado’s rooms began to seem a bit small. 

The owners considered the costs of upgrading and how that would push their nightly rates too high.  Instead they decided to sell.

“They’ve been able to keep it alive.  I don’t think anybody who looks at the numbers here would be able to say the same thing; that they would be able to do what this current owner has done so lovingly since they opened their doors in 84.”

And so, Horton said the property is being marketed as a private residence.  The sellers have already done legal footwork to allow a buyer to easily get permitting for a remodel and the building includes employee housing.  In addition there is a requirement that the Lenado’s rooms be offered for rent between December and March so in effect the impact on the number of beds available in Aspen will not be affected.

The Lendo’s story is familiar to other aging properties…including condominiums. While not often considered traditional lodging, condominiums make up almost half of the inventory of rental beds in Aspen.  Jessica Garrow is a Long Range Planner for the City of Aspen.  She says condo owners face the same remodeling challenge as the Lenado.

“There is a disincentive within our land use code to be upgrading those.  We really focus on a traditional lodge product.  Well if 40 percent of our bed base is in this more non-traditional product we really need to look at it and address it.”

Last year an updated Aspen Area Community Plan was completed.  The two top lodging issues were reducing the loss of inventory and the replenishing of the existing bed inventory.   The  City of Aspen is now looking at it’s codes and requirements for answers.

“There’s a lot of different ways this could end up getting hashed out.”

It could be making changes to the land use plan, says Garrow.  Fees could be reduced or eliminated, rules about renting out condominiums could be changed…everything is on the table for City Council to consider in coming months and years.  Immediately, the city will undertake a study later this month called Lodging Economics 101.   It is designed to inform city policy makers about the lodging industry from top to bottom.

“Then we can really tailor our regulatory structure to be encouraging the things we want to encourage based on some economic understanding of the reality of what’s out there right now.” 

Part of that reality is increasing competition from other resorts and new consumer power from the Internet.  Bill Tomcich is the President of Stay Aspen Snowmass the central booking agency for all of the lodges in town.  With few national chains and many unique lodges an condos Aspen lodging , says Tomcich, is sometimes a challenge.  Visitors can quickly compare hotels across several resorts.

“Online and via the telephone its easier for guests to find other alternatives than ever before so that really makes our job as the sales agent for the resort more important than ever to make sure we paint a really accurate picture and hopefully match the expectations of the guests.”

Back at the Lenado, Realtor Dayna Horton says after the sale Aspen will lose only a handful of beds.  A draft of the remodel shows some rooms being combined into suites and loft space added to others.  In the end she says the Lenado will likely become a hybrid; a personal residence that becomes a lodge for groups.  A place for retreats where the clients rent the entire place for a week or a season.

“The idea is that its out there, its available and we would continue to attract people in groups and not close down those hot beds.  Does it work perfectly that there’s going to be 19 beds rented every night?  No, because with the renovation you’re going to be reducing the number of rooms to make it so that it flows as a private retreat or a residence.”

This kind of creative idea is something the city will be exploring.  Planner Jessica Garrow says while lodging preferences don’t change as quickly as fashion they do continually evolve.  It is the city’s role to make regulations evolve with them.

“The job of city council is to look at those and figure out, ok, how can we incentivize lodging without doing a disservice to the other really important goals that the city has.”