The long-awaited hotel at Denver International Airport's terminal is taking off again.
The time is right to take advantage of strong hotel and travel markets and to seek proposals for a hotel, said Stan Koniz, deputy manager and chief financial officer at DIA.
Koniz said the airport hopes to issue what is known as a RFP - request for proposal - within the next couple of weeks. Construction likely would begin in 2008 with an opening in 2010.
The 518-room hotel, estimated to cost $125 million in 2001, could cost in the $175 million to $200 million range today because of the rising price of materials and labor, experts said.
"Still, I think this hotel would be one of the most impressive deals out there in the country, and there are a lot of people who would love to do it," said hotel consultant John Montgomery of Horwath Horizon Hospitality Consulting/Montgomery & Associates.
Montgomery cautioned that DIA, to attract a developer, must be careful not to make the terms too onerous.
Koniz said he would expect proposals from developers, hotel companies, equity investors and others. It's possible, he said, that a consortium representing all of those parties would submit offers.
Plans already have been drawn, and approved by the Federal Aviation Administration, for a 518-room hotel, although a respondent could submit a different proposal.
Room rates at airport terminal hotels tend to "leapfrog" over other hotels near airports and command rates similar to those charged by top downtown hotels, said Greg Hartmann, a hotel consultant with Boulder-based HVS International.
Cities with terminal hotels include Chicago; Dallas/Fort Worth; Houston; Detroit; Tampa and Orlando, Fla.; Philadelphia; Hartford, Conn.; Pittsburgh; Toronto; Boston; and Vancouver, British Columbia.
In 1998, Koniz said, Westin was going to finance and build the hotel itself. In exchange, the airport was to give Westin a 50-year ground lease on the property and concession sales.
Before construction began, however, the financial market deteriorated and hotels slumped, so Westin was unable to finance the deal.
In January 2001, the airport planned to sell bonds to finance the hotel and let Westin operate it, even though DIA didn't want to be in the hotel business.
"But then 9/11 happened and United (Airlines) declared bankruptcy, and the whole project was put on the shelf," Koniz said. "With the economy improving and travel picking up, it is a much more viable project. We would much rather have the private sector use their money to build the hotel than use our own money."
* Update: DIA will ask for proposals in the next several weeks.
* Rooms: 518, in plans approved by the FAA.
* Location: Just southeast of the terminal, accessible from the terminal.
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