The quasi-governmental nonprofit that owns downtown Denver’s second-largest hotel is preparing to embark on renovations that likely will cost at least $55 million and add a handful of more rooms.
The Denver Convention Center Hotel Authority — whose board members are appointed by the mayor and approved by the City Council — owns the Hyatt Regency hotel at 650 15th St., across from the Colorado Convention Center.
On Feb. 1, the authority issued a request for proposals seeking a firm to manage a “major renovation” that will touch all 1,100 guest rooms and suites in the 38-story hotel, as well as select meeting rooms.
The authority was formed in 2003 with one purpose: to acquire a site and facilitate the construction and operation of a first-class hotel by the city-owned convention center, which opened in 1990. The city formed the authority when no private developer stepped up to build such a hotel, which was seen as a need.
The 1.2-million-square-foot Hyatt Regency, which opened in December 2005, takes up a full city block. In addition to the guest rooms, it includes a 300-seat restaurant, three levels of parking, 62,000 square feet of meeting space and other amenities.
While the authority owns the hotel, Hyatt manages it, and CHMWarnick acts as asset manager.
Authority CEO Bill Mosher, also a local executive with the Dallas-based development firm Trammell Crow Co., said the hotel industry generally figures a property needs a minor renovation every five to eight years. That includes things like replacing carpets and beds, he said.
The Hyatt Regency has already had minor renovations. About $27 million was spent in 2014 and 2015 to improve the hotel’s rooms and meeting space. Another $12 million was spent to renovate the lobby and food and beverage space in 2019.
Mosher said a major renovation, which is what the authority is embarking on now, is generally needed every 17 to 22 years. This will be the first for the Hyatt Regency.
“That replaces just about everything in a room,” Mosher said.
The firm hired to manage the project will be expected to refine the scope of the work and estimate the expected cost this year. But Mosher said the work could end up costing in the range of $50,000 to $60,000 per room, or a total of $55 million on the lower end.
The biggest factor, Mosher said, will be how much in the way of changes are made to the hotel’s bathrooms, where fixtures are pricey and there are some big decisions to be made. Does the hotel want to stick with tubs, for example, or shift to walk-in showers? Take that cost and multiply it by 1,100.
“I always joke you replace a $4 light switch and it’s $4,400 by the time you’re done,” Mosher said.
Hyatt has already detailed some of the changes it would like to see. The list includes converting the 457 rooms in the hotel with both a queen bed and double bed into rooms with two queen beds.
Hyatt also has proposed converting an existing “Regency Club” space into additional rooms or suites.
Mosher said the club was a space where guests with certain Hyatt status levels could get basic food and beverage service, but Hyatt has kept it closed since the pandemic began. He said the conversion would likely add two to four rooms to the hotel’s total.
The renovations are expected to be completed by 2025. Responses to the RFP are due by 5 p.m. on March 17 to Mosher.
The selected firm will work with the authority and Hyatt to design the renovated rooms, building out at least two model rooms. The firm then would oversee the procurement of needed materials and the construction phase.
Mosher said the renovations will be done in stages, likely primarily during the naturally slower months of November to February, so the hotel can keep operating. That’s how major renovations work for most hotels, although Denver’s Four Seasons was a recent exception, closing entirely in late 2020 and early 2021 — when the pandemic meant business was naturally low — so all its rooms could be renovated at once.
Mosher said he’d love to have done all the work at the Hyatt Regency during the pandemic too, but the authority at that point didn’t have the necessary cash saved. Hotel owners generally set aside 9 percent of revenue as it comes in for renovations, he said.
“By the time we do this, we’ll be paying cash,” Mosher said. “It won’t be something we finance.”
Many of the renovations likely will end up taking place in the November to February period, when the hotel naturally has lower occupancy.
The authority financed the construction of the Hyatt Regency using tax-exempt bonds, but the authority and hotel customers pay the same taxes — property tax, sales tax, lodger’s tax — as at any other hotel in the city. If the authority opts to sell the hotel in the future, any profit would go to the city.
The only downtown hotel with more rooms than the Hyatt Regency is the 1,238-room Sheraton at 1550 Court Place. Its ownership undertook an $80 million renovation between late 2019 and early 2021.