HomeMy WebLinkAboutagenda.council.worksession.20121211
CITY COUNCIL WORK SESSION
December 11, 2012
4:00 PM, City Council Chambers
MEETING AGENDA
I. Lodging Study Update
II. Employee Generation Study Update
Page 1 of 6
MEMORANDUM
TO: Mayor and City Council
FROM: Jessica Garrow, Long Range Planner
Chris Bendon, Community Development Director
MEETING DATE: Tuesday, December 11, 5:00pm Council Chambers
RE: Lodging Study Update
REQUEST OF COUNCIL: Staff requests Council direction for next steps related to Council’s
lodging goal.
BACKGROUND: One of City Council’s Top Ten Goals is to “Complete a study on Lodging
that looks at the adequacy of lodging options in Aspen and suggested areas for improvement.”
As part of this effort, staff conducted a lodging study to examine our existing inventory and to
understand the current state of the lodging market. This is attached as Exhibit A. The report
provides an overview of the City’s role in lodging over the years, outlines Aspen’s lodging
inventory, includes average occupancy and rate information, and provides a number of
interviews with local lodging experts. One of the findings of this report was that over 40% of
Aspen’s short-term bed base is in condominiums. Based on that information, staff contracted
with Alan Richman Planning Services to conduct a detailed study of Aspen’s condominium
market. This report is attached as Exhibit B. A detailed summary of findings from these reports
is below.
Following the existing conditions work, staff hosted a Lodging Charrette with representatives
from Aspen’s lodging sector, as well as two outside consultants. The charrette asked participants
to discuss the following questions related to new lodging product, reinvestment/redevelopment
of existing lodges, and condominium rentals:
1. What opportunities exist?
2. What challenges exist?
3. What role, if any, should the City play?
As many of the participants pointed out, the half-day charrette brought members of the lodging
community together in a way that they have not been before. It was viewed as a potential
jumping off point for continued work and progress in this area. A summary of comments and
findings is also listed below. In addition, the two outside consultants provided written reports of
their thoughts and findings following the charrette. These are attached as Exhibits C and D.
FIRST PHASE REPORT: Earlier this year, the Aspen Skiing Company commissioned a study with
Mountain Travel Research Program, LLC (MTRiP) to provide updated data on the lodging bed
base in Aspen and Snowmass. The findings from MTRiP were included in the first phase report.
P1
I.
Page 2 of 6
The key takeaways from the first report, attached as Exhibit A, were related to the makeup of
Aspen’s short-term rental pool.
There are 2,293 units and 10,085 pillows in Aspen’s short term rental market. This represents
56% of the units and 53% of the pillows in the overall resort area. This represents a decrease in
units from 2009 and an increase in pillows since 2009. The differences are likely a result of
discrepancies in the 2009 reporting from individual properties, as there have not been any
significant new projects or decreases in projects in that time frame.
The largest sector of the Aspen lodging inventory is Hotels/Lodges, which account for 50% of
the bed base (-0.17% from 2009). Condominium units account for 41% of the City total (-5%
from 2009), with private homes at 6% (+31% from 2009) and bed and breakfasts at 3% (+6%
from 2009). In terms of categories, the overall availability of a range of lodging types and price
points continues to favor deluxe accommodations, with Deluxe pillows making up 68% and
Deluxe Units making up 62% of the inventory.
The Rocky Mountain Lodging Report compiles data for lodging throughout Colorado and the
Rocky Mountain Region. The information includes average occupancy data as well as
information on average nightly rental rates. This information was compiled for the Phase 1
Report. The seasonality of the Aspen is seen in the occupancy and room rate information over
the years, with the highest occupancy and room rates seen December through March and June
through August. December through March consistently command the highest average room
rates, ranging from an average of $542.30 in December between 2006 and 2011 and $419.89 in
March between 2006 and 2012. Compared to other Mountain Resorts and the entire state, Aspen
consistently commands higher average room rates.
Perhaps the most telling information in the report is from the individual interviews with members
of the lodging community. Interviewees consistently stated how important special events are to
attracting visitors to Aspen. They also focused on the importance of ensuring Aspen is able to
attract the next generation of visitors. Several warned that while Aspen has enjoyed unparalleled
loyalty in its visitors for several decades, the younger generation is less influenced by loyalty,
and more driven by adventure, new experiences, new places and exploring the many choices
offered around the world.
Many emphasized staying true to the values that make Aspen special today, including the
character of the built environment, environmental stewardship, the metropolitan feeling of arts
and cultural offerings and the many recreational choices. Several were worried that locals don’t
recognize that the Aspen brand is very intimidating to many people who have never been here,
which can deter people from visiting.
Finally, the general consensus from interviewees was that the city should have a minimal role in
the actual development of a lodge, but that the city could help to provide incentives that could
make a new lodge project or lodge rehabilitation more feasible.
CONDOMINIUM REPORT: The Condominium Report produced by Alan Richman focuses on the
regulatory and non-regulatory barriers to developing and upgrading condominiums in Aspen.
P2
I.
Page 3 of 6
Given that 40% of Aspen’s short-term bed base is in condominiums, staff asked Mr. Richman to
explore what steps the city could take to bolster this portion of the bed base. Much of the
information in the report is based on interviews with condominium and condominium lodge
owners and operators.
The report goes into great detail about how the land use code treats traditional lodge projects
differently from residential condominiums, and how that has resulted in a lack of maintenance
and upgrades in this segment of our bed base. These barriers range from zoning regulations to
growth management to the multi-family replacement program.
It is important to understand the difference between traditional lodging and condominiums that is
outlined in our code:
• A hotel or lodge unit may not be occupied for more than thirty (30) consecutive days per
year by a person who has an ownership interest in the hotel or in the unit and may not be
occupied by any person (owner or non-owner) for more than ninety (90) days per year. A
multi-family condominium is not limited in terms of how much of the year it may be
occupied by an owner or other person. Hotel units must be rented short-term, while
condominiums are rented at the discretion of the owner.
• A hotel or lodge unit may contain “lock-off units” whereby portions of the entire unit
may be separately rented by locking the door between different rooms or combinations of
rooms. On the other hand, multi-family dwelling units must have common un-pierced
demising walls and cannot be separated into lock-off units.
These differences prevent condominium units, even if they are rented on a short-term basis, from
taking advantage of some of the height, floor area, and growth management benefits available to
a traditional lodge. There are a number of condominium hotel properties in town that act as
lodges, but are considered multi-family residential because of they are condominiumized. These
properties do not “fit” into any zone district very well, which often means these properties are
subject to additional land use reviews related to any maintenance or upkeep that a traditional
lodge is not.
The report suggests a number of potential next steps, many of which are highlighted by staff
below in the Suggested Next Steps section of this memo. One question for City Council to keep
in mind is: Do you believe the condominium short-term market is important to maintain and
even bolster? If so, this is an area where the city can likely have the most impact going forward
in terms of creating incentives and easing regulatory barriers.
LODGING CHARRETTE: On October 23rd, the city hosted a lodging charrette at the Gant with
many of Aspen’s lodging stakeholders. This was one of the first times in many years voices
from all of Aspen’s lodging sectors – from developers to condominium managers to large and
small hotel operators to land planners – were in the same room talking about lodging issues and
what role, if any, the city should play. Participants discussed new lodging product,
reinvestment/redevelopment of existing lodges, and condominium rentals. Below is a summary
of comments related to the roles the City chould play moving forward. Complete notes from the
P3
I.
Page 4 of 6
charrette are included as Exhibit E. The reports from outside consultants from EPS and BBC are
attached as Exhibits C and D.
In terms of new lodging there were a number of comments that if the city wants to see more
lodging that the codes should be examined and updated to encourage, incentives, and perhaps
even subsidize new lodging. There was a general consensus that a free-market residential
component of some kind is needed to make any brand new lodge work from a financial stand
point given all of the city’s other requirements. Finally, there was consensus that lodging is the
appropriate use at the base of Lift 1A, and that the city may have a role in helping create an
environment where a new lodge could be successful. Some felt that improving that area would
create a portal that then helps other lodges. While there was interest in seeing new lodging
product, there was more support for examining ways to support our existing lodges and
condominium units. One participant said the city should “enable existing lodges to thrive before
focusing on new lodges.”
In terms of reinvestment in existing lodges, there was a consensus that there are too many
hurdles from the City in terms of fees and land use reviews. The process is complicated,
unpredictable, and expensive, and the smaller lodges are often not able to afford the time or
dollars it takes to go through a review process. There were some suggestions that the city could
provide tax incentives or low cost loans to smaller lodges looking to upgrade. The Aspen Gems
group has reformed, and participants suggested the city work with that group to determine what
specific incentives and regulations would help these lodges thrive.
The discussion related to condominium units focused primarily on how the land use code dis-
incentivizes them. There were a number of suggestions on the city’s potential role, all involving
ways to modify how the city regulates condominiums. Some felt the city should ease regulations
on condominiums if a certain percentage of units were guaranteed to be in the short-term rental
pool. Others felt requiring hotel-type amenities, like conference facilities and front desk
services, would help encourage new condominium units to be rented on a short-term basis.
Nearly all participants expressed concerns related to the multi-family replacement requirements
and their impact in stifling reinvestment in condominium units.
There were some general comments as well. Some felt that the city should look forward and
consider which areas of town or specific properties they would be interested in seeing a new
lodge or a revitalized lodge. This kind of exercise – focusing on what the city wants – could help
the private sector have more certainty to bring projects forward. In general there was a
consensus that the city’s regulatory structure is burdensome and prevents good projects from
coming to fruition. A final thought from the group is that the city does not actually know what
types of lodging is desired by our visitors because there hasn’t been any study or work on this
issue. This was seen as an opportunity as the discussion moves forward.
SUGGESTED NEXT STEPS: Based on the work to date, staff outlines the following
suggested next steps. Staff requests Council direction on these, or other next steps Council may
want to take in order to move forward on this Top Ten Goal.
P4
I.
Page 5 of 6
1. Examine and create a greater understanding of basic lodging economics. The
charrette group, which represented most of Aspen’s lodging community, consistently
expressed concern that community members, decision makers, and city staff, don’t
understand the basics of lodging economics. From staff’s perspective we agree with this
characterization. If one is not in the lodging field, then they’re likely not an expert in
lodging economics. However, a basic understanding of what it takes to make a lodge
“work” would be helpful to inform the conversation going forward. Staff suggests
utilizing an outside of Aspen consultant, such as the CU Leeds School of Business, to
walk through some examples of what goes in to making a new lodge and a lodge
redevelopment successful, and then putting it to a “aspen reality check” with local
lodging representatives. This approach was successful in the recent height study.
2. Study what lodge products our customers want. An obvious, but key, takeaway from
the charrette was that as a community we don’t understand what our visitor wants in
terms of lodging product. This is a role that the city can play a supporting role to Stay
Aspen Snowmass, ACRA, the Aspen Skiing Company, and the Aspen Gems. Staff
suggests partnering with these organizations to better understand what lodging product
and amenities Aspen’s visitors are looking for. The city has budget remaining under the
AACP Implementation, which could be used to assist in this effort.
3. Create a new program that better addresses hybrid condominiums/hotels. Three of
Aspen’s largest hotel properties are actually hybrid models – Aspen Square, Aspen Alps,
and The Gant. These properties are residential units that can be rented on a short-term
basis. They are considered under the land use code as multi-family residential units,
despite the fact that most of the units are in the short-term rental pool on a regular basis.
A new program could better address the needs of these properties, and enable the creation
of similar projects elsewhere in town. The Condominium study also highlights this as an
important step if the City is interested in bolstering the existing condominium short-term
rental market.
As the Condominium Report details, there are significant disincentives for condominium
development in the lodge zone district, where many of the short-term condominium
rentals are located. A new program could include changes to these regulations to
encourage condominium redevelopment/reinvestment with some mechanism to ensure
units remain in the short-term market. These incentives could be limited to projects that
bolster the short-term bed base.
4. Explore implementing development assistance for lodging refurbishment. One
option Council may want to consider is assisting existing lodges in upgrading and
updating their product. Development assistance could include providing expert analysis
to existing lodge properties so they know what refurbishment options are available,
looking at the fees associated with development applications and deciding if waivers for
certain fees or mitigation requirements should be implemented, or the creation of a drect
subsidy program. Staff does not have a specific recommendation in mind at this point,
but can explore the issue if Council is interested.
P5
I.
Page 6 of 6
ATTACHMENTS:
EXHIBIT A: Lodging Study Phase One Report
EXHIBIT B: Condominium Report
EXHIBIT C: EPS Charrette Report
EXHIBIT D: BBC Charrette Report
Exhibit E: Charrette Notes
P6
I.
Lodging Study - Phase 1 Final Report 1August 2012
Aspen’s Lodging Sector
An Analysis of Existing Conditions
One of City Council’s Top Ten Goals is to “examine the desirability
and sustainability of preserving existing lodging and producing
more lodging in Aspen.” This study represents the first phase of
this effort. It is intended to provide a “big picture” overview of
Aspen’s lodging sector. The study is divided into eight sections:
• History of Aspen’s Lodging Policies - pg 2
This section provides an overview of the City’s role in lodging
since the 1970s.
• 2006 Analysis of Aspen’s Lodging Profile - pg 7
This section provides a brief summary of a detailed 2006 report
on the lodging sector, and possible the role government could
play in providing moderate lodging.
• 2012 Analysis of Aspen’s Lodging Profile - pg 8
This section provides a brief summary of a 2012 lodging
inventory report conducted by MTRiP for Aspen Skiing Company.
• Lodging Occupancy and Rate Analysis - pg 10
This section outlines basic demand information for lodges. It
covers lodging ranging from economy to luxury.
• Lodging in the 2012 Aspen Area Community Plan - pg 12
This section outlines the public feedback that was received as
part of the 2012 AACP update, as well as an overview of the
lodging policies contained in the plan.
• Interviews with Aspen’s Lodging Sector - pg 14
This section provides detailed interviews with key players in
Aspen’s lodging sector. Interviews were conducted with lodge
managers, condominium and single-family rental agencies, and
lodge developers.
• Aspen’s Lodging Inventory, 2012 - pg 34
This section lists Aspen’s current lodging inventory based on
conversations with Aspen area lodges. Condominium and
single-family home rentals are not included in this inventory.
• Interviews with Aspen’s Short Term Rental Managers,
2012 - pg 36
This section outlines information related to Aspen’s
condominium and single-family home rentals.
City of Aspen
Community Development
Department
P7
I.
2 Lodging Study - Phase 1 Final Report August 2012
History of Aspen’s Lodging Policies
City government has played a wide variety of roles in Aspen’s lodging
sector over the years, ranging from the philosopher-sociologist to the
market economist – and at times, financial supporter.
One of the earliest statements about lodging came in the 1966 Aspen
Area General Plan, which defined the purpose of the Accommodations/
Recreation Zone District as “ … encouraging varied and interesting
development as a means of perpetuating Aspen’s prominence as a
quality resort….”
This perspective reflected a belief that local government should
treat lodging as infrastructure for the local economy. Without a solid
lodging base, a resort is not a resort – and every other sector of the
economy suffers. Over the years, this viewpoint meant sometimes
giving lodge development a break from Aspen’s rigorous regulations
and mitigation requirements.
On the other hand, growth management advocates have supported
annual development limits and tough mitigation requirements on
lodging, just as they would on any other kind of private sector
development. These different positions have been debated through
the years – often favoring lodging during economic slumps, and
favoring stronger growth restrictions during boom periods.
The philosophical side of the lodging debate emerged in the Aspen/
Pitkin County Growth Management Policy Plan of 1977:
“In short, we have a responsibility to vacationing, working Americans
who hold the vision of one or two weeks a year in a quality Colorado
mountain environment … (rather than) a setting for the fortunate few
who are wealthy enough ...” In other words, working Americans are
entitled to enjoy the public lands surrounding Aspen, and high costs
shouldn’t act as a barrier.
The other side of this argument has been to let the market decide
what kind of lodging is built, how much it costs and what demographic
is targeted. This viewpoint often takes note that a destination resort is
expensive by definition, due to high land and travel costs.
Early Growth Controls on Lodging
Beginning in 1977, the scoring of development applications under
the Growth Management Quota System (GMQS) reflects community
priorities for lodging development.
For example, the 1977 point system for lodging development
valued the physical compatibility of the proposed building with the
neighborhood (3 pts.) and maximizing public views of surrounding
scenic areas (3 pts.) just as highly as “Services Provided for Guests”
(6 pts.), which included the “spaciousness and quality” of lobbies,
restaurants, conference facilities, proximity to skiing and “overall
tourist appeal.”
The political tension between lodging-as-resort-infrastructure and
lodging-as-creating-negative-growth-impacts is also found in the
1977 GMQS point system: Points were awarded for “reduction of
tourist rental space below maximum allowable (square footage).”
The 1977 Growth Management
Plan.
P8
I.
Lodging Study - Phase 1 Final Report 3August 2012
In addition, affordable housing for lodging projects had to be provided
on-site, potentially creating conflict with the emphasis on limiting
mass and scale, and physical compatibility with the neighborhood.
As the national economy suffered, the Lodge at Aspen (26 rooms) was
the only lodging development to apply for GMQS approval between
1977 and 1981.
The City commissioned a lodging study in 1981, which concluded
that “most of the lodging available today was built many years ago
and consequently do not reflect current standards for maintaining a
premier resort classification.”
The report also found that a mid-1970s downzoning “resulted in
severe limitations for their opportunity to expand and modernize” in
some neighborhoods, including the Shadow Mountain area. The report
claimed the City had lost about 4% of its lodging base each year
during the 1970s.
Loosening Regulations & Lodging as Infrastructure
City Council responded in July 1982, by increasing the annual lodging
allotment from 18 to 35 units. A month later, Council stopped
awarding GMQS points for smaller lodges, removed the mandate for
on-site affordable housing and increased the percentage of points
awarded for guest amenities from 10% to 20%.
In August 1983, Council created a Lodge Preservation Overlay Zone,
making it easier for dozens of older lodges in areas such as Shadow
Mountain to renovate and expand. At the same time, Council awarded
new GMQS points for “rehabilitation and reconstruction,” and set aside
a quota of 10 lodge units per year for development in the new Overlay
Zone.
Between 1982 and 1987, many lodges underwent renovations,
including Independence Square, Snowflake, Aspen Club Lodge,
Endeavor Lodge, Shadow Mountain Lodge, the Inn at Aspen, Red Roof
and the Prospector Lodge.
Four lodges added units between 1982 and 1987: The Aspen (+3),
Hotel Lenado (+4), the Sardy House (+21) and the Jerome Hotel
(+67). The Aspen Mountain Lodge project essentially replaced the
Aspen Inn and Blue Spruce, and The Little Nell (92 units)
opened in 1989.
In 1987, the City Council stepped squarely into the role of financial
supporter for lodging, by establishing the Aspen Lodge Area Special
Improvement District. Council authorized $5.4 million to pave streets,
install storm drainage, sidewalks, landscaping, streetlights etc., with
the City picking up the large majority of the bill. The public works
project was focused on neighborhoods featuring small lodges and
condos, including the Shadow Mountain neighborhood, and from
Spring Street to the Roaring Fork River.
Ritz-Carlton as Symbol: The Upscale Trend
As the 1980s wound down, the Aspen area was experiencing a whole
new level of popularity and celebrity. Home prices were increasing
dramatically, many locals were selling their modest houses and the
percentage of commuting workers jumped from 40% to 55% between
1987 and 1991.
Hotel Lenado, one of the hotels
redveloped in the 1980s and taking
advantage of the zoning changesof
the time.
P9
I.
4 Lodging Study - Phase 1 Final Report August 2012
During that same period, the proposal for a massive Ritz-Carlton Hotel
was being hotly debated, and was slowly making its ways through the
City’s review process. Council approved non-binding Resolution No. 29
in 1988, setting the size at 294 units and 305,000 square feet.
In July 1989, City Council responded to growth management
advocates by cutting the annual quota for free market residential
units from 39 to 20, and decreasing the lodging quota from 45 to 22.
In February 1990, a much-debated City ballot election on the Ritz-
Carlton was a snapshot in time of political feeling about lodging:
• Option A would approve the 294-unit Ritz-Carlton Hotel.
• Option B would reduce the size of the hotel by 60,413 square
feet (about 20%), reduced the height and required much more
employee housing.
Sixty percent chose Option A, with 1,561 in favor and 1,059 opposed.
The approval of the Ritz-Carlton symbolized a distinct trend away
from economy or moderate rate hotels, and towards more deluxe
accommodations. The Ritz partially met its mitigation requirements
by converting the 43-unit Alpina Haus Lodge and the 14-unit Copper
Horse Lodge into affordable housing.
In the late 1990s, the economy/moderate rate Grand Aspen Hotel
was demolished to make way for the deluxe Grand Hyatt. Perhaps in
response to the trend, the 1993 Aspen Area Community Plan (AACP)
emphasized the importance of small lodges.
“Small lodges immediately set the stage for the guest experience in
Aspen,” according to the AACP Growth Action Plan. “These lodges
promote a sense of scale and feel that provide the visitor with a
transition into the uniqueness of Aspen.”
The 1993 AACP called for lowering mitigation costs for small lodges,
but it turned out to be a losing battle. Throughout the 1990s, older
lodges were converted either to free market homes or affordable
housing, including, to name a few:
• The 20-unit Fireside Lodge converted to townhomes.
• The 22-unit Bell Mountain Lodge converted to five free market
homes and five affordable units.
• The 11-unit Alpine Lodge converted to four free market homes
and 10 affordable units.
• The Aspen Country Inn was converted entirely to affordable
housing
All told, the number of “Economy” lodge pillows dropped from 1,012
to 704 during the 1990s, a 31% drop. By 1998, the percentage of
“Economy” lodge pillows had dropped to a mere 12% of the total.
Oddly, the 2000 Aspen Area Community Plan barely touched
on the subject of lodging. The Economic Sustainability chapter
called for “a lively, small-scale downtown with …a varied choice of
accommodations, including small lodges.”
In winter, taxable lodging sales eroded significantly between 1997 and
2003, a pattern linked to a decline in skier visits and a slowdown in
travel after 9/11. Winter lodging rebounded after 2003, along with the
national economy.
The Ritz-Carlton, now the St. Regis
Hotel.
P10
I.
Lodging Study - Phase 1 Final Report 5August 2012
While Aspen’s lodging inventory continued to shrink (a 27% decline
from 1994 to 2007), it was the “Economy” (-79%) and “Moderate”
(-47%) lodges that were disappearing the fastest. The decrease was
smaller for “Deluxe” lodge” (-7%).
Despite the declining base, taxable lodging sales jumped 49% from
2003 to 2007, reflecting an estimated 40% increase in average prices.
It was no great surprise that new lodges approved during this boom
period featured large rooms and deluxe amenities, including 26 units
at the Residences at Little Nell, 21 units at The Chart House and 18 at
the Dancing Bear.
City Tries to Re-Balance the Lodging Inventory
While a few luxury lodges were being approved in the 2000s, city
government was launching an effort to replenish the overall inventory,
and was also trying to encourage the return of so-called “moderate”
lodges.
In its 2002 report, the Economic Sustainability Committee made the
deteriorating lodging base its “#1 Issue,” stating:
“Aspen has a deteriorating lodging and tourist facilities inventory.
This includes small lodges and condominiums that are placed in the
rental pool. Not only has the number of available rooms decreased
greatly, but also remaining facilities are not perceived by the visitor
as offering appropriate value for their pricing. Lodging owners
and potential developers do not perceive a sufficient return on
investment to improve existing facilities and develop new ones.”
At the same time, the Infill Advisory Committee was drafting code
changes to encourage more downtown area development, including
lodging.
In 2005, City Council approved the Lodge Incentive Program,
encouraging the development of lodging with rooms that averaged
no more than 500 square-feet – relatively small compared to recent
deluxe lodge approvals.
The Lodge Incentive Program cut the housing mitigation rate in half,
and allowed the development of free market residential condos on
25% of the development’s total floor area (also at half the usual
mitigation rate), to make the overall development financially viable.
Also in 2005, the Limelite Lodge applied to demolish its 60-year-
old facility next to Wagner Park, along with the Snowflake Inn next
door, proposing to replace 115 rooms with 125 rooms in one larger
new building. The development application argued that “Preserving
and expanding mid-priced lodges such as the Limelite will allow
the community to provide accommodations for a ‘diverse visitor
population,’ as emphasized in the (2000) AACP.” Along similar lines,
the application quoted the AACP Vision for the Aspen Area; “Our
nature has been consciously inclusive and has abhorred exclusivity …”
In addition, the Limelite argued that mid-priced lodges are a “staging
area for supporting personnel and participants … in the special events
that are a vital element of the local economy.” (The point was made
following the recent departure of the HBO Comedy Festival, which
publicly blamed the lack of affordable lodging for its relocation to Las
Vegas.)
P11
I.
6 Lodging Study - Phase 1 Final Report August 2012
The Limelite proposal was in the form of a PUD because it proposed
to use 40% of total floor area to build condos (more than the 25%
that code changes allowed). Lodge incentive code changes from
2005 also allowed for greater height and massing in the Lodge Zone
District, and the large Limelite building drew many critics, but Council
approved the project.
In 2007, Council adjusted the Lodge Incentive Program, creating a
sliding scale: As room size grew smaller, the ratio of total floor area
for free market condos increased and affordable housing mitigation
was reduced. Lodge projects with room sizes of 300 square feet or
less would have to mitigate only 10% of employees generated, and
could use 60% of total floor area for condos. No lodge projects have
since applied for the incentives.
Current Status
As part of the 2008 State of the Aspen Area Report, a build-out
analysis showed that zoning could allow for about 330,000 square feet
more lodging, with the most potential in the Lift 1A neighborhood.
In November 2011, City Council approved a lodging proposal at
in the Lift 1A neighborhood, including 22 lodging units with a
room configuration allowing them to be broken down into 84 units
averaging 524 square feet. Although technically eligible for reduced
housing mitigation (60% to 40%, due to a room size between
500 and 600 square feet), the developer proposed 100% housing
mitigation for the lodging, five condos and 6,000 square feet of
commercial space.
At the same time, former lodges continue to convert to other uses,
the most recent being the Boomerang Lodge, which received approval
to convert its existing rooms and build an expansion, all as affordable
housing.
The 2012 AACP calls for “replenishing” the lodging base, while seeking
to balance the inventory by encouraging a wide range of product
types. Aside from the Lift 1A area, the greatest potential for a new
lodging development is at Buttermilk Ski Area, which is under Pitkin
County jurisdiction.
The former L’Auberge d’Aspen
Hotel. The property is approved
for a redevelopment that does not
include lodging.
P12
I.
Lodging Study - Phase 1 Final Report 7August 2012
2006 Analysis of Aspen’s Lodging Profile
As part of the 2006-’07 moratorium, the Aspen City Council hired
Boulder-based hotel consultant HVS International to analyze Aspen’s
lodging profile, to address concerns including “the lack of moderately
priced hotels within the city … ” and to explore what role, if any, the
public sector should play in lodging.
HVS stated that “public involvement in hotel projects is becoming
increasingly common, as … limitations on the availability of capital for
new hotel investment limits the feasibility of conventional financing.”
The report stated that most local government involvement in new
hotels is motivated by “the economic impact of group events and the
spending of visitors attracted,” while the City of Aspen’s motivation
is “to induce more affordable lodging opportunities for prospective
visitors.”
Among HVS’ recommendations were, “Publicly owned, funded or
subsidized focused-service hotels … more moderately priced than
luxury hotels, offering limited food and beverage facilities.”
Council asked HVS to generate a financial feasibility report for an
“example” hotel in the City of Aspen. HVS found that for a 103-
room hotel on 1.4 acres, the cost of land and development would
“far exceed the economic value of the hotel,” based on projected
revenues. HVS said either the land costs would have to be subsidized,
or a profitable “residential component” would have to be included to
make the project feasible.
Council had already adopted free market residential incentives in
2005, a year before the HVS report. The new code allowed 25% of the
total floor area of a development to be developed as condos, with the
other 75% featuring a lodge with an average room size of 500 square
feet or less. This 25% allowance was essentially a “guesstimate,” and
Council later approved the Limelite Lodge application with 40% of the
total floor area to be developed as condos to make the rest of the
hotel financially feasible.
After the 2006 HVS report estimated that moderate lodges averaged
room sizes between 300-400 square feet, Council adopted a sliding
scale in 2007: Lodges averaging 500 square feet could use 40% of
total floor area for condos; lodges averaging 400 square feet or less
could use 50% of total floor area for condos; and lodges averaging
300 square feet or less could use 60%. Although this language has
been in the land use code since 2007, no applications have been filed
to use the incentive.
The HVS report concluded that a moderate hotel could be developed
in the City of Aspen either by allowing a substantial free market
component, or if the land was donated by the City or subsidized in
some substantial way.
P13
I.
8 Lodging Study - Phase 1 Final Report August 2012
2012 Analysis of Aspen’s Lodging Profile
In 2012 the Aspen Skiing Company commissioned a study with
Mountain Travel Research Program, LLC (MTRiP) to provide updated
data on the lodging bed base in Aspen and Snowmass. MRTiP
conducted a benchmark study in 2009, and the 2012 study represents
an update to that work. The 2012 report outlines unit and pillow
information for traditional lodges as well as for rentals within
condominiums and private homes. A copy of the full MTRiP report is
available on www.AspenPitkin.com. Below is a summary of the report
with information specific to Aspen.
According to the report, there are 2,293 units and 10,085 pillows in
Aspen’s short term rental market. This represents 56% of the units
and 53% of the pillows in the overall resort area. In addition, 88% of
the fractional units in the resort area are located in Aspen (300 units
and 1,688 pillows).
The largest sector of the Aspen lodging inventory is Hotels/Lodges,
which account for 50% of the bed base (-0.17% from 2009).
Condominium units account for 41% of the City total (-5% from
2009), with private homes at 6% (+31% from 2009) and bed and
breakfasts at 3% (+6% from 2009). Within the above categories,
8% (300) of the units are fractional ownership properties, a -4.75%
change from 2009.
In terms of pillows, the numbers closely mirror the changes in Units,
with some exceptions. The number of pillows in Hotels/Lodges and
Condominiums increased while the number of units decreased. This
is likely due to discrepancies in the 2009 reporting from individual
properties.
Aspen - Units By Type Comparison Aspen - Pillows By Type Comparison
2009 2012 % change 2009 2012 % change
Hotel/
Lodge
1,160 1,158 -0.17%3,308 3,506 5.99%
Condo
Property
976 932 -4.51%4,991 5,077 1.72%
Private
Home
100 131 31.00%911 1,304 43.14%
B&B 68 72 5.88%175 198 13.14%
All 2,304 2,293 -0.48%9,385 10,085 7.46%
2012 MTRiP Aspen Snowmass Transient Lodging Inventory Study, as of July 1, 2012
P14
I.
Lodging Study - Phase 1 Final Report 9August 2012
Rental of single-family homes (5% of total bed base) within the City
of Aspen increased 30% from 2009. This may be partially attributed
to changes in economic conditions, homeowners interested in realizing
income from their properties, changes to the City’s Short Term
Lodging regulations, and an increase in reporting. The study shows
that 95% of the homes available for rent are classified as deluxe
accommodations, and the remaining 5% are classified as moderate.
While economic conditions between 2009 and 2012 may have
caused a shift in the rating of some units from deluxe to moderate
or moderate to economy, the overall availability of a range of lodging
types and price points continues to favor deluxe accommodations,
with Deluxe pillows making up 68% and Deluxe Units making up 62%
of the inventory. In Aspen both Moderate Category units and pillows
decreased (-37% for units and -27% for pillows), while Economy
Category units and pillows increased (+59% for units and +117% for
pillows).
Units By Rating Pillows By Rating
Deluxe Moderate Economy All Deluxe Moderate Economy All
Hotel/
Lodge
579 389 190 1,158 1,659 1,160 687 3,506
Condo
Property
719 197 16 932 3,954 1,034 89 5,077
Private
Home
124 7 0 131 1,243 61 0 1,304
B&B 1 61 10 72 20 152 26 198
All 1,423 654 216 2,293 6,876 2,407 802 10,085
2012 MTRiP Aspen Snowmass Transient Lodging Inventory Study, as of July 1, 2012
P15
I.
10 Lodging Study - Phase 1 Final Report August 2012
Lodging Occupancy and Rate Analysis
The Rocky Mountain Lodging Report compiles data for lodging
throughout Colorado and the Rocky Mountain Region. The
information includes average occupancy data as well as information
on average nightly rental rates. The report does not include every
hotel or lodge in Colorado or Aspen, but provides good trend
information. The properties reporting into their data tracking system
range from small to large hotels/lodges, and span the economy –
moderate – deluxe categories. Information from the Rocky Mountain
Lodging Report was used as part of the 2006 HVS Lodging Study
because it “provides a good indication of aggregate growth or decline
in existing supply and demand” in the lodging sector.
The charts below outline the Occupancy Percentage, Average Room
Rates, and Revenue per Available Room (RevPAR) for Aspen, Colorado
Mountain Resorts, and the State between 2004 and May, 2012.
The seasonality of the Aspen is seen in the occupancy and room
rate information over the years, with the highest occupancy and
room rates seen December through March and June through August.
December through March consistently command the highest average
room rates, ranging from an average of $542.30 in December
between 2006 and 2011 and $419.89 in March between 2006 and
2012. Compared to other Mountain Resorts and the entire state,
Aspen consistently commands higher average room rates.
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
2004 2005 2006 2007 2008 2009 2010 2011 2012
(Thru
May)
Average Room Rate Comparison
ASPEN
TOTAL RESORTS
TOTAL COLORADO
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Aspen Average Room Rate
Aspen Average Room Rate
2006
2007
2008
2009
2010
2011
2012
All Charts in this section are based
on data from Rocky Mountain
Lodging Report.
P16
I.
Lodging Study - Phase 1 Final Report 11August 2012
In terms of occupancy, Aspen, and the entire state, saw a significant
decline in occupancy in 2009 and 2010. Aspen consistently
outperformed other Mountain Resorts, but fell behind occupancy
averages for the state as a whole during that time period. There
appears to be a continued upward trend in occupancy in Aspen and
Mountain Reports in 2012.
RevPAR provides an indication of how room revenue is being
maximized. It is calculated by multiplying the Average Room Rate by
Occupancy Percentage. Aspen continues to outpace Mountain Resorts
and the State as a whole in this lodging metric.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Aspen Occupancy Percentage
Aspen Occupancy Percentage
2006
2007
2008
2009
2010
2011
2012
40.00%
45.00%
50.00%
55.00%
60.00%
65.00%
70.00%
2004 2005 2006 2007 2008 2009 2010 2011 2012
(Thru
May)
Occupancy Percentage Comparison
ASPEN
TOTAL RESORTS
TOTAL COLORADO
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
2004 2005 2006 2007 2008 2009 2010 2011 2012
(Thru
May)
Revenue Per Room (RevPAR) Comparison
ASPEN
TOTAL RESORTS
TOTAL COLORADO
P17
I.
12 Lodging Study - Phase 1 Final Report August 2012
Lodging in the 2012 Aspen Area
Community Plan
As part of the 2012 Aspen Area Community Plan (AACP), the city
conducted extensive public outreach to hear how the community felt
about growth and development issues. The public outreach process
included a number of questions related to lodging, and the issue of
lodging consistently rated high in terms of importance to the public.
There was consistently high opposition to building more large, deluxe-
style lodging units, and fairly strong support for focusing on additional
moderate or economy lodges.
The public feedback came after the 2008 State of the Aspen Area
Report found the lodging based had declined by 27% since the mid-
1990s, but that lodging rated moderate and economy had declined
even more steeply.
A Population Segments Chart, which estimated population changes
between 1990 and 2008, estimated that the average number of
people staying in lodging during a given day in peak season declined
from 6,548 in 2000 to 5,778 in 2008. At the same time, the number
of people staying in the area’s growing inventory of second homes
climbed from, 8,563 to 9,427.
AACP Feedback Summary
Respondents to the 2010 Instant Keypad Voting Sessions in ranked
“smaller lodging units” as their second choice in terms of the type
of development they want “to encourage.” In terms of the type
of development they most wanted “to discourage,” the top choice
was “larger lodging units.” When asked a similar question in 2009,
respondents stated they “would place the most growth restrictions”
on larger lodging units and “would place the fewest restrictions” on
smaller lodging units. (2009 Instant Keypad Session)
On the same topic, respondents were even more emphatic when the
question included some well-known slang terminology for the Aspen
Area: Sixty-one percent wanted to focus on lodging for “the next
generation of ski bums,” versus 15% who wanted to focus on “deluxe”
lodging for our “world class” resort. (2009 Instant Keypad Session)
Area residents felt strongly about encouraging a diverse visitor
population - 75% of Aspen area voters and 66% of homeowners
were willing to support government “incentives for small to moderate
lodges.” (2008 Community Survey)
In the 2011 Community Survey, the “most beneficial” type of
development was identified as “essential businesses,” with “diverse,
balanced lodging” coming in second. In a related question about
replenishing lost lodging inventory, the top choice was to replenish
inventory without a specific focus on type (35.5%) – but coming in a
close second (31%) was to replenish inventory with a specific focus
on moderate and economy lodging.
However, the gap was wider in the 2010 Instant Keypad Session,
when 51% favored replenishing lodging inventory with no particular
focus on type, compared to 28% who favored replenish inventory with
a focus on moderate to economy lodging.
P18
I.
Lodging Study - Phase 1 Final Report 13August 2012
In the 2011 Community Survey, smaller lodging units dropped from
second to sixth in terms of the type of development people wanted to
encourage – but larger lodging units remained at the top in terms of
development people most wanted to discourage.
If there was a community value that appeared to work in opposition
to replenishing the lodging base, it was preserving small town
character. Asked why they might keep lodging development modest
in size, the most popular answers were “small town character” and
“mountain views.” (2011 Community Survey) The top answer to a
very similar question at the 2010 Instant Keypad Session was “small
town character” at 38% -- but the second most popular response was
“don’t restrict lodging size” at 31%.
AACP Lodging Policies
During the drafting of the AACP, many discussions focused on the
feasibility of producing moderate lodging and what role the city could
play. Because the AACP is an aspirational document, focused on
establishing a vision for the future, the AACP itself does not address
these issues. Instead, it outlines a vision of a thriving, diverse visitor
base.
The Philosophy of “The Lodging Sector” contained in the 2012 AACP
states: “The formulation of a strategy that replenishes the lodging
base and favors a diverse lodging inventory is important to the long-
term sustainability of a visitor-based economy that purposefully seeks
to attract a diverse visitor base. Without a diversity of lodging options,
we limit the ability of future generations of visitors to experience the
Aspen Area and its surrounding public lands. Many of today’s longtime
locals first experienced Aspen thanks to “entry-level” lodging. The
concept of providing equal access to Aspen has been present in long
range plans dating back to 1976. We seek a broader demographic
in order to sustain a diverse, visitor-based economy. Finally, we
recognize that a diverse lodging inventory ensures there are places
to stay for those who produce and participate in many of our critically
important special events, workshops and other activities.”
The top two lodging policies in the 2012 AACP are “Minimize the
further loss of lodging inventory,” and “Replenish the declining lodging
base with an emphasis on a balanced inventory and diverse price-
points.”
Regarding the scale of new development, the 2012 AACP includes
a policy saying new lodging should be “compatible and appropriate
within the context of the neighborhood.”
P19
I.
14 Lodging Study - Phase 1 Final Report August 2012
Interviews with Aspen’s Lodging Sector
The following is a distillation of the answers from interviews
with lodging managers, describing repeated themes, ideas and
suggestions. Full responses begin on page 17.
1. For many years, StayAspenSnowmass and ACRA asked
lodges to identify themselves as deluxe, moderate or economy.
Which category does your lodge fall under?
The lodges represented in this feedback effort ranged from economy
to moderate and deluxe, with several including two to three
categories within the same lodge. For older structures that don’t
meet the expectations of modern travelers, high levels of service can
place them in the deluxe category. In general, economy lodges tend
to be further from downtown, while deluxe tend to be closest to the
mountain. Although the economy/moderate/deluxe categories are
not industry terms, and some lodges might choose a category for
marketing purposes, most felt the categories were generally accurate.
2. Can you describe your average customer, or the different
kinds of clientele that stay with you? Is there a certain type of
room, or size of room that people like most?
There are many niches in the Aspen lodging market. Some focus on
Baby Boomer skiing families, some on beginner skiing families, others
focus on couples and/or single professionals attending conferences
or consulting. Still others tend to cater to the support personnel and
participants of special events. In the deluxe category, the share of
the foreign market (South America, Australia) appears to be growing.
The only hostel in town (St. Moritz) appears to be less in demand in
recent years. The condominium rental market ranges from economy
to luxury.
There is no single type of visitor, so a successful lodge is about
meeting expectations in their niche. Families and those staying for
longer periods (i.e. the Music Festival, or extended skiing vacations)
tend to demand larger room sizes to accommodate kids, to stow gear
and to allow for work-space. In general, the lodging industry has
retreated from the 1,000 to 3,500 square foot room size that was the
trend before 2008. Smarter, modern design is aiming to accommodate
needs from roughly 400 to 700 square feet. Everyone emphasizes
the importance of service, but especially those working with outdated
structures, such as the aging condo inventory. Many condos have
eight-foot ceilings, far lower than what modern travelers expect.
Clients of the condominium and single-family rental pool tend to stay
longer than those in traditional lodges, staying a few weeks or months
as opposed to 3-7 days, which is typical in lodges..
3. Are there amenities that you find people demand more and
more? If there is one thing you could add to your lodge, what
would it be?
The top demand is technological services. Free Wi-Fi is a must, along
with I-Pod docking and enough outlets to handle everyone’s needs:
high speed and bandwidth are key as well. Pools and exercise rooms
are standard. Transportation is also key, with more lodges offering
bicycle fleets as well as shuttle and car service.
Community Development Staff
conducted interviews with local
lodging experts, ranging from
developers to operators. The
interviews are intended to
highlight the various opinions and
experiences within Aspen’s lodging
sector. Interview were conducted
with large and small hotels as well
as condominium rental agencies.
The hotels and condominiums
reporesented by the interviewees
range from economy to luxury.
P20
I.
Lodging Study - Phase 1 Final Report 15August 2012
Almost everyone emphasized service: People traveling to a destination
resort place a very high value on their time. Service means not just
having a stack of brochures, but talking with customers about the
many choices of events and recreation options – including tips about
having a genuine Aspen “experience.”
4. What is your lodge’s strategy for success? What are the
ingredients that make up long-term viability for you?
Trends in the lodging industry change quickly: many said the key is
continually evolving with the interests and demands of the customers.
Phrases used by respondents included “staying fresh,” “building
relationships,” “providing choices,” “creating memories” and “keeping
up with technology.”
5. How important are special events? What special events
bring you the highest occupancy? Is there a type of special
event that you think would fill your lodge?
Generally, the participants named Food & Wine and the Music Festival
as most important, followed closely by the X-Games. Most also
described the constellation of smaller events (Aspen Eco Fest, Aspen
Institute Socrates Dinner etc.) as creating an atmosphere of choices
that’s important to the modern traveler – and reinforcing the Aspen
brand.
Many wanted to see at least a modest expansion of the tourist season
– into the first two weeks of December and the last week of August.
Most were satisfied with the level of collaboration that’s critical to
producing specials events. Many said events should be consistent
with Aspen’s character. While all resorts have special events, Aspen’s
exceedingly strong arts and cultural institutions bring a level of quality
that few other resorts can match.
6. How will Aspen as a destination stay relevant, attractive and
compelling for future generations? Are you seeing changes
in demand for types of rooms, amenities? What do you think
visitors will be looking for in the future?
Most respondents talked about the importance of Aspen being
compelling to young people, with a sense of vitality in the downtown,
including things like jugglers on the pedestrian malls. Changes that
lodge managers liked included informal public gathering places,
including the increase in outdoor dining, tables and chairs around
the pedestrian malls, the upgrade of the Durant Street ice rink,
the Saturday Market. Managers wanted more of the same. Among
the suggestions were more colorful vendors (i.e. jugglers etc.); a
revival of the (FAC) Friday Afternoon Club (music and kegs outside
the Jerome); more Music Students on the malls (as in hiring them);
nightclubs for young people (the loss of Cooper St. Pier was a
negative); and improving the way we leverage the Aspen Idea.
Many emphasized staying true to the values that make Aspen special
today, including the character of the built environment, environmental
stewardship, the metropolitan feeling of arts and cultural offerings
and the many recreational choices. Several were worried that locals
don’t recognize that the Aspen brand is very intimidating to many
people who have never been here, which can deter people from
visiting. (There seemed to be no easy answer to that problem.) Most
applauded the Skiing Company’s efforts at attracting young people,
P21
I.
16 Lodging Study - Phase 1 Final Report August 2012
dating back to opening Aspen Mountain to snowboarders in the late
1990s, and the X-Games.
7. Many of today’s year-round residents stayed at a relatively
affordable lodge when they first came to town, grew to love
Aspen and decided to live here. Today, public feedback tells
us there is strong support for “entry-level” lodging. With a
steady decline in moderate and economy lodging since the
mid-1990s, there is a community aspiration to replenish those
types of lodges. What do you think about this? Do you agree?
Disagree?
Responses were mixed to this question: Many agreed that the aging
of the Baby Boomer generation is resulting in fewer visits, and
attracting the next generation is critical. Some said a diverse visitor
base is good for the town in general. Others said the young seasonal
workforce will become future guests, adding that affordable seasonal
housing has helped build for the future in that sense – though many
employees commute from cheaper housing markets downvalley.
Managers of economy properties said they continue to offer entry-
level lodging, one adding that Front Range and West Slope residents
are a market for lower-end lodging that could be tapped. Economy
lodges were also identified as essential for support personnel and
participants of special events to stay while in town.
Non-economy lodge managers said the erosion of the lower-end is
due to several factors, including inability to market aggressively; too
few rooms to achieve critical mass economically; difficulty in matching
service levels offered by others; the competition when upper-end
lodges aggressively lower off-season rates; and outdated buildings
and facilities.
Many said that the reality is that people must pay for the quality
of the amenities that the Aspen area offers, including the natural
environment, scenic views, multiple recreational opportunities,
high-quality arts and cultural offerings, the genuine historic built
environment and even the genuine and vital local community. Several
would rely on the market to find a balance in lodging inventory.
Several warned that while Aspen has enjoyed unparalleled loyalty
in its visitors for several decades, the younger generation is
less influenced by loyalty, and more driven by adventure, new
experiences, new places and exploring the many choices offered
around the world. Several again cited the “intimidation factor” as a
barrier that should be addressed.
8. Do you think the growth management incentive program
for small sized-rooms is viable?
Respondents said the program was either flawed, not widely
applicable or could be improved to be more effective.
9. There has been talk of the city partnering with a developer
to build a moderate/economy lodge. Do you think this is
viable? Do you think it’s a good idea?
Respondents were generally unenthusiastic. Such a partnership was
described as possible if the City “put real value on the table,” and if
such a lodge were “in off-beat locations.”
P22
I.
Lodging Study - Phase 1 Final Report 17August 2012
Interviews with Aspen’s Lodging Sector
Full Responses by Question
1. For many years, StayAspenSnowmass and ACRA asked
lodges to identify themselves as deluxe, moderate or economy.
Which category does your lodge fall under?
Michael Behrendt / St. Moritz
We have very different types of accommodations, from a 900 square
foot condo to the 2nd floor hotel rooms and the 3rd floor hostel. We
have people from millionaires to flat-busted.
Chuck Frias / Frias Properties
We provide economy to luxury rentals.
Donald Lee / The Gant
We are deluxe, but sell in all three categories. Our premier units have
been completely remodeled at very high levels and include king size
beds and washer/dryers among other things to achieve such a rating.
Standard units don’t have such amenities and weren’t remodeled to
the same extent and therefore command lower rates and occupancies.
It varies, but generally our clientele makes $150,000 per year and up.
Paul Lovelace / Inn at Aspen
The Inn at Aspen is comprised of privately-owned condos, often used
by owners and otherwise leased as lodge units. We are an economy
hotel partly because of the age of the facility and the location –
everyone wants to stay in town. But we’re looking to move into the
moderate category -- half of the rooms are now under renovation. We
want to perform well at the economy level, and break into the next
level as best we can.
Rick Moore / The Innsbruck
After the renovation in 2007, The Innsbruck became a fractional
property, selling 1/12 interests. Although we don’t have a kitchen, all
the units have kitchens and washer-dryers. I consider us deluxe.
Skiing Company / The Little Nell + The Limelight
The Little Nell is luxury, the Limelight is moderate.
Stan Clauson / Clauson Associates
The practice of lodges choosing the category they fall into (economy/
moderate/deluxe) may have as much to do with their own marketing
and positioning than which category is appropriate. The factors that
go into determining a hotel’s category are cost, room size, amenities,
location, design, ambience and character.
Terry Butler / The Residence Hotel
Deluxe.
John Corcoran / Aspen Alps
On an annual basis, about 45% of the people here are owners and
their guests. I think everyone has a niche that goes beyond the
categories of economy, moderate and deluxe. Even though we’re 50
years old, I’d consider us deluxe because of our location, privacy and
decorum – 70% of the people here are return guests who value those
things.
P23
I.
18 Lodging Study - Phase 1 Final Report August 2012
Bob Daniel / Lift 1 Lodge
Deluxe.
Craig Melville / Mountain Chalet
The categories don’t always capture what the hotel is all about. We
are generally viewed as an economy sector hotel, though we have
very nice deluxe rooms and 2 bedroom apartments that are definitely
not economy. We also offer a list and quality of amenities that is not
typical in the economy level.
John Sarpa / Centurion Partners
The categories we use in Aspen are not industry terms, but generally
they’re OK. If anything, the “deluxe” category is a little too much of a
catch-all – I would add the category of “luxury” just above that, which
would have only a very small number of lodges in it.
Warren Klug / Aspen Square
I consider us in the moderate category. We are a full ownership
condominium hotel, and draw visitors from the upper-middle class.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
Moderate. We are a moderate lodge because of our Main Street
Location, size of rooms, age of property, exterior of hotel, inclusions
with price, and character of hotel. Our guests tend to be singles and
couples, rather than families. This is generally because of the size of
the room and lack of kitchens vs. Condominium style properties which
likely attract families.
2. Can you describe your average customer, or the different
kinds of clientele that stay with you? Is there a certain type of
room, or size of room that people like most?
Michael Behrendt / St. Moritz
I have upper-middle class people who are happy with the 200-plus
square feet on the second floor. I have people staying for all the
athletic events. The average age used to be low 30s; now it’s more
low 40s.
People used to be satisfied with the hostel, but that’s been changing
– in the last five to 10 years, people have been more willing to pay
extra to have privacy, and the kitchenette. I don’t know how long the
hostel is going to last. The hostel was also affected when the City built
seasonal housing, such as Marolt Ranch, for the music students and
Ski Company workers – it’s hard to compete with that.
Chuck Frias / Frias Properties
Our customers tend to be on the wealthier side, considering the travel
costs. Because we rent condos and homes, we have more families.
Compared to the resort industry in general, Aspen condos are smaller
because the buildings are older and dated by ceiling heights and
lack of master bathrooms. We overcome it by providing hotel-type
services.
Donald Lee / The Gant
We are deluxe, but sell in all three categories. For example our
premier units must have been completely remodeled at very high
levels and include king size beds and washer/dryers among other
things to achieve such a rating. Standard units do not have to contain
such amenities and would not have been remodeled to the same
P24
I.
Lodging Study - Phase 1 Final Report 19August 2012
extent and therefore command lower rates and occupancies. It varies,
but generally our clientele makes $150,000 / year and up.
Paul Lovelace / Inn at Aspen
Our average client is beginning skiing families and economy-minded
travelers. Grandma can sit in a chair inside our common area and
watch the kids learning to ski. Our room size averages 350 square
feet, and that works for the short stays we have now. Some of the
older owners will stay much longer of course.
Rick Moore / The Innsbruck
We have 10, two-bed units at 1,275 square feet and 7 one-bed units
from 600-750 square feet. The larger size of our rooms makes us
attractive to families, and 30% are coming from South America and
Australia, staying one or two weeks.
Skiing Company / The Little Nell + The Limelight
Little Nell: Our customers are well traveled and affluent and tend to
stay about five days. The off-street suites are in highest demand.
People who are staying two to six weeks want the bigger rooms with
all the activities and gear.
Limelight: We get a variety of guests, from the economical traveler
to the affluent for our suites. The customers of the old Limelight were
saying the rooms were too small for families, the hallways were small
and they needed two beds. What we have now, averaging 500 square
feet, and two beds in half our inventory, seems to work well.
Stan Clauson / Clauson Associates
We have had clients with differing ideas about lodge size. There are
those who believe that it requires 1,000 square feet and up to create
a viable lodging product, and a recent lodge owning client who is
happy with units that average 300 square feet – it’s all over the map.
But many lodging professionals seem to believe that 500 s.f. makes
for an minimum size lodge room in the context of a ski resort.
Terry Butler / The Residence Hotel
I have mostly couples in their 40s and 50s. It’s not the size of the
room they care about as much as the spaciousness of the high
ceilings, and the elegance of the décor.
John Corcoran / Aspen Alps
People do care about size. We have families who are looking to spend
quality time away from their work lives – people who stay up to three
to six weeks, whether they own here or rent. I think high quality,
established events like the Music Festival, the Ideas Festival draw
those people here. When people are on vacation, they are still going
to work, and that requires space that condominiums provide.
Bob Daniel / Lift 1 Lodge
We expect to be family-oriented, but we have flexibility as well
because of the ability to lock off so many units into smaller units.
If you have a Baby Boomer couple that wants to spend time alone,
they can; if they want to bring the extended family, they can do
that as well. I think it will be multi-generational – there are a lot of
safe choices for kids, being so close to downtown. In general, the
industry has started to look at pulling back from very big rooms (in
excess of 1,000 sf), although there are still properties that cater to
this segment of the market and is looking at smarter, more functional
P25
I.
20 Lodging Study - Phase 1 Final Report August 2012
design, flat screens and the right kind of furnishings. One of the
challenges in the mountain environment is accommodating all the
stuff people bring on mountain vacations.
Craig Melville / Mountain Chalet
Our typical traveler is an older skiing couple from the United States
who has stayed with us before. As often as not, someone we would
call a friend. Generally, people prefer more space, though they seldom
ask about that when booking a room. They want to know what kind
of beds and other amenities there are. It depends on the time of year,
but the economy rooms that at least have a queen bed usually sell
out first. During certain times, such as Food & Wine, our middle of the
road rooms tend to sell out first, followed by deluxe rooms, and the
economy rooms sell out last.
John Sarpa / Centurion Partners
Market demand for room sizes has been changing. A few years ago,
people were focusing on very big rooms and very high rates, but the
industry has come down from there. Location has a lot to do with how
big rooms can be. The Nell averages 600 square feet – I’d say for
a winter resort, you don’t want to go much below 450 square feet,
which is roughly where the St. Regis is. But there are other niches –
for your 3.5 to 4 star hotels, 350-400 is OK. A lot of it is about just
satisfying expectations for whatever market niche you’re after.
Warren Klug / Aspen Square
Our customers tend to come from the upper-middle class. We have
a lot of visitors 50 years old and up, but they are not our only
customers. We get families and couples, partly because we have
diverse options, from studios to three-bedroom units. Out of 102
condominium, 68 are studios at about 500 sq ft, so they are good
for couples. Studios are roughly size of a hotel room, but they offer
more than an average hotel. Each has a full kitchen, fireplace, living
and seating area, and balcony. We get some groups who will use our
conference room. On average, customers will stay for 5 nights in the
winter and 3 nights in the summer.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
Our guests really like our rooms with wood burning fireplaces and in-
room Jacuzzis, as they are very unique. They also would like having
food and bar on site, this would be a nice amenity to offer our guests,
which we currently do not. Meeting space and fitness space would be
nice, we get a lot of calls for it.
3. Are there amenities that you find people demand more and
more? If there is one thing you could add to your lodge, what
would it be?
Michael Behrendt / St. Moritz
We have a pool and a small common area. I think we need more
common area. If I could I’d have an elevator, a bigger kitchen, an
exercise room and a real conference room for groups.
Chuck Frias / Frias Properties
The most important amenity is service, service, service – we treat
customers like family. The age and size of our inventory can be a
liability and we have to make it up with a lot of personal service – you
won’t find that anywhere else. Most condo rentals involve picking up
a key and that’s it. We offer rental guests free airport transportation,
daily maid service, free wireless internet and long distance calling,
P26
I.
Lodging Study - Phase 1 Final Report 21August 2012
concierge service, 24/7 coverage and check-in, HD tv and free pay
channels, as well as pre-purchase lift tickets and ski rentals. If there
is one thing we could add, it would be parking, larger units and
master baths.
Donald Lee / The Gant
Transportation is our marquee service, also Wi-Fi, exercise rooms,
strong TV programming with HD TV’s, well-appointed kitchens, high
quality bedding and linens are just expected – even more than just
five years ago. We now see more demand for king size beds and
washer/dryers in the units – consumers want luxury offerings and
high service levels.
Paul Lovelace / Inn at Aspen
Because of our out-of-town location, we emphasize the free parking
and our ability to serve breakfast, lunch and dinner – to be self-
contained. We have three banquet halls, which helps us get groups
here. We also provide what people are demanding now, including free
Wi-Fi, I-Pod docking and chargers. The shuttle to town is key for us –
everybody want to experience downtown.
Rick Moore / The Innsbruck
Since we are relatively new, we have all the technology people
are demanding, such as Wi-Fi, I-Pod dockers, plenty of outlets.
Transportation is key – we have a van, an electric car and eight bikes.
Skiing Company / The Little Nell + The Limelight
It’s not just Wi-Fi anymore, it’s speed and bandwidth. You can’t
make excuses for not having high-speed, and that’s a significant
investment. You can have six devices in one unit and both the
Limelight and the Nell have recently reinvested in this area. I hear
expectations that the entire town should have Wi-Fi – after all,
it’s Aspen. Fewer people are renting cars, so everybody expects a
complimentary shuttle, and the Nell is offering Audi test drives. The
Limelight provides five bikes, with a room set aside for storage and
tuning. The Nell has six bikes for rental.
The lack of bigger meeting spaces across the board is a barrier to
landing groups. We’re always interested if the City is exploring a new
public gathering place, as stated in the Civic Master Plan and the
AACP.
Stan Clauson / Clauson Associates
In terms of amenities, people with busy lives and short stays want
amenities on-site. A pool and a work-out area are almost essential
now.
Terry Butler / The Residence Hotel
We’ve been wireless for years, people like the Jacuzzi tubs. Because
of our downtown location and the land and leasing costs, you can’t
have on-site amenities. But we’re the most centrally located hotel
in Aspen, so we partner with Jean Roberts Gym, the Little Nell for
the pool, our guests have access to the Caribou Club and the Aspen
Mountain Club. We bring in any kind of service, from masseurs to spa
treatment and baby-sitting. And we’re right in the middle of all the
restaurants. If we could add something … parking would be nice –
that’s a big problem for us.
P27
I.
22 Lodging Study - Phase 1 Final Report August 2012
John Corcoran / Aspen Alps
The biggest demand for amenities right now is free Wi-Fi, and
we had to invest in that. The other two are concierge service and
transportation. People place a high value on their time here, and they
don’t want to sweat the details. If I could add something, it would be
nicer, newer more spacious accommodations.
Bob Daniel / Lift 1 Lodge
We’re going to have the advantage of being a new product that
responds to people’s technological needs which have become more
and more a requirement for guests. Also convenience and service are
two big things that customers demand. Traveling is more of a hassle
today than ever and once they arrive, they want to fully enjoy their
experience without hassles.
Craig Melville / Mountain Chalet
To most travelers it is first and foremost about value. What am I
getting at this hotel for this price versus what I would get at another
hotel for another price. They are firstly looking at price, room type
and location. They then consider the amenities and the character of
the hotel. They associate a set of expectations with each price level.
For us, the personal connections over the years are very important.
John Sarpa / Centurion Partners
At the Residences at Little Nell, we’re focused on creating memories
every time someone visits – you have to love to come back to
overcome the competition and the transportation barrier. Providing
guests with options for things to do during their stay is part of a very
high level of service that places a high value on people’s time while
they’re here.
Warren Klug / Aspen Square
We are a limited service hotel, which means we don’t have our own
food and beverage service. We have a front desk with concierge
services, a fitness area, conference facilities, pool, and hot tub.
I’d say our most important amenity is our service. We strive to
provide high quality service in all aspects of the business. In the
condominium business there are different levels of service. We
only manage the Aspen Square, so we can focus on the service
provided here. We operate similarly to the Gant in that respect. If
we were going to add one thing it might be limited breakfast service
because it seems travelers, especially Europeans, expect breakfast
to be included in their rates. This would require more space and
at least a limited kitchen. Both would be helpful for meetings as
well. We might also consider additional meeting and function space
to accommodate more groups and special events, like weddings,
meetings and meals for meetings and seminars, larger receptions and
function space.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
I think that the current occupancy figures do not warrant adding
lodging inventory to the community. Significant incentives should be
offered to the older/affordable lodging base in order to allow them
to preserve what they have and upgrade for the future. Incentives
need to go beyond the LP overlays offering, which few if any lodges
have successfully utilized since its inception. The LP overlay doesn’t
go far enough to assist these redevelopments. Additionally, the city
fee’s and permit process are cumbersome for smaller lodges. The city
process lends itself to large scale development, e.g. developers doing
large projects that can afford high priced architects and planning
P28
I.
Lodging Study - Phase 1 Final Report 23August 2012
consultants. We had to do a simple project that cost $20,000 and it
cost us $3,000+ in city fee’s + $5,000 in architectural fee’s. This is
a large sum to navigate the city process to do a simple project. E.g.
residing an exterior wall, bathroom remodel, etc.
4. What is your lodge’s strategy for success? What are the
ingredients that make up long-term viability for you?
Michael Behrendt / St. Moritz
Just keep giving good value. I don’t plan any changes in the short-
run, but if present trends continue, we may want to convert the hostel
to regular hotel rooms.
Chuck Frias / Frias Properties
I think there’s a lack of awareness in town about the stock of
functionally obsolete condos. We had the very first condos in the
United States, and a lot of them have 8-foot ceilings, and many have
no parking. The level of service we provide and the attraction of
Aspen is what keeps us going. But it would be great if the City could
focus on how to address this inventory – we’re talking about a lot of
units and a lot of customers that spend money.
Donald Lee / The Gant
Continuous improvement of the product and service, service, service.
You truly have to connect to the customer – knowing their name,
what they like. Overall, staying current with customer expectations is
critical, which includes staying ahead of all the technological changes
– that can be as simple as having enough outlets when every family
member is plugging something in.
Paul Lovelace / Inn at Aspen
We’re looking at both interior and exterior remodels. We have room
for water features outside in the back, volleyball or bocci courts,
outside food service – it’s still in the planning stage. Beyond that,
when you have a building that is dated, you need to focus on
customer service, and that means building relationships one at a
time. We need to continue to leverage the three banquet halls by
focusing on group business.
Rick Moore / The Innsbruck
High quality rooms and service. I think we are in a niche that will
keep working, in terms of occupancy. The fractional ownership market
has been down for a few years now.
Skiing Company / The Little Nell + The Limelight
Little Nell: Twenty years ago, the Nell was the only five-star hotel in
a mountain resort. Now there are hundreds. You have to continually
evolve as people’s interests and expectations change all the time.
We’ve had tremendous loyalty, but now as they’re getting past 60
and 70, they’re not coming as often. We have to make sure we’re
relevant, we’re looking to stay fresh and have a more modern appeal.
That’s reflected in the renovation and the new room furniture – less
overstuffed, more spacious.
Limelight: Younger people are more adventuresome and value-
conscious, and they’re getting bombarded by marketing. This
generation will have 15 jobs in their lifetime, while the older
generations had two – in general, the sense of loyalty is not as strong
as it was. I think we’ll need a bigger fitness center.
P29
I.
24 Lodging Study - Phase 1 Final Report August 2012
Stan Clauson / Clauson Associates
As a lodge, you need a critical mass of rooms to make the economics
work, and that’s why so many of the smaller lodges aren’t here
anymore. The small lodges that remain tend to be owned by people
who are committed to keep it going for their own reasons.
Terry Butler / The Residence Hotel
As the owner-operator, I follow up with customers all the time. I live
in the hotel, so we sit down and talk and become friends. I call them
on the phone, I send cards to their dogs – we’re very dog-friendly.
Forty percent of our customers bring their dogs. People who want the
new modern room, they won’t come here – but there are people who
like the heavily decorated rooms with antiques from all over the world
and a lot of personality. It’s a very personal hotel, like a big family.
John Corcoran / Aspen Alps
We’re always keeping a close eye on the implications of generational
change. What is happening with the Baby Boomer generation? What
are the personal interests of the next generation?
Bob Daniel / Lift 1 Lodge
We recognize that the Gen X and Gen Y generations want more
choices and a variety of experiences – there’s less automatic loyalty
than in the past, and that’s a reality. We need flexibility and options in
terms of our product mix.
Craig Melville / Mountain Chalet
The hotel biz is pretty simple: provide a quality product for a good
value. We have the huge advantage of owning the property for a long
time, so we have avoided the difficulty of new costs of building.
John Sarpa / Centurion Partners
The seamless ability to have different experiences through the
lodge. We want to bring people choices of experiences – we want
the customer to look back and say; “They convinced us to do it
and we loved it” – whether it’s hot air ballooning, Nordic skiing or
experiencing the real Aspen.
Warren Klug / Aspen Square
We build on the strengths we have – our location is almost
unmatched, and we have high quality accommodations. We really
emphasize quality and friendly service. This goes for the staff as
well as the quality of the accommodations. We have to keep the
apartments up and remodel as necessary. Our owners are committed
to maintaining and upgrading our common areas and individual units
as needed to keep up with the marketplace. We are really fortunate
to have condo accommodations that have in-room facilities (full
kitchen, living/siting area, patios, fireplace). We also have a full time
marketing and sales person. We continue to focus on international
sales, which has been very successful especially in the last few years
when domestic ski activity has been soft.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
Continual reinvestment into our property.
P30
I.
Lodging Study - Phase 1 Final Report 25August 2012
5. How important are special events? What special events
bring you the highest occupancy? Is there a type of special
event that you think would fill your lodge?
Michael Behrendt / St. Moritz
We benefit from all the special events except Forstmann-Little (an
annual gathering of the very wealthy). We have all kinds of people
bleeding over to us, with our prices -- from Food & Wine to all the
athletic events. We get participants and the support personnel.
Chuck Frias / Frias Properties
There’s a huge correlation between special events and occupancy.
They do work and they’re essential. We, and others in the lodging
community, provide many comp (free) rooms to help host the events.
The City and County should consider providing equal amounts to help
support these events.
Donald Lee / The Gant
Some special events are vital and others not so much. Food & Wine
is extremely important to the community. It is a great example of
what the right type of special event can grow into and is a good fit for
Aspen. I’d like to see a greater focus on reviving Gay Ski Week – that
was working extremely well and then it wasn’t. We should be working
with them, maybe move it to March and support it. One-day events
like the bike race just don’t have the impact on lodging, but the PR
and marketing is important – the question will become: Is it a big
enough return for the investment? The collaboration on special events
across lodging, retail, restaurants, ACRA – that has gotten better over
the years.
Paul Lovelace / Inn at Aspen
We get a lot of support crews for special events – the most extreme
example if the X-Games, when we’re ESPN’s headquarters. We
get a lot of participants in the athletic events, and from events in
Snowmass.
Rick Moore / The Innsbruck
Food & Wine and X-Games are no-brainers. I like the bike race; it
keeps our name on TV, and if it grows it could become a big deal.
Bicyclists love Aspen.
Skiing Company / The Little Nell + The Limelight
They’re very valuable, especially the destination events, the long-term
events with more moving parts and support personnel, where most
of the participants and spectators are from out of town. Eventually,
the bike race could become that. In the summer, it’s all about timing
– what is there before Food & Wine? What is there after the Music
Festival, in the last week of August? The smaller events are also
important because they add to vitality; people want choices and that
small event could make them stay another day.
There has been more collaboration across the board on events, and
that’s good for everyone – there’s been more of an effort to get all
the players involved. The restaurants are becoming more of a player,
and that’s a big deal. We need a short-term, mid-term and long-range
strategy on special events. The City has been reaching out more with
the Mining for Ideas Committee. It might be valuable for the City to
track specific events with tax revenues, so we can all get a sense of
the impact. When the Music Festival changed its dates, it had a huge
impact – we even saw it in the Gondola rides.
P31
I.
26 Lodging Study - Phase 1 Final Report August 2012
Finally, there are so many calendars, it doesn’t seem as if there’s a
one-stop shopping calendar. We know through our service experience
that people love to be handed a ‘menu’ of events with the kind of
detail they need.
Stan Clauson / Clauson Associates
If special events are consistent with Aspen’s character, they work
really well. Food & Wine is a very successful special event. The
X-Games are a little dysfunctional with regard to the lodging sector
and overall ambience, but the overall publicity is certainly important.
Terry Butler / The Residence Hotel
Food & Wine and X-Games are great, but we need more big events to
fill out the seasons; in early December and late August. I’d rather one
big event than four little ones. It helps me because I can’t do the kind
of marketing that others do.
John Corcoran / Aspen Alps
Special events are great – we participate in lower rates. It’s important
to experiment with events that are consistent with Aspen’s character,
which is a combination of culture and outdoor activities. Only rarely
do newer special events have any contribution to the bottom line for
us – usually it is the established events that are more productive.
Bob Daniel / Lift 1 Lodge
Every mountain resort has festivals and things like that, but Aspen
has a really strong set of arts and cultural institutions that bring a
level of quality that’s undeniable. That’s what sets us apart. People
know the difference between a “made up” festival and one that offers
a real experience. The X-Games is so critical, it creates a young, hip
vibe that Aspen just didn’t have before and helps Aspen be relevant
for the future snow riders.
Craig Melville / Mountain Chalet
Special events make Aspen a more desirable place to be, and whether
that improves our bottom-line directly or indirectly is not important.
I’d say the Music Festival is the longest lasting and the best for
business. Considering short-term events, Food & Wine is the best.
The bike race is a nice addition, but we will have to wait each year to
see if it comes to Aspen so it is not ideal. And it requires a lot of comp
(or nearly comp) rooms. Any popular event that happens downtown
is likely to fill our lodge.
John Sarpa / Centurion Partners
The big special events are big enough to fill everything. While the
smaller ones aren’t that great for occupancy, they do build the brand
and that’s important.
Warren Klug / Aspen Square
They are extremely important to the community because they give
people that much more reason to come visit. The king of special
events is X-Games, with Food & Wine Weekend right up there too.
Food & Wine is important because it is at a time when we’re not
typically busy. June can be a tough month to attract people because
people are wrapping up school and are not yet traveling for summer
vacations. The bike race is also an important event, but it has only
brought people for one night. As the race continues to gain notoriety
we expect it to help drive more visitors to the area. It is hard to
attract visitors in June and even in late August, so Food & Wine and
P32
I.
Lodging Study - Phase 1 Final Report 27August 2012
the bike race are helpful for us. We were disappointed to see the BBQ
event dissolve. It was during a slow week, and could have helped
draw more visitors building on the bike race activities of that same
week.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
Lodges should do what’s best for lodges, each one is unique, and they
should have the amenities they think go best for their customers,
not what the AACP thinks they need… For us, a bar and restaurant
would be a convenient amenity, as well as a fitness facility, and
perhaps a small massage treatment room (nice after a long day of
activities). Guests aren’t going to have every meal or drink in the
hotel restaurant/bar, they want to experience town. It’s just nice for
the times when they want that convenience. Additionally, it’s nice for
locals to have a poolside bar/restaurant that’s an enjoyable hangout.
We are in the moderate hotel category and the accompanying
restaurant/bar would speak to that price point for food and beverage.
6. How will Aspen stay relevant, attractive and compelling for
future generations? Are you seeing changes in demand for
types of rooms, amenities? What do you think visitors will be
looking for in the future?
Michael Behrendt / St. Moritz
More venues for young people downtown. If you approve a larger
building, let’s have an economical nightclub in the basement. We
really lost something with Cooper St. Pier. The more outdoor dining
the better, more buskering* and jugglers, more vendors, more music
– how much would it cost to pay different groups of music students to
be out every night? The chairs around the pedestrian malls are great,
but more tables that aren’t just for a restaurant would be nice. The
new C.P. Burgers at the ice rink and things like the Saturday Market.
*(A busker is a street performer.)
Chuck Frias / Frias Properties
One aspect that people might not be aware of is the tremendous
success of the fractional inventory. People who own a whole ownership
condo outright have been less and less likely to rent it over the years.
But in terms of hot beds, the performance of fractionals is better than
anyone anticipated. We need to incentivize the older condominiums,
which is most of the current inventory, to enhance the product. Some
functional elements like short ceilings and lack of master baths should
be improved. The overall unit size cannot be easily changed, so we
need to improve other elements that we can control.
Donald Lee / The Gant
It’s about the exceptional experiences that Aspen has to offer. The
sheer number of cultural offerings gives people a lot of choices – it
gives us metropolitan flair in a small town. We don’t have to reinvent
the wheel. I think we are all after the same thing -- how do we
bridge maintaining Aspen’s character while embracing modernization,
embracing energy efficient technologies, etc? We need to maintain
strong air service, continue to modernize. What the SkiCo and the
lodges have done with international markets is really showing up now.
Paul Lovelace / Inn at Aspen
Stay fresh, stay relevant – you have to evolve and change. The TV
exposure of the X-Games shows Aspen is a place where young people
can have a good time. – it’s not as elite and stuffy as the reputation
can be.
P33
I.
28 Lodging Study - Phase 1 Final Report August 2012
Rick Moore / The Innsbruck
I’d love to see Aspen get young again. Only two of our 13 employees
live in town. I think if we had more rental employee housing, you’d
see that young labor force enjoying town and coming back, not just
for work. On the other hand, losing the Cooper St. Pier was a real
loss. It’s not easy for working kids to go out and have a good time at
night like they used to.
Skiing Company / The Little Nell + The Limelight
How do we get the 16 to 20-year-olds coming back – we’ve focused
on that ever since allowing snowboarding on Aspen Mountain and with
the X-Games. That has to be part of the mindset in the whole town.
There has to be as many compelling things off-hill, with music and
public gathering areas. People don’t do 8:30 to 4:30 skiing anymore –
we need to feed that social component.
Stan Clauson / Clauson Associates
We need to keep changing and evolving. We need to embrace
dramatic bold strokes; the new Art Museum is an example of that. If
it’s all about preserving a certain image of the 1970s and ‘80s, that’s
not in our best interest. There’s a certain phobia about development
that’s not based in reality – to have a three-story town is not
emulating Vail; we won’t inherently lose our soul and character.
Terry Butler / The Residence Hotel
I’ve been on the Commercial Core and Lodging Commission for 15
years and fought for the outdoor dining – we need more nightclubs.
We need fun, exciting activities that keep our visitors busy. The City
shouldn’t pass so many regulations that it’s no longer fun.
John Corcoran / Aspen Alps
We need to stay true to ourselves. What are our values? It’s
recreation, the arts and culture, environmental stewardship – all the
things that make this place special – we shouldn’t lose sight of those
basic things. I would trust the people who come here in the future to
appreciate what’s here, and also to be part of innovative thinking –
that’s part of Aspen’s heritage; but I don’t think it’s necessarily the
government’s job.
Bob Daniel / Lift 1 Lodge
The Skiing Company has done a great job of planting the seeds.
Carbondale has done some interesting things with First Fridays. In
Aspen, we used to have the FAC (Friday Afternoon Club) where the
Jerome had music and kegs outside. As a traveler, coming across
things like that, finding that informal fun is so important. We should
remember that for most people who don’t know Aspen, it’s very
intimidating, and we need to be aware of that. The malls are great,
with outdoor dining, and people playing music – that’s a comfortable
approachable environment for visitors no matter their background.
Craig Melville / Mountain Chalet
Character and media attention that derives from special events,
which are on track thanks especially to the Ski Co. Also, we need to
maintain the character of downtown, but I have no idea how. We do
a fair job of maintaining the look, but you can’t force character. The
market will determine what succeeds.
John Sarpa / Centurion Partners
The Aspen Idea is unique to us, it’s historic, it’s genuine and we don’t
P34
I.
Lodging Study - Phase 1 Final Report 29August 2012
leverage it as much as we should. The three parts of the Aspen Idea –
mind, body, spirit – could be a way to organize the choices Aspen can
offer – like a menu of experiences.
Warren Klug / Aspen Square
We need to honor our history and the historical look of our
community. New development should fit in with the community.
We also need to understand that a discerning public wants nice
accommodations. There are a lot of old and tired condominiums in
town, so updating and upgrading those accommodations is important.
We have to keep up with guest expectations, and remember there is a
lot of new, high quality inventory all over ski country (Park City, Deer
Valley, Vail, etc.). We must have an ongoing and concerted effort to
make sure our service is the best there is. Friendliness, service and
personality are essential to compete effectively with others who are
out after our same customers. Competition is fierce, and the “people
ingredient” and personality must be right. In terms of new lodging,
we need to think about on-site mitigation requirements. It doesn’t
always make sense to have employees living on-site, especially when
they have families, and when that space could be used for lodging.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
The special events that Aspen presently has are fantastic and the
more we can add that are handcuffed to Aspen the better. Food and
Wine and X-Games are the highest occupancy, but the events that
the Institute and former Given used to bring in were not insignificant.
The Given meeting facility brought in many Aspen first time high-
income earners (Doctors, etc) that become life-long Aspen tourists
once they visited. Big loss.
7. Many of today’s year-round residents stayed at a relatively
affordable lodge when they first came to town, grew to love
Aspen and decided to live here. Today, public feedback tells
us there is strong support for “entry-level” lodging. With a
steady decline in moderate and economy lodging since the
mid-1990s, there is a community aspiration to replenish those
types of lodges. What do you think about this? Do you agree?
Disagree?
Michael Behrendt / St. Moritz
I think we already serve that purpose. I understand the common
wisdom that we need low-cost accommodations and I can sympathize,
but there are economical lodges. Our phones aren’t ringing off the
hook. People thank us for being here, but at the same time, we’re
not turning people away the way we used to. Occupancy levels for
economy lodges show only moderate demand. Lower prices don’t
seem to give me a big advantage. If the price is too low, people can
be suspicious of the product.
Chuck Frias / Frias Properties
I don’t know the solution. There are plenty of owners I know who
came on a college trip or with mom and dad and that’s how Aspen
became their place. The question is how do we keep young people
coming? We used to have significant college groups in the 1970s, but
then the resort industry expanded substantially. There were lots of
other choices where the travel costs were lower, and the Internet has
made all resorts more visible. That makes higher-priced resorts like
Aspen more difficult to sell. We should continue to solicit economy
lodging customers but the lodges over the years have closed because
they are not financially viable without subsidies.
P35
I.
30 Lodging Study - Phase 1 Final Report August 2012
The intimidation factor of Aspen as a luxury celebrity destination is a
reality as well – I’m not sure as locals we really appreciate how the
rest of the world sees us.
And since the mid-1980s, we’ve lost about 50% of our company’s
original condo inventory because people don’t want to rent out
anymore – they don’t have to financially, and they don’t want to
worry about damage to the property.
Donald Lee / The Gant
It is not 1970 any longer, times have changed. While I do think that
period was the glory years for the ski industry for a lot of reasons, it
is now 2012 … I don’t think we move forward by looking backwards…I
don’t think we replenish new ski bums with economy lodging. I
think other factors are at play today. There is simply no demand for
this lodging and it is not viable to run and maintain the appropriate
infrastructure to be competitive at economy rates, which is why these
properties have diminished.
Paul Lovelace / Inn at Aspen
I think entry-level lodging is important for Front Range and Western
Slope visitors who want to see what Aspen’s all about. We want them
to stay for two or three nights and not just one – get ‘em hooked on
skiing and the area. People budget their vacations: They might spend
on the lodging and skimp on food. Families with kids might prefer the
comfort of the lodging versus going out to eat. I see people being
more frugal – not renting a car, and we want to provide amenities
like free wine and cheese in the common area to help them decide to
come.
Rick Moore / The Innsbruck
My parents owned Bethune & Moore at the ABC back in 1966 when
I was starting college and we used to stay at the Smuggler Inn as
a family, and Aspen has been my home base since. I see that the
demand is there for the upper end, but I’d like to see more lower end
for people with limited means – it’s good for town. I’d even go along
with a government subsidy.
Skiing Company / The Little Nell + The Limelight
Nell: Six months out of the year, we are economy and entry-
level. I think there is an on-ramp in Aspen. We’re trying to build
a late April skiing school and are looking at a coordinated effort
for early December. The Skiing Company supported the COWOP
recommendation for the Lift 1A area – a bigger hotel base would be a
catalyst for bigger citywide events.
The economy hotels struggle at that entry-level because they can’t
market the way people expect today, or Expedia takes a big cut. We
recognize that our low rates in the off-season are tough for them – if
their rates are relatively low in peak season, where do they go from
there in off-season?
Stan Clauson / Clauson Associates
The bottom line is that it’s not cheap to get to a destination
resort, and you have to pay for the quality of Aspen: the natural
environment, the scenic views, the recreation, the arts and culture,
the historic buildings. It’s a unique place that’s in demand, and that
means prices are relatively high to stay here, to eat here, to ski
and paraglide and so forth. Relatively few people will come here as
tourists with limited means. On the other hand, the workers who
come from all over, with six or eight kids renting a house – many
P36
I.
Lodging Study - Phase 1 Final Report 31August 2012
of them are going to enjoy Aspen and come back as they get older.
So I don’t really subscribe to the idea that we can effectively bring
economy travelers here with affordable lodging.
Terry Butler / The Residence Hotel
I believe in the free market. Water finds its own level. I’d like to see
less government control of everything.
John Corcoran / Aspen Alps
A healthy mix is important, but I think the market can take care of
that. The lodging incentive program is fine, as long as it does not
serve as a disincentive for higher end accommodations. I don’t think
it’s the City’s place to have an impact on the industry.
Bob Daniel / Lift 1 Lodge
Part of the answer is that the next generation comes from the current
generation bringing their kids with them to vacation. Another is the
young people who are willing to live eight to a house to work here
– they’re going to come back. The reality is that there are far more
opportunities now with the affordable housing program for people to
come and live here than there were when I arrived in 1988.
Craig Melville / Mountain Chalet
I agree and disagree. I think that there is a strong desire for value
lodging. We are not going to get many customers who are looking for
the cheapest vacation. They simply will not look to Aspen because of
our reputation. However, there are a lot of middle-income people who
have heard about how great the skiing and town are here and want
to come, but cannot afford the more expensive properties. They want
a value option and those are hard to come by because of the costs
associated with a new hotel. How do you build a new hotel and run
it profitably in the moderate sector? I do not have an easy answer
for that question. When you get into the costs of building in Aspen it
becomes very hard to make it work -- from the land, to the stringent
codes, to the design/architectural work in conjunction with city
council to construction costs. The cards are stacked against building
affordably and thus succeeding as a moderate hotel.
John Sarpa / Centurion Partners
It’s a great idea to see if we can preserve the few that are left or find
a way to assist some development in the lower tiers. The question for
the community is how much do we want to do this, because it’s going
to take either public funding, financing or some public land.
At the same time, we need to continue to attract a high-end clientele
– we’re one of the best in the world, but there are far more choices
now. The traveling public spends less time in more places, and that’s
new. There’s more pressure on maintaining the high-end clientele
than ever before.
Warren Klug / Aspen Square
Times have changed. Economy lodging is not Aspen’s market. We
are an upper-middle class market, and a luxury market, in terms
of lodging, restaurants, and activities, and should not be building
ski bum accommodations. I don’t think small lodge rooms will
sell because it’s not Aspen’s market. That is not what people want
in coming to an Aspen vacation. And I don’t think the City should
be promoting that. If the goal is affordable lodging, that goal is
wrong. The marketplace should determine what the town needs,
and the economy market is just not there. No matter what lodging
P37
I.
32 Lodging Study - Phase 1 Final Report August 2012
is available, the attraction of Aspen speaks to an upper level market
in our shops, restaurants, activities and our $100 daily lift ticket.
Aspen has a strong affordable housing program, which helps with the
issue of new employees and providing reasonably priced housing for
businesses. The city does not need to be providing “ski bum” lodging
or entry level lodging. Aspen Square has several affordable housing
units for staff both on and off-site.
Michael Brown / Hotel Aspen & Molly Gibson Lodge
Older lodges are an important offering for Aspen tourism. For Aspen
to stay relevant to a good deal of visitors to our city, the older lodges
need to be maintained. In order for them to be maintained, they
need reinvestment, and for this to happen the city needs to work
with older lodges to make the city process easier and affordable.
It’s presently way to expensive and difficult to navigate. Further
incentives for improvement need to be put in place, including fee
exemptions for upgrade and redevelopment and additional free
market incentives. Free market is one of the economic drivers that
make affordable lodging investment possible.
8. Is the growth management incentive program for small
sized-rooms viable?
Stan Clauson / Clauson Associates
We are very familiar with the program. The residential component and
lowered mitigation are essential incentives and need to be retained.
On the other hand, the smaller rooms favored by the incentive
program will not be favored by all lodge development.
Bob Daniel / Lift 1 Lodge
It would work better if the requirement was just a certain square-
footage average for rooms. But when you add in the total floor area
requirement, it really squeezes people too much. The effect is there
just isn’t enough room for basic amenities and non-unit space you
need to make the hotel work efficiently and to meet the demands of
the guests.
John Sarpa / Centurion Partners
Generally speaking, it’s not viable. It might work here and there, but
there aren’t many properties I can think of where it would work.
Skiing Company / The Little Nell + The Limelight
Discussion ran late, no answer on this question.
9. There has been talk of the city partnering with a developer
to build a moderate/economy lodge. Do you think this is
viable? Do you think it’s a good idea?
Stan Clauson / Clauson Associates
Generally, I don’t think the City should get into the lodging business.
If the City is going to partner on anything, it should make sure the
Lift 1A area truly becomes a second portal with great amenities.
This should have happened with the COWOP process, but now needs
some alternate incentives. I’d even suggest that upper Aspen Street
is a blighted area worthy of an Urban Redevelopment Authority.
More than anything, Aspen Street/Lift 1A improvements will help
save the smaller lodges in the Shadow Mountain and Main Street
neighborhoods.
P38
I.
Lodging Study - Phase 1 Final Report 33August 2012
Also, the City should consider taking the Lodge Incentive Program
and let it apply to multiple sites. If a lodge project on one property
can use 40% of its total floor area as free market condos to make
it financially viable, there’s no reason we shouldn’t be able to apply
the same math to two sites. One site might get the residential
development, the other would get transferred lodging units to make
for a more viable lodging complex.
Bob Daniel / Lift 1 Lodge
If you want to do it, do it in locations that make sense. Where do you
see the affordable lodges now? They’re in off-beat locations. Maybe
the Zupancis property, maybe the BMC property, where you’re on a
bus line. The City shouldn’t be a developer, but it’s possible to partner
with someone if the public sector brings land to the table, or very
steeply discounted – and you couldn’t require full mitigation.
John Sarpa / Centurion Partners
Only if the town puts more value on the table. Even then, the private
and public sectors are very suspicious of each other. I think the
private sector would be worried about how long the whole thing would
take. I think meaningful incentives are the best way to go, and let the
market take it from there.
Skiing Company / The Little Nell + The Limelight
The City can be most helpful by focusing on how to improve
occupancy as a whole, and helping existing lodges.
P39
I.
34 Lodging Study - Phase 1 Final Report August 2012
Aspen’s Lodging Inventory - 2012
* Christiana Lodge only rents 1 unit as a hotel
** L’Auberge d’Aspen is in the process of converting from a hotel to a religious use. These
hotel units are no longer rented, but are included in the list because they were rented for a
portion of 2012.
Lodge Property Units Classification Studio / 1 bd 2 bd 3 bd 4 bd Kitchen Lodge Property Average Room Size Lowest Room Size Highest Room Size
Annabelle Inn 35 Moderate 35 0 0 0 0 Annabelle Inn 225 Not available Not available
Aspen Alps 83 Standard/
Deluxe 0 59 18 6 83 Aspen Alps Not available Not available Not available
Aspen Meadows 98 Deluxe 94 4 0 0 0 Aspen Meadows 750 700 1000
Aspen Mountain Lodge 38 Moderate 38 0 0 0 0 Aspen Mountain Lodge 275 250 280
Aspen Square 101 Moderate 75 24 2 0 101 Aspen Square unknown 500 1800
Christiana Lodge*1 Moderate/
Deluxe Not available Christiana Lodge*Not available
Dancing Bear Lodge 9 Luxury 0 0 9 0 9 Dancing Bear Lodge 2000 1700 2200
Hearthstone House 16 Moderate*16 0 0 0 0 Hearthstone House 225 170 340
Hotel Aspen 45 Moderate 45 0 0 0 1 Hotel Aspen 350 275 443
Hotel Durant 20 Moderate 20 0 0 0 0 Hotel Durant 233 175 305
Hotel Jerome 93 Luxury 78 15*0 0 0 Hotel Jerome 600 (approx.)525 750
Hotel Lenado 19 Moderate/
Deluxe 19 0 0 0 0 Hotel Lenado 261 255 270
Hyatt Grand Aspen 122 Luxury 2 20 27 1 50 Hyatt Grand Aspen 400 - 600 400 1800
Independence Square 24 Moderate 23 1 0 0 3 Independence Square Not available
Inn at Aspen 122 Economy 120 2 0 0 Not
available Inn at Aspen 350 Not available
Innsbruck Inn 17 Moderate 7 10 0 0 17 Innsbruck Inn 700 550 1126
L'Auberge d'Aspen**16 Moderate Not available L'Auberge d'Aspen**Not available
Limelight Hotel 126 Deluxe 125 1 0 0 119 Limelight Hotel 485 315 1300
Molly Gibson Lodge 53 Moderate 52 1 0 0 3 Molly Gibson Lodge 300 190 851
Mountain Chalet 58 Moderate 54 4 0 0 4 Mountain Chalet 225 210 760
Mountain House Lodge 27 Moderate 26 1 0 0 1 Mountain House Lodge 225 192 492
Residences at Little Nell 26 Luxury 0 0 19 7 25 Residences at Little
Nell 2,900 (approx.)2000 3250
Ritz Carlton Club 73 Luxury 0 22 51 0 73 Ritz Carlton Club 1,800 (approx.)1500 2122
Sky Hotel 100 Deluxe 94 6 0 0 0 Sky Hotel 350 300 550
Snow Queen Lodge 8 Economy 8 0 0 0 2 Snow Queen Lodge 250 160 350
St. Moritz 37 Economy 21 4 0 0 8 St. Moritz unknown 110 950
St Regis Residence Club 25 Luxury 0 15 10 0 25 St Regis Residence
Club 2000 1900 2200
St. Regis Resort 179 Luxury 177 2 0 0 3 St. Regis Resort 600 600 1100
The Gant 143 Moderate/
Deluxe 13 95 25 7 143 The Gant 1,000 Not available
The Innsbruck 17 Deluxe 7 10 0 0 17 The Innsbruck Not available 600 1275
The Little Nell 92 Luxury 91 1 0 0 0 The Little Nell 600 - 700 600 2500
The Residence Hotel 8 Deluxe 4 4 0 0 6 The Residence Hotel 750 450 1600
Tyrolean Lodge 16 Economy 16 0 0 0 16 Tyrolean Lodge 350 336 400
P40
I.
Lodging Study - Phase 1 Final Report 35August 2012
Lodge PropertyUnitsClassificationStudio / 1 bd2 bd3 bd4 bdKitchen Lodge Property Average Room Size Lowest Room Size Highest Room Size
Annabelle Inn35Moderate350000 Annabelle Inn 225 Not available Not available
Aspen Alps83Standard/
Deluxe05918683 Aspen Alps Not available Not available Not available
Aspen Meadows98Deluxe944000 Aspen Meadows 750 700 1000
Aspen Mountain Lodge38Moderate380000 Aspen Mountain Lodge 275 250 280
Aspen Square101Moderate752420101 Aspen Square unknown 500 1800
Christiana Lodge*1Moderate/
DeluxeNot available Christiana Lodge*Not available
Dancing Bear Lodge9Luxury00909 Dancing Bear Lodge 2000 1700 2200
Hearthstone House16Moderate*160000 Hearthstone House 225 170 340
Hotel Aspen45Moderate450001 Hotel Aspen 350 275 443
Hotel Durant20Moderate200000 Hotel Durant 233 175 305
Hotel Jerome93Luxury7815*000 Hotel Jerome 600 (approx.)525 750
Hotel Lenado19Moderate/
Deluxe190000 Hotel Lenado 261 255 270
Hyatt Grand Aspen122Luxury22027150 Hyatt Grand Aspen 400 - 600 400 1800
Independence Square24Moderate231003 Independence Square Not available
Inn at Aspen122Economy120200Not
available Inn at Aspen 350 Not available
Innsbruck Inn17Moderate7100017 Innsbruck Inn 700 550 1126
L'Auberge d'Aspen**16ModerateNot available L'Auberge d'Aspen**Not available
Limelight Hotel126Deluxe125100119 Limelight Hotel 485 315 1300
Molly Gibson Lodge53Moderate521003 Molly Gibson Lodge 300 190 851
Mountain Chalet58Moderate544004 Mountain Chalet 225 210 760
Mountain House Lodge27Moderate261001 Mountain House Lodge 225 192 492
Residences at Little Nell26Luxury0019725 Residences at Little
Nell 2,900 (approx.)2000 3250
Ritz Carlton Club73Luxury02251073 Ritz Carlton Club 1,800 (approx.)1500 2122
Sky Hotel100Deluxe946000 Sky Hotel 350 300 550
Snow Queen Lodge8Economy80002 Snow Queen Lodge 250 160 350
St. Moritz37Economy214008 St. Moritz unknown 110 950
St Regis Residence Club25Luxury01510025 St Regis Residence
Club 2000 1900 2200
St. Regis Resort179Luxury1772003 St. Regis Resort 600 600 1100
The Gant143Moderate/
Deluxe1395257143 The Gant 1,000 Not available
The Innsbruck17Deluxe7100017 The Innsbruck Not available 600 1275
The Little Nell92Luxury911000 The Little Nell 600 - 700 600 2500
The Residence Hotel8Deluxe44006 The Residence Hotel 750 450 1600
Tyrolean Lodge16Economy 1600016 Tyrolean Lodge 350 336 400
Aspen’s Lodging Inventory - 2012
P41
I.
36 Lodging Study - Phase 1 Final Report August 2012
Interviews with Aspen’s Short Term
Rental Managers
The following is a compilation of answers from interviews with short term rental companies,
specializing in condominium and single-family home rentals. Please note that responses from one of
Aspen’s largest condominium rental companies, Frias Properties, are included in the “Interviews with
Aspen’s Lodging Sector” section, above.
1. For many years, StayAspenSnowmass and ACRA asked lodges to identify themselves
as deluxe, moderate or economy. Using the same terms, what kind of inventory do you
manage/operate?
Tricia McIntyre / Aspen Luxury Rentals
Most of our rentals fall in the luxury category. We manage single-family homes with three or more
bedrooms. I don’t think our inventory is indicative of the overall market short-term market, but it
represents a specific sector.
Carrie Bryant / Aspen Signature Properties
About 90% of our rentals fall in the luxury category. We work primarily with owners of homes that
are available by request. The properties are managed individually not by us, so the number we work
with fluctuates based on the market.
2. Can you describe your average customer, or the different kinds of clientele that stay
with you? Is there a certain type of room, or size of room that people like most?
Tricia McIntyre / Aspen Luxury Rentals
In general our customers want to be near the core or in the immediate vicinity with four or more
bedrooms. All of our clients are looking for units in the luxury category that have been upgraded and
come with amenities. In the winter, ski-in / ski-out units in the Aspen/Snowmass core are most in
demand. During the summer, properties in the West End represent highest demand.
New Year’s Eve week is definitely the peak week of the entire year. Other high demand periods are
X-Games, President’s Day, March, Food and Wine, and all of July and August. There’s been a drop in
visits during Christmas week because more people are only traveling for one week in the winter, or
it’s too expensive for them to travel during Christmas. Our summer guests stay for a whole month or
more, while our winter guests stay for a week or so. For Food and Wine and holiday weekends we’ll
see 4 - 7 night stays.
Carrie Bryant / Aspen Signature Properties
Our summer guests tend to stay for 1 - 2 months, while our winter guests tend to stay for 1 week
long during the regular season and 7 - 14 nights during the holiday. Our 3-5 bedroom units are most
in demand. Renters are also looking for amenities like a hot tub and A/C in the summer. The busiest
periods for us are July 1 through Labor Day and Dec 18 through March 25.
3. What kinds of units are least in demand?
Tricia McIntyre / Aspen Luxury Rentals
Anything outside of the core of Aspen that is not in the East End or West End is difficult to rent. We
tend to have a more difficult time renting units that have fewer than three bedrooms.
Carrie Bryant / Aspen Signature Properties
Standard Units that have not been upgraded, as well as older properties, tend to have a lower
demand than newer and upgraded properties.
P42
I.
Lodging Study - Phase 1 Final Report 37August 2012
4. What trends do you see regarding nightly rental rates?
Tricia McIntyre / Aspen Luxury Rentals
Nightly rentals have risen approximately 10% from the 40% drop that was experienced during the
recession. We’re seeing average nightly rentals between $2,000 and $6,000.
Carrie Bryant / Aspen Signature Properties
I see nightly rates becoming stronger over the next year. For our rentals, an average summer rate is
around $1,000 and an average winter rate is $2,000 or more. That does not include major holidays,
which tend to command higher rental rates. Our properties can rent for up to $25,000 a night.
5. Are there any general trends you see in the short-term rental market?
Tricia McIntyre / Aspen Luxury Rentals
In general, consumers are looking for larger units with 3 - 4 bedrooms. Most guests want these to
be newly renovated in a contemporary style. The old rustic mountain look is not nearly as popular
anymore. These guests also want their rental to be in the core area of where they are visiting.
We have noticed that our consumers are younger in age and generally have families. These guests
want value for their money. If they are paying $6,000 a night, they are going to expect ski passes,
fitness passes, chefs, transportation, etc. Additionally, most consumers now want air conditioning
in their rental, and this is a reason why some older properties or properties that have not been
upgraded do not always rent.
Carrie Bryant / Aspen Signature Properties
The market seems to be working back to where it was 8 years ago. This includes stronger rates and
occupancy in the high seasons. Customers are looking for luxury, cleanliness, and excellent customer
service.
6. Are there upgrades or improvements that you think are needed to ensure Aspen stays
competitive in this market?
Tricia McIntyre / Aspen Luxury Rentals
In terms of rentals, regular maintenance and upgrades are important. Properties need to meet
the demands of the visitors. Customer service is also important and needs to be at a high level.
Sometimes we hear from clients that they have not received quality customer service in a shop or
restaurant. Some kind of program, like a secret shopper, might be helpful to encourage high levels of
customer service and to ensure the appropriate leaders in the city and chamber are aware.
The city could also help by ensuring the sign code is enforced and making sure all properties receive
a Short Term Rental Permit. The safety of properties is very important, and the licensure process
should include information about safety, including carbon monoxide and smoke detectors.
Carrie Bryant / Aspen Signature Properties
Regular upgrades and maintenance is critical. Our customers expect high quality units and properties
with consistency in quality. The most important thing is exceptional customer service and meeting
the needs of our customers. We always ask the client how their stay was and encourage them to
return to Aspen in the future.
P43
I.
OVERCOMING THE OBSTACLES
TO UPGRADING
CONDOMINIUM LODGING IN ASPEN
A STUDY PREPARED BY
ALAN RICHMAN PLANNING SERVICES
P.O. BOX 3613
ASPEN, COLORADO 81612
920-1125
OCTOBER, 2012
P44
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 1
I. Purpose
One of City Council’s ten goals for the coming year is “To examine the desirability and
sustainability of preserving existing lodging and producing more lodging in Aspen”. In
support of that goal, the Community Development Department produced a Phase 1
Final Report in August, 2012 entitled Aspen’s Lodging Sector: An Analysis of Existing
Conditions. That report provides an overview of Aspen’s lodging sector, including a
history of the City’s policies towards lodging since the 1970’s; tabulations of Aspen’s
lodging inventory compiled from various sources; and the results of interviews
conducted in 2012 with lodge managers, condominium and short term rental agencies,
and lodge developers working in the City of Aspen.
This report is the next product in the lodging study. The purpose of this report is to
focus on the condominium segment of the lodging market. The City recognizes that
there are a substantial number of multi-family residential condominium properties in
Aspen that represent a significant portion of the community’s lodging inventory. Some
of these units function solely as short term rentals while others are rented or occupied
on a longer term basis. The units are contained in projects which range in age, with the
first of these projects having been built more than 40 years ago, in the 1960’s. The City
recognizes that some of these units need to be upgraded and re-developed, but that
there are a variety of factors that can make this difficult for owners to accomplish.
Considering this context, the City has asked Alan Richman Planning Services, Inc. to
provide an analysis of regulatory and non-regulatory barriers that exist to upgrading and
re-developing these condominium lodging properties. This report summarizes the
results of that study. Included within this report are the following sections:
• An inventory of Aspen’s condominium lodge properties.
• An evaluation of the regulations in the Land Use Code that present obstacles to
the upgrading and re-development of condominium lodging units.
• A discussion of other factors outside of the City’s regulations that present
obstacles to the upgrading and re-development of condominium lodging units.
• Recommendations as to how the City might reduce or eliminate the regulatory
obstacles to upgrading and re-development, along with approaches that might
help to overcome the non-regulatory obstacles to upgrading and re-development.
Consideration is given in these recommendations as to ways to ensure that as
condominium units are upgraded they are not then removed from the short term
rental pool.
• Summaries of the interviews conducted with selected condominium lodge
managers and others involved with condominium lodging. The summaries are
presented as an appendix to the report but the ideas provided by those who were
interviewed have been woven into the body of this report.
P45
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 2
II. Inventory of Short Term Condominium Units
Before delving into an analysis of the regulatory obstacles faced by Aspen’s
condominium properties, it is first helpful to present an overview of the inventory of
properties on which this study is focused. The City does not maintain this type of
inventory data and so we looked to other sources for information we could present.
In July 2012, the Aspen Skiing Company commissioned Mountain Travel Research
Program (MTRiP) to conduct a report on Aspen’s short term lodging. That report, which
is summarized in the table below, found that Aspen’s short term rental pool is comprised
of 2,293 units, of which 932 are condominium units. This means that nearly 41% of
Aspen’s short term rental inventory is condominium units, highlighting the significance of
this sector in Aspen’s overall short term accommodations inventory.
Hotel/Lodge Condominiums
Single Family
Residential B&B All
Units 1,158 932 131 72 2,293
Percent of total 50.5% 40.5% 6% 3% 100%
2012 MTRiP Aspen/Snowmass Transient Lodging Inventory, July 1, 2012
An analysis of the inventory shows that a majority of the condominium units are located
in the Lodge (L), Commercial Lodge (CL) and Multi-Family Residential (RMF) zone
districts. Examples of such projects include the Aspen Alps, Fifth Avenue, Durant
Condominiums, North of Nell and Aspen Square. These zone districts, which are
located at the base of Aspen Mountain and in Aspen’s East End, allow multi-family
residential units as a use by right. However, as is discussed in greater detail in the next
section of this report, many of the structures in which these units are located exceed the
underlying dimensional standards of these zone districts, meaning that they are
nonconforming structures.
There are also some multi-family units located in the City’s commercial zone districts,
including the Commercial Core (CC), Commercial (C-1), Mixed Use (MU) and Service
Commercial (SCI) zones. Examples of such projects include the Chateau Aspen, Park
Central West and Obermeyer Place. These zone districts have historically listed multi-
family residences as permitted uses. However, in recent years the City has applied
restrictions to certain uses in these zones to promote them for commercial activities and
to limit their use for short or long term multi-family residences (generally by permitting
the use only the upper floors of a mixed use building).
A small portion of the inventory is located in the City’s single-family zone districts (R-6
and R-15). Multi-family units are not a permitted use in the R-6 and R-15 zone districts,
so those properties are non-conforming uses.
Most of the multi-family units that are now in single family zones were developed in the
1960’s or 1970’s under a very different set of land use regulations than are in effect in
P46
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 3
Aspen today. Although these properties have not since been rezoned to a zone district
that permits multi-family uses, they have typically had a PUD Overlay designation
applied to them in recognition of the fact that their density exceeds that permitted by
their underlying single-family zoning. For example, The Gant is zoned R-15, but has
had a Lodge (L) Overlay and a PUD Overlay applied in recognition of its uses and
density.
P47
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 4
III. Regulatory Obstacles
The purpose of this section of the report is to identify some of the key provisions of
Aspen’s Land Use Code that present regulatory obstacles to upgrading or re-
development of the community’s short term condominium inventory. This section also
sets the stage for Section V of this report, where recommendations are made for ways
to overcome these obstacles.
The findings in this section are based on the comments provided by the persons whom
we interviewed along with the author’s own experiences in working with the Aspen Land
Use Code. If there is one overall theme that emerges from this aspect of the study, it is
that the current provisions in the Code do not set up a level playing field for all types of
accommodations. Instead, the Code contains a strong bias in favor of traditional lodge
and hotel projects. A variety of zoning incentives are offered to those who would
develop or improve lodge/hotel properties, but those incentives do not also extend to
short term condominium properties. Those with whom we spoke felt that this bias
should be eliminated because of the valuable contribution that short term condominiums
make to the Aspen community. Two of the most important contributions that were noted
were as follows:
1. There is a high level of customer demand for condominium properties. During
Aspen’s tourist seasons these units experience relatively high levels of
occupancy. The units serve important segments of Aspen’s visitor population,
these being families with children and groups of unrelated individuals who wish to
stay together, neither of whom would be well served by a traditional hotel room.
The persons we spoke with repeatedly pointed out that not every visitor to Aspen
is looking for a traditional hotel room or can afford a single family residence, so
the market needs to continue to respond to the diversity of accommodation
needs that our visitors demand. They also pointed out that many other ski
resorts – from Vail and Beaver Creek to Deer Valley have built these kinds of
units over the last 10-20 years and so when visitors compare their vacation
options on the internet, Aspen’s 30-40 year old inventory often comes up short.
2. The owners of condominium properties have made a significant investment in
their units and in the community. They return to Aspen on a regular basis year
after year and consider this to be their part-time home. Some of these owners
have become important contributors to the community, particularly to Aspen’s
non-profit organizations which they support with their attendance, charitable
contributions, and in some cases by serving on the board of directors of these
organizations.
Following is an evaluation of specific aspects of the Land Use Code that lead these
persons to conclude that the Code makes it particularly difficult to develop or upgrade
short term condominium projects.
P48
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 5
A. Definition of Condominium vs. Lodge Units
In trying to understand the regulatory obstacles to upgrading short term condominiums,
it is essential to first examine the differences in how the Land Use Code defines
condominium units as compared to hotel or lodge units. At first glance, there is a
fundamental similarity between the two definitions. A dwelling unit is defined as a
shelter in which people reside and sleep which contains a kitchen and bathroom.
Lodging units are defined as a place where people sleep that may or may not contain a
kitchen. However, there are two essential differences between these unit types:
• A hotel or lodge unit may not be occupied for more than thirty (30) consecutive
days per year by a person who has an ownership interest in the hotel or in the
unit and may not be occupied by any person (owner or non-owner) for more than
ninety (90) days per year. A multi-family unit is not limited in terms of how much
of the year it may be occupied by an owner or other person.
• A hotel or lodge unit may contain “lock-off units” whereby portions of the entire
unit may be separately rented by locking off the door between different rooms or
combinations of rooms. On the other hand, multi-family dwelling units must have
common un-pierced demising walls and cannot be separated into lock-off units.
The first of these distinctions is a key limit that keeps condominium units from utilizing
certain Code provisions that are available to hotel/lodge units. Most condominium
properties in Aspen were developed at a time before the Code limited owner occupancy
of short term units to no more than 30 consecutive days and 90 total days per year.
The condominium documents governing these properties do not contain such
restrictions and owners purchased their units with an expectation that they had the
opportunity to stay in their units for a longer period of time. These owners are reluctant
to give up this opportunity (even if they don’t necessarily take advantage of it) out of
concern for the impact it will have on the value of the unit and its resale attractiveness.
Therefore, as explained below, the dimensional and other incentives that are available
to hotel and lodge units are not available to short term condominium units.
Even if an individual owner were willing to have these limitations placed upon his or her
unit in order to take advantage of the incentives available to lodge units, the Code is not
clear whether the City would consider individual units within a multi-family complex to be
hotel/lodge units unless the entire property (or at least a majority of the property)
accepted the occupancy limits. Getting an entire association to accept these limits is a
much more complicated problem than getting an individual owner to apply these limits
to a unit.
The provision addressing demising walls creates an entirely different obstacle for short
term condominiums. As is explained below, there is a multi-family unit size limitation in
many of Aspen’s zone districts. This limitation, combined with the prohibition on such
units being locked-off, means that it is difficult for an owner to purchase two side by side
units and occupy them as a single unit or as separate units as the situation demands.
P49
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 6
This limit does not apply to hotel/lodge units, giving owners and other users/renters of
such units greater flexibility in how they use a unit.
These key differences between hotel/lodge and short term condominium units should be
kept in mind when reviewing the remainder of this section of the report.
B. Dimensional Limits of the Lodge Zone District
As noted above, many of Aspen’s short term condominium properties are found in the
Lodge (L) zone district. This zone district was substantially amended in 2005 in an
effort to spur the construction of short term accommodations. However, a close
examination of the amended zone district makes it apparent that this revision tilted the
playing field in this zone district significantly towards traditional lodges, timeshare
lodges and mixed use projects and away from pure free market multi-family projects.
This can be seen most clearly in the density, floor area and height limitations of this
zone district.
Density Limitations: The Lodge zone district requires a minimum of 3,000 sq. ft. of lot
area for each free market multi-family residential unit. This standard means that a
maximum of 14 free market multi-family residential units may be built per acre. Lodge
units and timeshare lodge units have no minimum lot area requirement to limit how
dense a lodge project can be built in this zone. Instead, the maximum allowable density
of the lodge project is a function of the allowable floor area and allowable height for a
lodge project, meaning that as many lodge units can be built on the property as can fit
within these two dimensions of the building. This is often much more than 14 units per
acre.
Floor Area Limitations: Combining the floor area limit with the density limit makes it
clear how much this zone district favors lodge over multi-family development. The
maximum allowable floor area in the Lodge zone for lodges, timeshare lodges and
mixed use projects that include lodge units ranges from a low of 1.0:1 all the way up to
2.75:1. Where a property falls in this range is dependent upon the parcel size and
whether the project contains more or less than 1 lodge unit per 500 sq. ft. of gross lot
area. If a project proposes more than 1 lodge room per 500 sq. ft. of gross lot area
then it is eligible for an allowable floor area of 2.5:1 or 2.75:1, depending upon lot size.
These limits can be compared to the allowable floor area of multi-family residential
units, which is 1:1 for projects established before the 2005 revision to the Lodge zone
and 0.75:1 for projects established after that effective date (of which only 0.5:1 can be
free market housing with the remainder being devoted to affordable housing). There is
no floor area or density increase available in this zone as an incentive for an applicant
to create smaller multi-family units.
Height Limitations: The height limit for multi-family units as a single use and for lodge
units or timeshare lodge units with less than 1 unit per 500 sq. ft. of gross lot area is 28
feet. This height limit jumps to 36 feet (40 feet by design review) if there is more than 1
P50
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 7
lodge unit per 500 sq. ft. of gross lot area and to 38 feet (40 feet by design review) if the
resulting lodge units average 450 sq. ft. or less in size.
These comparisons clearly show how the City favors lodge development as compared
to multi-family development in the Lodge zone district. However, these dimensional
limits can go beyond simply being a preference to one type of development and actually
become an obstacle to upgrading and re-development of existing condominiums for two
reasons. First, these standards mean that some existing condominium complexes in
Aspen are nonconforming structures because they exceed the allowable density, floor
area, or height of the Lodge zone district. For an explanation of the impact of being a
nonconforming structure upon a property, please see Section III.C of this report.
Second, for properties that are not nonconforming, these limits can become an obstacle
because of how they constrain a property’s development potential. As an example, let’s
look at a theoretical 1 acre property that an applicant wants to develop or re-develop as
a multi-family condominium complex. The 1 unit per 3,000 sq. ft. density standard
would limit the applicant to a maximum of 14 free market units on the property. The
maximum unit size for multi-family residential units in the Lodge zone district is 1,500
sq. ft., increasable to 2,000 sq. ft. by retiring 1 TDR per unit. 14 units of 1,500 sq. ft.
each results in a project of just 21,000 sq. ft. (less than 0.5:1) while 14 units of 2,000 sq.
ft. each results in a project of 28,000 sq. ft. (about 0.65:1). Since the zone permits
multi-family residential to build out to 0.75:1 or 1:1 in floor area, the applicant would
have to use the remaining floor area for non-unit space (hallways, common amenities,
etc.) or for affordable housing (which has no density limit), rather than maximizing the
number of free market residential units that can be achieved on the property.
C. Nonconforming Structure Provisions
While it is beyond the scope of this study to evaluate the dimensional standards of each
of the existing short term condominium properties in Aspen, our experience indicates
that a number of these properties are nonconforming with respect to underlying density,
floor area, height and other dimensional standards. This means that these are
considered to be nonconforming structures.
Aspen’s nonconforming structure provisions are found in Sec. 26.312.030 of the Land
Use Code. Like many other communities, Aspen does not have a policy of amortization
or forced elimination of nonconformities. Instead, the City’s policy is to allow
nonconformities to continue and to allow normal maintenance to be accomplished to a
nonconforming structure. However, Sec. 26.313.030 C states that “A nonconforming
structure may not be extended by an enlargement or expansion that increases the
nonconformity”. This means that if a structure is nonconforming as to floor area or
density, then it cannot add additional floor area or additional units. Moreover, Sec.
26.313.030 F provides that any nonconforming structure that is purposefully demolished
may only be replaced with a different structure if the replacement structure conforms to
the provisions of the Code, unless the nonconformity is permitted to be replaced via
special review. This means that the replacement structure might have to be built to a
P51
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 8
lower floor area or height to conform to the current Code provisions. This section does
provide, however, that when a structure that is nonconforming as to density is
purposefully demolished it can be rebuilt to its nonconforming density if a building permit
is issued for the replacement structure within 12 months of the date of demolition.
These provisions present a fundamental obstacle to upgrading and re-development of
Aspen’s condominium inventory. Many of Aspen’s condominiums are 40 years old or
more, having been built in the 1960’s and 1970’s, before the City’s Growth Management
Quota System began to control the pace of growth in Aspen. Such structures were
designed in a very different economic climate than is present in Aspen today and under
very different building and energy codes than are in effect today.
So it is virtually certain that if a homeowner’s association (HOA) or a developer wants to
demolish one of these nonconforming condominium buildings and replace it with a new,
upgraded structure, they will want to replace it with some type of “different structure”
and not a new structure that is identical to the old structure. It would be helpful if the
Code provided some standards for what is meant by a “different structure” and if these
standards offered some opportunity for a building to be modernized when it is replaced.
At a minimum, these standards ought to allow cosmetic changes to the building without
it being considered to be “different” It would also seem reasonable to allow changes to
a building’s configuration that comply with underlying setbacks and height limits. And
the Code should also offer some flexibility in response to the fact that new building and
safety codes may make it impractical to replace the same structure, while green
technologies may make it desirable to change a building’s appearance and functions.
The City has taken some initial steps in this direction in language recently established in
Sections 26.575.020 K and L of the Code. These allow the Community Development
Director to offer exceptions to the dimensional restrictions to accommodate energy
efficiency systems and to achieve compliance with building, fire or accessibility codes
when no other practical or reasonable way to implement the desired upgrade exists. It
is not clear at this time whether many members of the development community or
owners of short term condominium units are aware of this new flexibility, although a few
projects have recently taken advantage of these new provisions.
D. Maximum Unit Size Limitations
Section 26.710.190 D.12 establishes a maximum unit size limit of 1,500 sq. ft. of net
livable area for a multi-family residential dwelling unit in the Lodge zone district. An
applicant may increase the size of the unit from 1,500 sq. ft. to no more than 2,000 sq.
ft. by extinguishing one historic transferable development right certificate. Similar unit
size limitations can be found in Aspen’s commercial and multi-family zone districts.
This limit can present an obstacle to upgrading and re-development of condominium
units under several different scenarios. One such scenario would occur when an owner
wants to purchase a unit adjacent to the unit he owns or simply wants to purchase two
side by side units and combine them by installing a door between them. Combining the
P52
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 9
units in this manner would, however, exceed the maximum size limit. The option of
maintaining the spaces as separately rentable lock off units after they are combined
does not exist for short term condominiums, since the door represents a penetration of
the demising wall between the units.
Another scenario in which this limit can come into play is when a property that is
nonconforming as to density is replaced with a new building. As noted above, the
nonconforming structure regulations require that if a building is replaced with a different
structure, the new structure must comply with the dimensional and other standards of
the Code. So in order to bring the new building into conformance, the applicant would
have to build fewer units in the new building than are in the existing nonconforming
building. One way to make this type of design financially feasible might be to allow the
replacement units to be larger than the existing units; however, the maximum unit size
limitation essentially takes away that option from the developer.
E. Housing Replacement Regulations
Section 26.470.070.5 of the Code contains the City’s regulations addressing the
demolition or re-development of multi-family housing. These regulations provide
limitations on combining, demolition and conversion of existing multi-family housing
units so as to mitigate the displacement of working residents that can occur from those
activities. The regulations offer two options for mitigation – either replacement of 100%
of the demolished free market units with resident occupied affordable housing units or
replacement of 50% of the units, bedrooms and net livable area with Category 4
affordable housing units.
There are a number of exemptions to the housing replacement regulations. One such
exemption which was recently re-introduced into the Code applies to multi-family
housing units “which have been used exclusively as tourist accommodations or by non-
working residents”. Documentation (occupancy records, leases or affidavits) may be
required to demonstrate that the unit has never housed a working resident.
While this exemption will allow most condominium units that are rented on a short term
basis to be re-developed or combined without triggering the mitigation requirement, it is
still viewed by some as too restrictive to address all of the circumstances that may arise.
Some of those we interviewed mentioned that in their experience some units have had
isolated occupancy periods by a resident over a history of otherwise uninterrupted
visitor occupancy. They suggested that some flexibility should be added to this
provision to allow the City to examine the overall occupancy history to determine
whether such isolated occupancies by a resident should trigger the mitigation
requirement. In other words, they suggest that rather than having a simple yes/no kind
of regulation, the applicant should be given the opportunity to demonstrate to the City
that the unit in question has primarily been a tourist unit and its isolated occupancy by a
working resident should not over-ride the fact that it has generally been a tourist unit.
P53
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 10
F. Growth Management Regulations
The development of new free market units within a multi-family or mixed use project requires
an applicant to obtain a Growth Management allotment. Having to compete in the Growth
Management process introduces a level of uncertainty to the development review process.
The uncertainty comes from two aspects of the Growth Management system. First, the City
awards just 18 free market residential allocations per year in its competitive scoring process.
Applications may only be submitted 2 times per year – on February 15 and August 15. The
score received by a project determines in which order the application is awarded its
allocations. So an applicant is uncertain as to whether and when he may receive an
allotment to proceed with the project.
Points are awarded to residential projects based on exceeding the affordable housing
mitigation requirements of the Code, providing larger affordable housing units than the Code
would otherwise require, or receiving LEED certification for the project. A project can
receive no points and still be considered for an allocation, but if other projects receive points
and use up the 18 allocations then the project would not proceed and would have to be re-
submitted for the next year’s competition. So applicants are also uncertain as to what level
of commitment they must make to be successful, making it difficult to evaluate the financial
feasibility of a potential project.
Finally, it should be noted that expansion of the net livable area of existing free market units
within a multi-family or mixed use project is also subject to Growth Management review.
This type of activity is not subject to the competition process, but it does require the
applicant to provide net livable affordable housing area equivalent to 30% of the net livable
free market housing area that is added to the project.
G. Development Fees and Other Exactions
The City has made revisions to various elements of the Land Use Code in recent years
to ensure that development pays its own way with regard to its impacts on the
community. The adopted park impact fee has been revised, a new Transportation
Demand Management/Air Quality Impact Fee has been imposed and the school land
dedication requirements have been revised. The Affordable Housing cash-in-lieu fees
have increased on an annual basis. Tap fees for the City’s water system and the Aspen
Consolidated Sanitation District are considerable. In addition, the fee structure the City
applies to its land use, zoning and building permit reviews has been reformed. All of
these actions have added to the cost of development in Aspen.
One of the persons we interviewed noted that the cost of exactions has risen
dramatically in recent years and now can equal 10% of the cost of a project. When
these new fees are considered together with the lower per square foot sale prices that
can be achieved due to the down-turn in the local real estate market, it is easy to see
why some say that it has become more difficult today to make the numbers work to
make this type of project economically feasible.
P54
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 11
One of the more significant new costs that has been imposed in recent years is not in
the Land Use Code but is instead found in other Code sections addressing the
requirements of the Urban Runoff Management Plan (URMP) and the City’s Stormwater
Fee In Lieu of Detention. In 2011 the City amended these provisions as shown in the
following table.
The table shows that the requirements imposed on what it classifies as minor projects
are relatively straightforward. Major projects must comply with the following:
If a project adds or disturbs more than 1,000 sq. ft. of impervious area but the disturbed
or added impervious area represents less than 25% of the site, then the disturbed or
added impervious area is required to detain runoff to the historic undeveloped flow
rates. If the property is unable to provide this detention on-site then it is required to pay
the fee in lieu of detention for the disturbed or added area.
If a project adds or disturbs more than 1,000 sq. ft. of impervious area and the disturbed
or added impervious area represents more than 25% of the site or more than 50% of
the existing structure, then the entire site is required to detain runoff to the historic
undeveloped flow rates. If the property is unable to provide this detention on-site then it
is required to pay the fee in lieu of detention for the disturbed or added area.
P55
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 12
These drainage requirements can have major implications for the re-development of
condominium projects. In many cases the re-development of a multi-family complex will
add more than 1,000 sq. ft. of impervious area and disturb more than 25% of the total
developed area of the site. If doing so places a project in the position of having to go
back and detain stormwater based on the site’s original pre-development status, then it
can make re-development or a small addition a significantly more expensive proposition
or can even make such projects unfeasible.
This approach to regulation can be contrasted to the way that the Building Codes are
applied to re-development projects. During the course of the interviews it was
suggested by several persons that it has been their experience that when individual
units or an entire building are brought in for building permit approval, the project can be
de-railed when the Building Department applies unanticipated Code provisions to the
project (such as requiring the installation of sprinklers or similarly costly improvements
to common areas). However, when we met with the Building Department to discuss this
issue, we found that in fact, the Building Codes allow the staff to look at an upgrade
project and only require compliance for those portions of the project that the applicant
chooses to alter. Unlike the drainage provisions, where crossing a threshold may mean
the entire project must be addressed, the Building Codes can be applied selectively to
upgrade individual units or areas of a building. So, for example, if an applicant
proposed to add some new units on top of an existing condominium building, the new
units would have to be fully accessible under current codes but the existing floors below
the new units would not have to be modified to meet current accessibility standards.
P56
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 13
IV. Non-Regulatory Obstacles
The purpose of this section of the report is to identify some non-regulatory obstacles to
upgrading or re-development of the community’s short term condominium inventory.
The author of this report does not have personal experience in working with these kinds
of non-regulatory obstacles, so the findings in this section will focus on the comments
provided by the persons whom we interviewed.
The non-regulatory obstacles can be organized into two basic categories. One set of
obstacles is a function of the fact that condominium properties are run by homeowner’s
associations. Because any association will be comprised of individuals with different
financial and personal motivations and limitations, getting an association to reach
consensus to take action to improve a property can be a difficult task.
The second category of obstacles is a reflection of the trying economic climate in which
most of us are operating these days. One outfall of the economic downturn from which
the Country has been slowly emerging is that it has become more difficult for some
condominium complexes to raise the resources to fund upgrade projects than it might
have been in the past.
Following is a brief summary of each of these types of obstacles.
A. Homeowners Associations
Many of Aspen’s condominium associations are comprised of a mix of owners ranging
from original buyers to new owners. Each of these owners has a different financial
basis in their unit. The owners also had different reasons for buying their unit. For some
the unit is primarily an income-producing property while for others it is intended for
personal or family use. Some of the units in short term condominium complexes are
owner-occupied on a year round basis.
Some current owners bought their unit in the 1960’s or 1970’s, when prices were quite
modest as compared to today. These owners may not fit the common perception that
Aspen’s visitors are quite wealthy; they may simply be middle class persons who own a
valuable asset. While their unit has likely gained significant value since its purchase,
this type of owner may not have the disposable income available to put into a special
assessment to upgrade the complex. In addition, some of these owners have reached
the stage in life where they are not interested in giving up their unit for a year or two
while a re-development project takes place.
One person we interviewed suggested that an association will not be ready to tackle an
upgrade project until the majority of owners in the association are persons who have
paid current market prices for the unit. This person also pointed out that owners who
are looking to sell their units are generally more willing to invest in an upgrade because
they believe they will be able to recoup their investment.
P57
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 14
Another person suggested that some of the older complexes may not have professional
assistance running their associations and they may not be used to working with lawyers,
planners and developers. As a result, they may not be aware that State statutes (the
Colorado Common Interest Act) state that an association only needs 2/3 approval by its
members to take action. Some associations have higher requirements in their by-laws
and they aren’t aware that State law over-rides their requirements.
B. Economic Climate
The current economic climate has made it much more difficult to get HOA approval of
special assessments to improve complexes. One person we interviewed stated that
many owners today are “loathe to incurring special assessments”. Another person we
spoke with stated that this is particularly true if there are units in the complex that have
owners who are under water. He felt that the overall economy is the most significant
factor that is stopping upgrades from occurring today.
It was suggested that unless a developer is willing to come in and take the risk for them,
many owners are unwilling to even put up the funds to evaluate what issues they would
have to overcome to make improvements. But because many properties are
nonconforming and don’t have floor area or density remaining to be developed, some
associations have nothing to offer to a developer to induce him to come in and upgrade
the complex.
Another person we interviewed stated that lenders view condominiums and
condominium hotels as a higher risk than single family residences. This is because an
owner might be more willing to walk away from an investment in a condominium
property than an investment in a home. So lenders require greater down payments or
offer other terms that are less favorable to those who are buying into condominium
properties. These added costs obviously leave owners with less money in their pockets
to put towards improvements to their units or to the complex.
C. Recommendations to Reduce Non-Regulatory Barriers
Because of the nature of the issues dealt with in this section, the City’s role in
addressing these obstacles is not nearly as direct as with the regulatory obstacles.
Clearly the City is not in a position to change the economic climate or to affect the way
homeowners’ associations operate. Based on the comments we received, we believe
that the most important thing the City can do is to make it clear to the homeowner’s
associations that the City is interested in seeing these units get remodeled and
upgraded and is not erecting barriers to doing so.
As noted elsewhere in this report, the common perception among those who operate
condominium complexes or own these properties is that the City’s primary interest is in
promoting hotel development, not condominium development or upgrades. In fact, one
condominium manager indicated that he anticipated that going in front of the City with
an application to upgrade his complex could be an extremely challenging experience.
P58
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 15
One way to change this impression would be for the City to make it easier for owners to
accomplish remodels or upgrades that will result in energy efficiency or green building.
Many older complexes have highly inefficient buildings and it would seem logical that
the City would welcome these kinds of upgrades, not make them hard to accomplish.
The City should also look for ways it can inform homeowners associations and
condominium management companies about the flexibility that has been introduced into
the Code that permits the staff to allow a project to exceed dimensional standards in
order to comply with building and safety codes and energy efficiency standards. Going
one step further, this flexibility should be extended beyond what is currently allowed to
permit these kinds of upgrades to existing nonconforming structures (see Section V
below for more discussion of this increased flexibility).
Several of the persons we interviewed took this thought another step further. They
suggested that the way that the City ought to change its basic way of thinking about
proposals to improve condominium lodging properties. Today, it often seems like the
only “currency” an applicant can offer to obtain a development approval is to pay
exactions (transportation, affordable housing, etc.) or to offer public amenities (trail
connections, open space dedications, etc.). But these individuals believe that creating a
better accommodations experience for guests and owners needs to be recognized as
being of benefit to the community and should be sufficient rationale to get projects
approved.
It was also suggested that self -managed complexes are ripe for an education process
by the City or by management companies. The City could work together with
condominium management companies, the Chamber of Commerce and the Board of
Realtors to develop a program aimed at educating associations as to the steps involved
in undertaking a unit or property-wide upgrade or the steps involved in short terming
their unit.
A final comment we received that is not directly relevant to this study but that seemed
quite meaningful to report is that the City should require reliable, high speed cellular/wi-
fi service as a condition of any franchise agreement the City enters into. It was noted
that guests expect that they will be able to use their mobile devices to do work or get
internet access in their rooms and that if this service is not present they will not return to
that complex or to this resort. However, many properties are not currently equipped to
offer this service. It was suggested that the City should ensure that bandwidth is made
available whenever it has the opportunity to work with a service provider, particularly
when a new franchise agreement is being negotiated.
P59
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 16
V. Recommendations to Reduce or Eliminate Regulatory Obstacles
Thirty years ago the City of Aspen undertook a study of its short term accommodations.
The 1982 Short Term Accommodations Report was an effort by the City to evaluate why
the overall accommodations inventory was shrinking and what could be done to improve
the quality of lodging in the City. One major conclusion of that study was a recognition
that zoning actions taken by the City in the 1970’s had made many of Aspen’s smaller
lodges nonconforming and had left many such properties “frozen in time”, unable to
improve their facilities at a time when other ski resort communities were rapidly building
up their inventory. As a result of that study, the City created the L-3 (later changed to
LP) zone district which allowed minor expansion of these lodges and helped to generate
several notable lodge remodels and expansions in the 1980’s and 1990’s.
Aspen may be reaching a similar point today with some of its short term condominium
properties. Cosmetic upgrades have been successfully accomplished for many of these
properties. But there are a significant number of condominium properties at the base of
Aspen Mountain that are 40 years old or more and may be approaching the end of their
useful life. Some of these properties are nonconforming with respect to floor area,
density or height and therefore face considerable obstacles if they are to be re-
developed and remain a part of Aspen’s short term inventory.
This section presents a series of regulatory reforms the City should undertake to make
upgrading and re-development of short term multi-family residential properties less
daunting. It is interesting to note however, that a recommendation contained in the
lodging section of the recently adopted 2012 Aspen Area Community Plan (AACP)
would not only suggest that the City not explore these types of reforms, but that it
should instead reinforce the Code’s bias in favor of hotels and lodges and away from
multi-family residential uses in the Lodge zone district. This recommendation, which
can be found under the general policy guidance of “Minimize the further loss of lodging
inventory”, reads as follows:
“Explore amending the City Land Use Code to eliminate the provision for new multi-
family free market residential as the sole non-lodging use on a parcel in the Lodge Zone
District.”
This recommendation demonstrates the potential uphill battle we face in presenting
these recommendations and getting them implemented. Nevertheless, following are
some reforms we believe the City should consider.
A. Amend Lodge Zone District to Level the Playing Field
There are a number of approaches the City could take to place short term multi-family
condominiums on a more level playing field with hotels and lodges in the lodge zone
district. The most aggressive approach the City could take would be to allow multi-
family residential projects to achieve a maximum floor area and height that is closer to
P60
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 17
that which is permitted for lodge properties . Today there is a significant gap between
these two types of projects, making it difficult for existing properties to be re-developed.
The way this could work would be to keep a base floor area of 1:1 for multi-family
projects with a relatively large average unit size (say units of 1,250 to1, 500 sq. ft.).
Projects with a smaller average unit size (say 1,000 to 1,250 sq. ft.) would be allowed a
floor area of 1.25:1 and projects with an average unit size of 1,000 sq. ft. or less would
have an allowable floor area of 1.5:1 A similar approach to height limits could also be
applied based on unit size. (Note: These numbers are meant to be examples of how
this approach could work and are not intended to be specific zoning recommendations.)
This approach would be consistent with the way the City treats lodges and hotels in this
zone (smaller-sized units are allowed the greater floor area and height).
A second change that could be made is to reduce the minimum lot area requirement in
the Lodge zone district. This standard is currently 1 unit per 3,000 sq. ft. ft. and should
be reduced to 1 unit per 1,500 sq. ft., so applicants can more fully utilize their allowable
floor area to develop more units per area of land. This will further encourage applicants
to develop units that are at or below the maximum unit size.
If the City is not comfortable amending the Lodge zone district to promote this kind of
development, then an alternative approach would be to create a new Tourist Multi-
Family (TMF) zone district to be applied to condominium properties at or near the base
of Aspen Mountain. This would allow the Lodge zone to be tailored to traditional lodge
and mixed use lodge/condominium projects and provide a distinct zone for the pure
residential condominium projects. The TMF zone should include the same type of
density, floor area and height recommendations described above in order to incentivize
development of relatively smaller condominium units.
Adoption of a new zone district for Aspen’s short term condominium properties may
seem like somewhat of a radical approach to suggest. However, in the past, the City
has relied on the PUD process to resolve the variety of zoning “ills” that these properties
suffer from. By placing a PUD on the property, the applicant is given the opportunity to
vary from the underlying zone district limitations as part of a development proposal.
The main problem with the PUD approach is that since most of these properties were
developed many years ago, virtually none of them have recorded PUD Development
Plans in place. This means that if an association is planning a minor or relatively
modest development proposal, it will be subject to the City’s relatively simple PUD
Amendment process while if the association proposes a more ambitious development
plan it will have to go through the full PUD process. In the amendment process the
applicant may be required to prepare a survey of the property and document all of the
existing conditions in order to determine which dimensions (setbacks, height, floor area,
etc.) require PUD variations. For some properties, which contain just a single building
on a small lot, this may not be an onerous condition. But for some of the larger
properties such as the Alps or the Gant, producing a survey of the complex and
analyzing existing conditions (height and floor area) can be a very costly endeavor.
P61
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 18
It can be difficult for some associations to decide to process a PUD, particularly when
PUD is known to be a discretionary review process, leaving applicants without any
certainty that what they propose will be acceptable to the City and not knowing what
types of tradeoffs may be required to make their application successful. Plus, for
properties that are nonconforming as to use (that is, a multi-family use in a single family
zone) the PUD process doesn’t offer any relief since PUD’s can only be used to vary
dimensional standards, not uses. So if applicants were zoned to use through a TMF
zone district, at least they would enter the process knowing that theirs is an allowed use
and that they have been determined to be an appropriate use in their neighborhood, not
an “anomaly” that requires some variations just to fit in. Furthermore, if the dimensions
of this new zone are properly calibrated to the range of existing buildings that would
receive this zoning designation, then the new zone could make many nonconforming
structures conforming, thereby simplifying their opportunities to be upgraded.
B. Allow Short Term Condominiums to Maintain their “Hybrid Personality”
If the City does not support the idea of amending the zone district standards to create a
more level playing field, then we suggest that the Code should be revised to recognize
that many of Aspen’s condominium properties are “hybrids” that have both a lodging
and a residential personality. Under today’s regulations it appears that unless the
owners are willing to limit the occupancy of their units as stated in the definition of a
lodge unit, they are not able to take advantage of the incentives offered to lodges.
We believe that this should not be an all or nothing form of regulation. In other words,
the Code ought to state that if the applicant provides appropriate assurances that the
preponderance of the units (say 2/3 or ¾ of the units) will be in the short term rental
pool, that should be sufficient to obtain the higher floor area, height and other incentives
that lodges enjoy over multi-family condominium projects. The actual units which are
put in and taken out of the pool might vary from year to year, but the applicant would
agree (through an audit or similar mechanism) to demonstrate that at no point did the
percentage of units in the pool fall below this threshold. This would recognize that some
owners will simply never agree to limit their occupancy of their units, but that if most of
the units do so, the property should be considered to be a short term and not a
residential project.
C. A More Flexible Approach to Nonconforming Structures and Dimensional
Standards
The City already has a flexible set of regulations for nonconforming structures that
allows an existing structure to be expanded or enlarged as long as doing so does not
increase the degree of nonconformity (that is, the building can’t extend further into the
setback). This allows viable structures to be remodeled in an effective manner. But
when a structure has reached the end of its useful life and needs to be replaced, the
nonconforming regulations become much more restrictive. We believe it is simply too
restrictive to say that the only time a replacement structure can be different than the
nonconforming structure is when the replacement structure is brought into conformity.
P62
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 19
We suggest, therefore, that a more flexible approach be adopted that allows for
cosmetic improvements to be made and for changes to the configuration to be made, as
long as the changes do not extend a nonconformity. In other words, the structure
should be able to keep its underlying nonconformity and expand, as long as the portions
where it expands do not result in a greater nonconformity.
The provisions in Sec. 26.575.020 K. and L. represent good first steps toward allowing
some flexibility to exceed dimensional requirements to achieve energy efficiency and
building code compliance. However, the Code is somewhat ambiguous as to how much
flexibility the staff is actually authorized to offer as these two sections require the staff to
find that “the visual impact of the exemption is minimal”.
To address this ambiguity, some communities authorize what are called “administrative
modifications” where an underlying zoning standard can be modified by a specified
amount (typically 5%, 10% or 20% of the underlying dimensional standard) without
having to go through a PUD process or a variance process. Sections K. and L. are a
form of administrative modification, although without the numerical guidance as to by
how much a standard can be varied. The City might consider authorizing a 10% or 20%
modification of the floor area or height standards in order to allow the upgrading and re-
development of its short term accommodations inventory. The authority for the
modifications would be given to P&Z (or, if this is politically unacceptable, then to City
Council) in a one-step review process. The applicant would have to demonstrate that
the modification would result in a better quality project for owners and guests and would
also be subject to other typical land use review standards (such as the addition causes
minimal visual impact; the project is compatible with neighboring properties, etc.).
We also suggest that Sec. K. and L. might provide a good starting point for other ways
the City might create some flexibility for the improvement of short term condominiums.
One suggestion we heard during the interviews was that when a building is being
reconstructed, if the owners had the ability to add just 1’ in floor to ceiling height on
each level of the building, which could be a sufficient incentive for them to upgrade the
property. Similarly, if a property does not have a spa or hot tub on-site, the only
opportunity for this to be achieved might be on the roof. But both of these types of
options would typically exceed the underlying height requirement and could not occur.
Today, the only way that such flexibility can be obtained is via the PUD process, which
offers the ability to obtain variations from underlying zoning standards. The problem
with the PUD approach is that projects to upgrade existing condominium complexes
don’t have the kinds of public amenities to trade off to obtain approval from the City for
the zoning variations they need. PUD is also a rather complex process, requiring a
relatively involved type of land use application and a multi-step review process in front
of the Planning and Zoning Commission and City Council. While we recognize that it is
not likely that the City would allow the staff to sign off administratively on these kinds of
improvements, there ought to be a simpler way to provide some flexibility than through a
full PUD process. A Board of Adjustment variance is certainly not the answer to this
problem, as such variances require demonstration of a physical hardship which often
P63
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 20
cannot be done. So this might also be another place to apply the 10% or 20%
modification technique that is described above.
A final aspect of the dimensional standards that should be considered for revision is the
maximum unit size limitation. While there is good logic to why the City would impose
this type of limitation of new development projects, the rationale begins to break down
when it is also applied to units that pre-date the standard and which are made
nonconforming by this one provision. This limitation can prevent an owner from
combining two units that are side-by-side, even if the owner were to agree to maintain
the units as two separate lock off units in the rental pool. And it places a nonconformity
stigma on existing units that may make them less easily financed. It is suggested that
the City consider limiting the applicability of this provision solely to newly developed
units and not applying it to existing units or to units that are combined but which the
owner agrees will be rented as separate lock off units.
D. Fine-Tune the Multi-Family Housing Replacement Regulations
The City’s multi-family housing replacement regulations already contain an exception for
units which have been used exclusively as tourist accommodations or by non-working
residents (26.470.070.5.8.c). While this provision will take care of most of the issues
that might arise in the re-development of short term condominium units, it will not
address those units that may have had an isolated instance of rental to a local worker
but whose overall occupancy has clearly been as a tourist accommodations unit. The
most egregious example of which we were told was a tourist unit that was occupied by
an employee while his own unit was being repaired after flooding damage. The
regulation should be fine-tuned to allow an applicant to demonstrate that such isolated
occupancies should not mean that the unit is ineligible for this exemption.
E. Reconsider Development Fees and Exactions
As mentioned in Section III of the report, there have been changes in the impact fees,
fees-in-lieu, and other on-site exactions that are required of development. While it is
important to ensure impacts are mitigated, the changes have resulted in a sometimes
significant cost to development. The City may wish to consider examining exaction and
fees in general to determine if any changes should be made as it related to
condominium development.
One area that was raised by a number of interviewees is the cost and complexity that is
added to projects in order to meet the City’s drainage and building requirements. As the
table included in Section III of this report shows, when a development crosses a certain
threshold and is classified as a “major project”, its drainage requirements or required
fee-in-lieu of detention are no longer based solely on the increment of new growth or
disturbed area but instead are based on the drainage requirements of the entire site.
This can become an obstacle to condominium improvements, and is worth examining
within this context.
P64
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 21
APPENDIX
SUMMARY OF INTERVIEWS
I. Tom Todd
II. Chuck Frias
III. Donnie Lee
IV. Galen Bright
V. John Corcoran
VI. Sunny Vann
P65
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 22
CONDOMINIUM LODGING INTERVIEW: TOM TODD
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
Not applicable.
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
Not applicable.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
Not applicable.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
Floor area and density regulations make many of these buildings nonconforming.
Without floor area or density the HOA has nothing to offer to a developer to induce him
to come in and upgrade the complex. Maybe the City could create an incentive, like
exists for properties on the historic inventory, that offers a bonus in exchange for
upgrades to short term rental units.
One approach might be to permit development to occur in exchange for some
percentage of the units in the complex being placed in the short term rental inventory for
a specified period of time. Not all of the units, but a significant percentage because “all
or nothing will not sell”.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues)
Older associations are comprised of a mix of owners ranging from original buyers to
new owners. Each has a different financial basis in their unit; each has a different
interest – income versus personal use. Most owners are “loathe to incur special
assessments”. Unless a developer is willing to come in and take the risk, many owners
P66
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 23
are unwilling even to study the issue of what they would have to overcome to make
improvements. Plus some of them are at a point in life where they are not interested in
giving up their unit for a period of time while it is redeveloped.
The Colorado Common Interest Act says association needs just 2/3 approval to take
action. Some associations have higher requirements in their by-laws and they aren’t
aware that State law over-rides their requirements.
Smaller, older complexes may have owners who are not extremely wealthy but instead
are more “middle class”. These people are not used to working with lawyers,
developers, etc. and may not have professional assistance running their associations.
Sale of general common elements such as airspace to a developer can result in capital
gains and taxes for the association. The association may be able to get around this if
the developer instead puts the money back into the complex as mitigation for the
development rather than paying cash to the association.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
Create incentives so that owners can take advantage of remodels or upgrades that will
result in energy efficiency or green building. The older complexes are highly inefficient.
City Hall needs to welcome this, not make it hard to do.
Encourage management companies to develop a program where they educate
associations as to “how to” complete an upgrade or how to short term their unit. Self-
managed complexes are ripe for an education process by the City or by management
companies.
Get the word out that the City is receptive to projects that upgrade existing properties.
Consider Ordinances 30/48 to be examples of how not to do it. Instead of City
establishing the policy, let the management companies and HOA’s take the lead.
P67
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 24
CONDOMINIUM LODGING INTERVIEW: CHUCK FRIAS
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
Many properties that he works with have done a face lift. Some properties (such as
Fifth Avenue and Durant Condominiums) are really struggling with a variety of issues,
including lack of HOA consensus on whether/how to address their needs and a myriad
of zoning obstacles (properties are nonconforming in various respects).
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
The problem with many condominium units is they offer a product that is no longer
competitive in the market compared to newer resorts. Our condominiums were mostly
built in the 1960’s and 1970’s and they have to compete with condominiums in Beaver
Creek and Deer Valley that may only be 10 years old. A 900 sq. ft. two bedroom unit
with 8.5’ ceilings just can’t compete. For many years they have tried to make up for the
physical deficiencies by offering higher levels of service by the management agency.
This works for guests who have been coming here year after year. But at some point
newer customers will find a better product elsewhere. For the last 25 years the
traditional high month of March has declined. Our dated product maybe just one reason
why this has occurred.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
Owners who invest in a significant upgrade of their unit are less likely to keep their unit
in the rental pool. He suggested that as many as half of the units have been removed
from the inventory in recent years because owners don’t like the wear and tear on their
units or prefer to be able to use the unit whenever they want to. He also noted that
fractional units have become the hottest beds that they can rent (because they are in
newer properties and have the desired amenities) and have seen the greatest revenue
growth in recent years. An owner may have bought a 6 week (1/8) share and only be
able to be here for part of that time so they rent out the other weeks.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
P68
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 25
Properties need to be able to add the simple amenities that the market demands. Four
of the most basic improvements that the current Aspen condominium inventory lacks
are elevators, adequate parking, spa/pools, and reliable cellular or wi-fi service.
When the Durant Condominiums wanted to add an elevator to improve its very awkward
external access issues, they were forced to go to the Board of Adjustment because the
property was already nonconforming. It was difficult to prove that they had a hardship –
they really just had a need to improve their building access for their guests. Similarly, if
a property doesn’t have a spa, the best opportunity they have might be on the roof. But
that might violate height restrictions. The City ought to create some flexibility in its rules
so that improvements to these properties that violate underlying dimensional limitations
don’t trigger variance application procedures. Applicants need a simple procedure that
looks at whether it is an appropriate improvement, not whether the applicant has a
physical hardship.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues).
Some associations have owners who bought their properties many years ago and the
investment they made is well less than the value of the property today. These people
are the most reluctant to incur new assessments to improve the property. It is only
when an association becomes dominated by owners who have paid current market
prices to purchase their units that the association has the will to undertake an
improvement project. Also, owners who are looking to sell their units are generally
more willing to invest in an upgrade because they will be able to recoup their
investment.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
The City should require reliable, high speed cellular/wi-fi service as a condition of any
franchise agreement they enter into. Guests will not accept that they cannot use their
mobile devices to do work or get internet access. A large bandwidth must be made
available.
The City needs to accept the improvement of these buildings as an amenity to the
community, not as growth or development. If these properties need to pay current
entitlement fees to the City just to remain competitive they will be unable to do so.
Many properties have limited land area, are already built to their maximum development
potential or are actually nonconforming. So they don’t have open space to offer or room
to provide affordable housing. In fact, they may need some development potential just
to make the numbers work. Ideally, the City might create some flexibility in its rules to
let them improve. For example, if a property could add 1’ in height to each floor in the
building that would improve the value of the unit. Of course, allowing additional floor
area or density would also provide the incentive to improve the property.
P69
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 26
CONDOMINIUM LODGING INTERVIEW – DONNIE LEE
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
The Gant has an incentive program for owners to upgrade their units. Completing an
upgrade means units get rented more often and in a higher tier (greater income).
Virtually all of the units in the complex have completed an upgrade. The Gant has a list
of desired improvements and guides the owners through the process, including helping
to choose the designers to use. In addition, the complex completed a significant
exterior upgrade in 2004-2008, including changes to railings, elevators, etc. and
significant landscape improvements. He feels the permitting process for that upgrade
went smoothly.
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
Overall demand in Aspen remains good so there are No difficulties; high occupancy
rates. However, the recession has applied downward pressure on both occupancy and
rates.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
Investment was necessary because as the infrastructure ages it is necessary to
modernize to maintain quality and value for the customer. Aging buildings need the
opportunity to modernize to meet consumer demands and capitalize on new
technologies that improve efficiencies for both energy and operations.
Ski industry has changed. Guest used to be a group of people that would be
comfortable sharing rooms and walking to the lift. Now people have high expectations
for services (vans are critical) and quality accommodations.
Lastly, the unit owners desire to keep their units in the rental pool as long as there is a
return on their investment and an offset to the annual costs of ownership. Without
performance that satisfies this criteria owners pull the units out of the rental program
and the community loses bed base.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
P70
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 27
For The Gant, Primary problem is they have an underlying residential (R-15) zoning but
they are in the lodging business, and truly The Gant is a hybrid property Meaning it is a
multi-family property and owners use it as such, for extended periods, etc, but the
property operates as a lodge. IT does not fully fit into either category, but given the long
term and consistent success of the property perhaps a new category should be
developed that embraces and encourages such an operation.
Property was listed as a potential historic resource but were able to get it removed from
that list.
Building Department can raise unexpected Code issues when a remodel is proposed
that make proceeding more difficult and costly. Gave example of an existing fireplace
triggering a new air vent installation. Should not apply to older buildings as they already
have extensive air infiltration. Current IR photos demonstrate this.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues).
Has 143 owners, each with his/her own opinions. He has owners who bought 30 or 40
years ago and view this as their winter or summer retreat who are not interested in
making upgrades for the rental market. (this is minority of ownership) Even has some
owners who live in their units year round.
The Gant is fortunate to have a very professional and big picture focused Board and
there is strong collaboration with both owners and management. Some HOAs (this is a
generalization) do struggle with Board members who focus on resolving their individual
situation rather than on solving problems that are relevant to the entire HOA or entire
building.
The biggest obstacle for continued improvement is ability to provide ROI. Construction
costs are extraordinarily expensive, $400 – 500 per sq ft including all costs of
construction, design and furnishings. Additionally aging infrastructure and the need to
continue to make older properties safe requires costly upgrades to common areas.
These types of improvements have been embraced at The Gant and continued
cooperation and collaboration with various city departments is vital for continued
success.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
City should recognize how successful the condominium hotel properties have been and
support what they do. These properties are less expensive than luxury hotels and have
very high occupancy throughout the year which provides significant tax income to the
P71
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 28
City. Moreover, the owners of these properties contribute to Aspen in so many ways –
they are members of/contributors to local non-profit organizations and various arts
groups.
A complex like the Gant is really a hybrid of a condominium lodge and a residential
condominium complex. The City should not force all of the owners in the complex to be
part of the short term rental market as a condition of providing development options to
the property. The City needs to recognize that these properties will always have this
hybrid personality and not try to tie the hands of the owners by forcing them all into a
single box.
P72
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 29
CONDOMINIUM LODGING INTERVIEW: GALEN BRIGHT
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
We recently completed a major renovation to the South Point building where I live and
serve as a board member. Individual unit interiors are often remodeled after the they
trade to a new owner.
He leases several condominium units for his clients. Most of his clients are not
interested in nightly rentals, just monthly or seasonal. If and when they do remodel they
typically are not interested in renting after they have remodeled.
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
As explained above, he focuses on renting the unit for a month or for the seasonNightly
rentals are more popular at “condo-hotels” type buildings (Aspen Alps, North of Nell,
Aspen Square, Gant, Lift One) which are set up to be short termed (because it has a
front desk and/or a web-site and other support services such as on-site maintenance
and staff). Most of these rentals are done in house, or with a rental agency that focuses
on nightly rentals along with property management.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
His clients who accomplish a really high end upgrade will typically remove the unit from
the rental inventory.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
In his experience, renovations can trigger building code requirements (such as sprinkler
system upgrades or installations) that make a project expensive to complete. For
example, if a major common element, such as a hallway or parking garage, is involved
sprinklers may be required. He agrees with the code requirements for bringing a
building into compliance for safety reasons, but recognizes that it does add to the cost
of a major renovation and may delay the project until the HOA can raise more money.
P73
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 30
He owned 4 side-by-side units in a condominium complex that he wanted to combine
into 2 units and upgrade. This triggered the multi-family replacement regulations,
because changes to the City building codes in 2007, which would have required
significant affordable housing mitigation to occur. This killed the project he had planned
and caused him to have to sell off the units individually.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues).
Lenders view condominiums and condominium hotels as a higher lending risk than
single family homes because an owner who gets into financial difficulty is more likely to
walk away from that type of investment than a home they own and live in. So in today’s
lending market, these properties get saddled with higher down payments and higher
interest rates which leave the owners with less money to improve their properties.
The current economic climate and decreased property values has made it much more
difficult for an HOA to collect special assessments to for improvements to complexes,
because owner don’t want to spend the money, or simply do not have the money to
spend. This is particularly true if there are units in the complex that have owners who
are under water. This is the most significant factor that is stopping upgrades from
occurring today.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
Let the free market do its thing. The City should not get involved in assisting with the
remodel of older complexes with the exception of streamlining the permit process for all
types of building applications.
P74
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 31
CONDOMINIUM LODGING INTERVIEW: JOHN CORCORAN
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
Yes. They have two markets they need to stay competitive in – owners and renting
guests. Both of these markets have evolved past the physical offerings that are
available at the Alps. The Alps has a great location, great service, but does not offer
the newer type of unit that has been built at other surrounding properties.
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
The Alps has lost some guests due to competition from newer properties, and has also
been affected by the overall economy. A lot of people still come to the Alps because of
the service they get and their comfort with the facility.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
Owners will make investments that suit their own needs with the expectation that it will
also help the unit rent better. Any redevelopment or updating of the Aspen Alps would
not make the units so elegant that the owner would be unwilling to rent it out. He
expects the new units will still be rented, in fact upgrades could enhance their
desirability and overall occupancy.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
Has seen several owners who wanted to combine units be unable to do so because of
the maximum unit size limit in the Lodge zone district, despite the fact that combining
those units would not have removed them from the rental market.
The Alps is significantly nonconforming as to density and floor area. If they were to tear
down one or more of the buildings and were required to re-build the same project, why
would they do that? How can that make economic sense? Their owners are not super-
wealthy people to whom the bottom line is not necessarily important. How much will the
City bend in terms of mitigation required to allow the units to be re-built?
P75
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 32
Multi-family replacement regulations probably don’t affect most Alps units because of
the exemption for tourist units. But they do tend to “freeze” older complexes in time
leaving complexes in the neighborhood that cannot be modernized.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues).
Building consensus in an HOA is very tricky, even though he has a forward thinking
group of owners and board members.
It is always hard to time the market – don’t know when the business cycle is going to be
most favorable to this type of project.
How do you stay ahead of the technology curve and changing market demands – wi fi
etc. HOA’s move more slowly than the market. Gaining consensus from a large group
of people (owners) in response to changing conditions can be challenging.
Transportation to the airport is a huge issue. Need a dedicated service that is not stuck
in traffic, whether it is a lane on the Highway (their vans cannot use the bus lane) or a
monorail or similar technology. Also need increased air service into Aspen, primarily
commercial service (most of their guests fly commercial) so more people can fly direct
from other cities to Aspen. This is an important feature to maintaining and growing a
tourist base.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
There is general concern that going in front of the City with a discretionary application is
going to be a difficult experience.
Why wouldn’t the City want the Aspen Alps to be the best property it can be? Paying
extractions/offering public amenities should not be the only “currency” to make things
happen – creating a better product for guests, owners and the community should be
seen as having its own value.
There is an impression that the only incentives the City will offer is for the kind of
traditional hotel that the City seems to favor. But condominiums are an important part of
the lodging mix as well. The City needs to understand what the customers are looking
for and it is not necessarily a small traditional hotel room.
Don’t dis-incentivize condominiums relative to hotels – at least have a level playing field
for all types of lodging.
P76
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 33
His owners have a huge financial and emotional stake in Aspen and its non-profit
institutions. These people are a part of the community, contribute to non-profits, and
volunteer time and talent to organizations here in Aspen.
P77
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 34
CONDOMINIUM LODGING INTERVIEW: SUNNY VANN
1. Are you/your owners interested in a significant update, remodel, or
redevelopment of all or part of your condominium complex or an individual
unit? Why or why not?
Not applicable.
2. Do you have any difficulties renting your condominium unit for short-term
stays? If yes, why do you think that is?
Not applicable.
3. If you did invest in a significant update, remodel, or redevelopment, would
the property be more likely or less likely to be rented short-term? Would the
upgrade be done so you could keep it in the rental pool or because you want to
remove it from rental?
Not applicable.
4. Have you identified specific City rules or requirements that make the
update, remodel, or redevelopment of your condominium complex difficult? We
are most interested in hearing about land use and building regulations (zoning
limits, multi-family replacement regulations, growth management etc.) but if there
are other concerns please let us know.
Many of the condominium properties are nonconforming as to floor area and/or density,
whether they are in the Lodge, RMF or other zone district. This means that if they are
to be upgraded or replaced they must comply with the nonconforming structure section
of the Code which creates significant obstacles for the owner. It doesn’t make
economic sense to re-invest in a property when the Code requires the new project to be
essentially identical to the form of what was removed and to not increase in size. The
only option is for a developer to buy out some of the owners and then distribute their
development rights to the other units so each can be somewhat larger and that may not
make economic sense. The nonconforming section of the Code should be revised to
create some flexibility so the replacement building can comply with new health and
safety codes that have been adopted since the original structure was built and to offer
some limited expansion potential so the project makes some economic sense. The
increased floor area and density do not have to be “by-right”; they can require special
review or PUD review to ensure compatibility. But unless an incentive is present many
redevelopment projects will not be feasible.
The market is not demanding new condominium units that are stacked one on top of the
other as is found in most of existing complexes. Instead the market is looking for a
townhome configuration and would prefer a larger unit. The challenge is that units in
this configuration and size are costly enough that the owner typically has less interest in
P78
I.
Overcoming the Obstacles to Upgrading Condominium Lodging in Aspen Page 35
turning them into short term rentals. So the key is to identify an incentive (such as floor
area or density) that will induce the developer of the new (or replacement units) to agree
that a significant percentage of those units will go into the short term rental pool.
Most older complexes have units that have housed a local resident at some point in
time. So even if these units are essentially short term rental properties, they have a
history of occupancy that makes them subject to the multi-family replacement
regulations. These are not the kind of units that this regulation was written to address.
This regulation needs to be fine-tuned so it does not apply to these types of units.
5. What issues, not City related, present an obstacle for the update, remodel,
or redevelopment of your condominium complex? (for instance large HOA, or
HOA that does not agree or owners who have no interest in spending the money
necessary to upgrade or have other financial issues).
Not applicable.
6. What role, if any, do you think the City ought to play in assisting the
redevelopment or remodel of older condominium projects?
See suggestions in #4, above.
P79
I.
123079-Charrette Memo_110912
M EMORANDUM
To: Chris Bendon, Community Development Director
Jessica Garrow, Long Range Planner
From: Brian Duffany
Subject: City of Aspen Lodging Charrette, EPS #123079
Date: November 9, 2012
Background
The City of Aspen invited Economic & Planning Systems (EPS) to a
Lodging Charrette on October 23, 2012. The Charrette was a meeting of
lodging, real estate, and planning professionals active in Aspen
organized to discuss the challenges and opportunities related to
maintaining and expanding the overnight bed base in Aspen, and
specifically expanding and maintaining economy to upper mid-range
lodging. The City and condominium and lodging managers have noted a
gradual decline in the City’s bed base due to a number of interrelated
factors. Following the Charrette, the City asked EPS to:
Summarize the major themes and findings of the Charette;
Provide available examples of how peer resort communities are
addressing this issue; and;
Propose next step policy and strategy recommendations to the City.
P80
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 2
Problem Statement
High occupancy turnover (HOT) accommodations, commonly referred to as “hot beds,” are
critical to the economic base of a destination mountain resort. HOT beds provide the
accommodations for tourist visitors which, in most mountain resorts, produce the majority of the
sales in local businesses and cultural and entertainment venues. Even in communities like Aspen,
where there are an increasing number of part-time residents present for more than six months of
the year, HOT beds still play a large role in the economic health of resort communities. EPS has
found, through numerous assignments in Rocky Mountain resorts, that destination visitors spend
more per day of their visit than full-time or permanent residents.
While Aspen has a reputation and image as a destination and home to the wealthiest of the
global elite, historically it has had a variety of lodging types that attracted visitors in a range of
demographic segments. Some in the lodging and tourism industry are concerned about the
eventual economic impacts of a bed base that is declining in both numbers and quality in the
mid-range market segments.
In mountain resorts, the hot bed inventory is comprised of hotels and motels, condo hotels,
vacation clubs and timeshares, and private condominiums that are rented on a nightly basis.
Community leaders, lodging operators, and others involved in the tourism economy have
observed a decline in the economy to mid-range hotel and motel inventory in Aspen, as
properties have been sold for redevelopment as high end residential properties.
As condominiums have increased in value due to market appreciation and remodeling, the number
of condominiums placed into the overnight rental pool has decreased. Owners of high value
condominiums and homes either do not need or care about rental income, or may simply not want
other people using their property and furnishings. In addition, Aspen’s condominium inventory is
relatively old and obsolete compared to newer condominium lodging in competitive resorts such
as Vail and Beaver Creek, and Park City (including Deer Valley and The Canyons). Many of
Aspen’s condominiums were built in the 1960s, 1970s, and 1980s and have low ceiling heights
and few amenities, such as elevators, wireless internet, health/fitness facilities, or even adequate
parking. Aspen’s constrained land supply and restrictive development regulations have made it
more difficult and more costly to redevelop older properties and to develop new condominiums.
Charrette Summary
Brian Duffany of EPS attended the Charrette and was placed in Group 3. Group 3 was comprised
of several lodging operators, ranging from economy properties to upper-mid range properties, a
condominium rental property manager, an experienced resort developer, and a lending
representative. This group tended to be focused on and knowledgeable of the economics of
condominium and lodging development and operations. The discussions frequently returned to
economic fundamentals including the cost of land, construction costs, and financial risk and
return. The City’s development review process was also a focus. While we were instructed to
discuss separately existing lodging, new lodging, and condominiums, our group found it difficult
to differentiate the issues since the underlying resort and real estate economic factors are
common to each lodging type.
P81
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 3
EPS’ interpretation of the major issues and opportunities from the Charrette is summarized
below. The commentary below does not necessarily reflect EPS’ opinion of the best balance of
the varying policies that are in tension in Aspen; e.g. affordable housing and lodging
development. We are merely stating the conclusions of the Charrette Group, and the economic
realities of real estate development in Aspen.
Another caveat is that much of this summary highlights largely negative issues and impediments.
Charrette participants acknowledged that Aspen is highly successful and the issues identified are
largely a product of this economic prosperity. The quality of the destination and experience is
what sets Aspen apart from other resorts. Aspen consistently achieves the highest seasonal and
year round occupancies of the Rocky Mountain resorts and is a globally recognized brand.
Real Estate Economics
1. The high cost of land and construction makes new hotel development infeasible and
the expansion of existing properties difficult; high end ownership residential
development is favored.
The cost of land in Downtown Aspen and surrounding the Aspen Mountain base can be more
than $500 per square foot. This is roughly 10 times the cost that an upper end hotel can
support with an average daily rate of $300 per night (annual average) and annual occupancy
in the high 50 to low 60 percent range, which is the typical occupancy range for Aspen hotels.
This economic reality (the value of Aspen real estate) is driving the gradual loss of older
lodging properties to redevelopment, as land values exceed the values of existing buildings
and business operations. For existing lodges without surplus land that could be used for
expansion, it is not feasible to purchase additional property for expansion. High land costs
also dictate that any new condominium development will be priced at well over $1.0 million.
In this price range, owner participation in the overnight rental pool is also very low. Owners
in this demographic do not generally purchase resort condominiums for their rental income.
Recommendation or City Role: Largely beyond City’s control. Only with large subsidies would
the City be able to affect the supply of mid-range overnight lodging.
2. Seasonal occupancy fluctuations compound the feasibility challenges in hotel
development and operations. The future viability of the condo hotel product is also
in question.
The top performing hotels in Aspen achieve annual occupancies in the high 50 to low 60
percent range. For comparison, good hotels in urban environments achieve occupancies in
the 70 to 80 percent range due to the higher level of year-round economic activity. The lower
annual occupancies in seasonal resort settings equate to a lower cash flow which makes hotel
development less profitable. When combined with the high land costs in Aspen, hotel
development is often not financially feasible and it is difficult to secure development
financing. Few if any pure hotels have been developed in any upper end destination mountain
resorts over the past 15 years. Instead, resort developers have built variations of condo
hotels to provide HOT beds while circumventing the hotel feasibility challenges.
P82
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 4
Condominium hotels, like pure hotels, have a central check in or front desk and some guest
services. Having numerous individual owners spreads the financial risk and operating costs of
the hotel over more owners than does a pure hotel with one ownership entity. However, the
units are sold to individual owners who may or may not elect to rent their unit. Nevertheless,
experience shows that roughly 75 to 85 percent of condo hotel unit owners rent their units.
During the real estate crash beginning in about 2008, even condo hotels have proven to be
difficult to develop. Several proposed and partially completed projects in Colorado and
elsewhere went into bankruptcy as buyers cancelled pre-sales contracts or when the project
could not achieve sufficient sales volume or cash flow due to the recession. The Viceroy in
Snowmass, the Hotel Madeleine (formerly the Capella) in Mountain Village, Base Village in
Snowmass, and Trailhead Lodge in Steamboat are examples. While the condo hotel model
relies in part on one’s desire to own real estate as an investment, this appeal may be in
decline following the Great Recession.
Recommendation or City Role: Largely beyond City’s control. Consider being open to different
types of hotel and condominium development, as each fills a roll in supplying HOT beds.
3. Ownership residential units are often proposed in hotel projects in order to
subsidize hotel development costs and risks within the project.
As discussed above, pure hotel developments are not typically feasible in high cost resorts
such as Aspen and its competitors. However, many resort host cities are interested in
attracting additional hotel development because of the economic impacts of hotel beds
(visitor spending). Hotel beds generally have a larger economic impact than condominium
beds due to higher annual occupancies. Resort developers are sometimes encouraged to
include hotel rooms in their projects during development review negotiations. To help fulfill
the desire for hotel rooms, the market response is for projects to include a mixture of pure
hotel rooms and fee simple ownership residential units (e.g., condominiums and
townhomes). Sales revenue from the more profitable residential units is used to offset the
less financially viable hotel component in order to generate the financial returns needed to
attract investment.
In order to combine these product types into a viable development project, it is common for
developers to request height and density variances in order to maximize a site’s utilization
and revenue producing potential. Large projects have a better chance of succeeding due to
economies of scale and to the home owner’s association dues from the residential units,
which partially fund the hotel amenities and operations. This is true in resort settings and
urban settings; the Four Seasons and Ritz Carlton models are examples.
Recommendation or City Role: Consider offering more flexibility in development review to
allow residential units with hotel projects, recognizing the financial feasibility limitations of hotel
development.
P83
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 5
4. Charrette participants did not seem to favor the City offering financial incentives or
subsidies to lodging developers or operators.
Cities sometimes offer financial incentives to hotel developments to fill financing gaps when
there is a real or perceived economic benefit to the City that is equal to or greater than the
incentive or subsidy. When asked about potential tools or incentives the City could offer to
attract mid-range hotel and condominium development, there was a general agreement that
it was not advisable for the City to “get into the hotel business” or to “pick winners and
losers.” In addition, the level of financial subsidy required would be unrealistically large.
Alternatively, for existing properties there seemed to be support for incentives like fee
waivers, expedited permitting and review, exemption from or reduced housing mitigation
requirements, and perhaps limited use of tax increment financing. Most of the group’s focus
was on streamlining the City’s development regulations and review process and creating
more predictability in the process.
In EPS’ view, it may be worth exploring the feasibility and effectiveness of offering incentives
such as lodging tax rebates, permit and fee waivers or reductions, and tax increment
financing (TIF) to address feasibility gaps, especially for existing lodging renovation projects.
For new projects, these incentives may not be enough to have a measurable impact. In
addition, there are arguments that the over-use of incentives like these inflate or maintain
costs, as the incentives become built into assumptions on project revenues and supportable
land values.
Recommendation or City Role: Explore reducing or waiving fees and housing mitigation
requirements for new projects, and offering expedited permitting and review for existing
hotel/lodge and condominium renovation projects. Consider financial incentives such as tax
rebates and TIF targeted to mid-range lodging projects and existing property renovations and
expansions.
Development Regulations and Review
5. The current land use code contains barriers to renovating and/or redeveloping
aging condominiums.
The report prepared by Alan Richman and Associates, Overcoming the Obstacles to
Upgrading Condominium Lodging in Aspen, provides an extensive discussion of the barriers
to both lodge and condominium development and redevelopment. In essence, the code
favors lodge development and redevelopment. Charrette participants agreed that there was a
need to “level the playing field” for existing condominiums since they make up nearly half of
the tourist bed base. Many of the condominiums in Aspen are non-conforming uses because
they exceed the density of their base zoning or 14 units per acre. If a condominium complex
were to be redeveloped, it would be subject to the base zoning, which in many cases would
allow fewer units than exist today, creating a financial dis-incentive for redevelopment. In
addition, redeveloping a condominium building triggers multifamily housing replacement
regulations. These regulations require that any demolished or redeveloped multifamily
housing be replaced one to one with housing deed restricted to Aspen residents (no income
limit), or replaced with 50 percent Category 4 units. Lodge re/development is subject to
different regulations, which allow higher densities and contain more flexibility.
P84
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 6
New condominium development is also subject to the growth management quota of 18 free
market units per year. Lodge development is not subject to the growth management quota,
since lodge units are not classified as dwelling units.
Finally, developers present at the Charrette noted that the cost of fees, permits, and
exactions (e.g., affordable housing) are among the highest of any resort community in North
America. This adds additional development cost, complexity, and time to developing in an
already costly market.
Recommendation or City Role: Review the findings of the Richman report. Seek direction from
City Council and other stakeholders on the types of regulatory changes that may be acceptable
to first facilitate renovation of existing properties (condominiums and lodges), and second to
create opportunities for new development and redevelopment.
6. Increasing development density is a way to encourage HOT bed development and
condominium redevelopment. However the existing two to three story development
context will make this politically contentious.
Density and height increases are requested by developers to offset the high cost of land as
well as the various fees and exactions required by the City. Higher densities enable projects
to generate more cash flow per square foot of land, increasing project feasibility and
decreasing financial risk. Much of the City of Aspen is built at a two- to three- and
occasionally four-story height, which gives Aspen much of its character. Few buildings rise
higher than the tree canopy or substantially higher than neighboring buildings, thereby
protecting views. However, the trade-off for low height limits, compared to competing
resorts, is increased development costs per unit or room and higher real estate prices. This
link between real estate economics and the underlying zoning results in high value residential
units, which are not as likely to enter the tourist bed base, and a lack of hotel development
or renovation due to feasibility constraints discussed above.
Recommendation or City Role: Identify areas of the community where it is appropriate to
increase development densities and/or expand the Urban Growth Boundary to increase the land
supply. Pursue HOT bed development in these locations. The Lift 1A site is a potential example of
sites that may be appropriate for more density. Ski area portals are particularly attractive to
resort developers because of their central location and high activity levels. The Lift 1A area, as
well as Gondola Plaza area, may be appropriate. Other areas with aging condominiums may be
appropriate to increase density.
Public-Private Relations
7. Developers have noted that City officials and the public at large do not understand
the financial risk and return requirements and feasibility constraints of real estate
development.
Whether it is earned or not, it is common for there to be some distrust between a city’s
officials and development review staff and real estate developers. While one could generalize
that developers are always interested in maximizing profit, requests for height and density
increases are often made for feasibility reasons, especially when a hotel product is part of a
project. When the desired type of development does not occur in a community, it is evidence
of either a lack market demand, financial feasibility, or regulatory impediments. The
consensus of this group is that the impediment is largely financial feasibility.
P85
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 7
The 2006 Study by Hospitality Valuation Consultants (HVS) estimated the land values that a
mid-range hotel could support in Aspen at approximately $40 per square foot, far below the
several hundred dollar per square foot value of land in Downtown Aspen. The analysis also
addressed, albeit peripherally, risk and financial return. While EPS believes that the analysis
is technically correct and EPS agrees with the findings, a simplified and more concise analysis
could be prepared to illustrate the constraints imposed by land values, but also the risk and
reward aspects of real estate development.
Real estate development is one of the most risky investment options, and the financial
returns required to compensate for this level of risk are higher than other investments with
lower risk such as stocks or bonds. A real estate developer or investor compares the risk of a
development to other investment options and adjusts financial return expectations according
to the likelihood that a project will perform as expected. A developer would therefore not
invest in a real estate project if he/she expected only to earn returns comparable to stocks,
bonds, or other traditional investments. Equity (cash) return requirements can be upwards of
15 percent, compared to about 7 percent for the Down Jones industrial average.
Recommendation or City Role: Assist staff and council in understanding the impacts of land
use regulations on development feasibility. Encourage developers to share project pro formas
and demonstrate the need for density or height increases based on project feasibility impacts.
Encourage a more open dialogue or partnership between real estate interests, especially those
proposing HOT bed development, and the City.
Peer Communities
In EPS’ recent experience, resort communities are generally supportive of HOT bed development
and seek to expand their bed base, some more aggressively than others. However, no
community faces the same cost, land supply, and regulatory constraints as Aspen. Aspen’s
challenges are not unique, but are more challenging due to the higher relative costs and
regulatory constraints. Aspen stakeholders may be of the view that Aspen is unique and that
none of these examples below are relevant to Aspen. Development densities in these examples
are also considerably higher than what is permitted in Aspen. The following is a brief discussion
of the successful and unsuccessful approaches from selected communities.
Mountain Village, Colorado
Mountain Village was created from a PUD in San Miguel County in the 1980s. It is the second,
although some might argue that it will become the primary portal to the Telluride ski area. Much
of Mountain Village is built as low density condominiums and large single family residences.
Mountain Village’s low density lodging inventory underperforms, with low rental program
participation and low occupancy rates. The Town’s Village Core is designated for higher densities,
but the Town has struggled to attract a sufficient critical mass of HOT beds to support its retail.
There have been several development proposals in the Village Core for higher density lodging,
but they were met with community opposition due to height and density impacts. The Capella
Hotel project, now Hotel Madeline, may represent a turning point for the Town. The Capella was
proposed as a 100-room hotel with 50 units of condominiums in an adjacent building. The Town
required the project to provide numerous amenities such as an ice rink, and underground
parking and loading. The developer requested an additional floor of height to compensate for
these increased costs. The Town was initially inflexible in granting the height increase.
P86
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 8
Eventually, the developer and the Town reached a compromise on height. However, it required
the developer to reduce the ceiling heights in the units to 8.5 feet from 10 feet. The reduced
ceiling heights impacted the marketability of the project. The Great Recession followed soon after
the project was built and the project went into bankruptcy.
During negotiations between the Town and the developer, a number of council people and other
stakeholders came to the realization that people did not understand the economic benefits of
HOT beds and the need for a more marketable tourist bed base. EPS worked with the Town to
build a fiscal impact model that is used to evaluate land use changes and development projects.
It also contained an educational piece that illustrated the land use and economic linkages in the
Town. This work formed the basis of the Town’s first comprehensive plan, which increased
density in key locations in and around its Village Core to promote HOT bed development.
Vail, Colorado
West Vail and Lionshead have several aging condominium buildings and a confusing circulation
pattern. Seeing the need to continually improve on the visitor experience and reinvent to remain
competitive, the Town is working in partnership with Vail Resorts Development Corporation
(VRDC) to define a redevelopment plan for West Vail. Two recent projects are major catalysts to
redevelopment in Lionshead and West Vail: The Ritz Carlton, and The Arrabelle. The Ritz has 71
condominium units and 45 fractional club units. The Arrabelle is a luxury condominium building
but has numerous units with lock-offs. VRDC is also planning the Ever Vail redevelopment which
would contain 1,500 residential and hotel units; however, this project is on hold pending a
stronger real estate market recovery.
The Town recognizes that condominiums are a large portion of the tourist bed base and that no
pure hotels have been developed in Vail in anyone’s recent memory. During development
negotiations for the Arrabelle, the Town worked with the developer to create an incentive
program to encourage rental program participation. The Town has identified Lionshead and West
Vail as an appropriate area for higher densities, and thus far has allowed heights of roughly five
stories; additional heights are possible. Part of the intent of allowing higher densities in this
location is to encourage HOT bed development.
Steamboat Springs, Colorado
The City of Steamboat created an Urban Renewal Authority (URA) to facilitate redevelopment at
the ski area base. Like Aspen, Steamboat saw extensive condominium development in the
1960s, 1970s, and 1980s, and much of the lodging and commercial inventory is dated and
reaching obsolescence, especially in the Base Area. The URA used tax increment financing to pay
for major infrastructure and pedestrian connectivity improvements in the Base Area to help
catalyze redevelopment. Two major projects have been completed so far: One Steamboat Place,
which is a fractional club development, and Highmark, which is a luxury condominium project
with hotel amenities. There are several other condominium and condo hotel projects proposed in
the Base Area, although they have been shelved since the recession. The Atira Group purchased
the Thunderhead lodge which contains roughly 150 condominiums dating back to the early 1970s
and razed it for redevelopment along with several smaller condominium and commercial
properties in Ski Time Square. The City has not indicated a strong preference of favoring pure
hotel projects over condominium projects; its approach is to allow the market to determine what
is feasible and recognize that a large portion of Base Area condominiums will likely enter the
rental pool.
P87
I.
Memorandum November 9, 2012
City of Aspen Lodging Charrette Page 9
Concluding Remarks
There is no simple solution to expanding the City’s tourist bed base. High land costs are a major
barrier to hotel and mid-range condominium development. Real estate economics indicate that
any hotel development will need to contain a luxury residential component to subsidize the hotel
component. With the current height and density limits, the feasibility of residential-with-hotel
projects seems to be marginal as well. The most viable development type in Aspen is high-end
residential and the market will continue to supply that product. Even with a major loosening of
exactions and density increases, hotel development will still be inhibited by high land costs. Real
estate pro forma modeling would provide a better characterization of the extent of the feasibility
gaps and identify more specifically the land use/zoning conditions and exactions that have the
largest impacts on feasibility.
The selected case studies suggest that allowing higher densities can help attract HOT bed
development in resort settings, although the recent recession has stalled many projects. Vail,
Steamboat, and Mountain Village already contain developments that are built at considerably
higher densities than the majority of Aspen’s built environment, which has made higher densities
more acceptable. In these examples, the communities have opted to give deference to the
market to provide the types of lodging and condominium products that are in demand and are
financially feasible.
There should be provisions to facilitate condominium renovations, especially since condominium
redevelopment is so difficult with multifamily housing replacement regulations and non-
conforming use challenges. From an economic perspective, it is also advisable to up-zone
(increase allowable density) aging condominiums to create an economic incentive for
redevelopment and modernization, especially in areas that are not likely to generate widespread
opposition from neighbors.
P88
I.
November 30, 2012
er Jessica Garrow, AICP, Long Range Plann
t Department Community Developmen
Street
City of Aspen
130 South Galena
Aspen, CO 81611
Re: Aspen Affordable Lodging
Dear Jessica:
This letter is in response to the planning office’s request for my observations about the Aspen
lodging charette held in October and, more broadly, my observation regarding the affordable
lodging issue in general.
Background
Per your request, I reviewed a number of background reports related to transient bed base
quantity, character and occupancy rates in Aspen. I attended an October 20th charette, which
assembled members of the Aspen lodging community and policy makers to discuss the condition
of Aspen’s lodging sector and consider the prospect of public efforts to stimulate additional
affordable (lower price-point) transient lodging. There were roughly 18 charette participants
with representatives of lodging management, hotel ownership, marketing organizations, ski
area operations, and city council and staff. The objective of this half day session was to get
feedback and collective insights into the following issues:
Is there a problem with, or unique opportunity in, the Aspen Lodging sector?
Towards what goal? If so, how might the city and other involved interests intervene?
What does this intervention look like? Does the city have a role?
What happens to the lodging inventory if the city doesn’t intervene?
We broke into three groups of about 7or 8 persons each and considered the above topics as they
applied to three forms of development: hotels, fractional or interval ownership units and
condominiums.
P89
I.
PAGE 2
Evidently, it was already well known that the city council was considering some kind of market
intervention and my discussion group went right to the question as to whether the city should
sponsor (in some undefined manner) a relatively large, lower-price point hotel project as a
strategy for diversifying the Aspen visitor market.
What are other communities doing?
As one of two outside consultants, I was asked to give particular thought to one additional
question:
Are other resorts contemplating (or have they already executed) strategies to stimulate lower
priced hotel development or otherwise affect the mix of lodging products? If so, what policies are
they considering or what has been their success?
Let me address this question before recounting the opinions of my charette partners on other
issues.
In my experience, other resort communities share many of the same concerns about the quality,
mix and appropriateness of their respective bed bases that were expressed in Aspen. Many
resorts, at least up until 2008, commonly debated the merits or shortcomings of various forms
of lodging (hot vs. cold beds, etc.) in the same manner as Aspen has over the years. Some
resorts, mostly higher-end communities with strong market demand and thus the luxury of
choice, have instigated either formal or informal regulatory mechanisms for promoting
traditional hotel units, which are generally perceived as hot beds with significant public benefits.
Most “regulation” towards this objective involves a system of rewards and penalties during the
entitlement process as a means of shaping an applicant’s lodging mix.
For a variety of economic reasons, most recent resort projects (the last decade) include a mix of
lodging types and enter the market near the top of that community’s price range. Most
communities react favorably to high-end hotel or interval ownership proposals, which hold the
promise of wealthy customers and associated retail and restaurant sales.
I can think of one recent exception, which involved a proposed, new Vail mixed-use project
(2011) called “Ever Vail,” which promised a mid-level, rather than a high-end, hotel
development. This was justified by as a form of market diversity and existing overcapacity at the
high-end level. It should be noted that in this instance the developers did not foresee beginning
development in the near future, and that ultimately a final market positioning decision would be
made at some future time.
Vail, Steamboat Springs and Park City, Utah have used urban renewal authorities to “subsidize”
hotel development efforts but I can’t think of an instance where a resort community argued for a
lower-end hotel.
P90
I.
PAGE 3
In short, I don’t think any western resort community offers an example of pursing the market
diversity objective suggested in the Aspen discussions, although many resorts pursue “hot bed”
goals by supporting hotel transient projects over private for sale units. Aspen is one of few
communities so confident of its high-end market that it might prefer to channel development
toward a lower price point. Outside of the resorts, public subsidies to support all forms of hotel
development are common, as hotels are generous producers of tax revenue.
General Sense of the Group
At the Aspen charette, each group’s thoughts and conclusions were tallied and the final 45
minutes of the session were devoted to a full participant discussion of observations and
conclusions. I assume this process has been compiled and will be presented in some manner to
city council. I will offer more general observations.
One disadvantage of the charette process was that each individual participant spent the session
with only a small group of seven or eight other individuals, so that any observations I have only
really reflect this subgroup’s discussions. At the end of the day, we did a general wrap up, but
most of the substantive discussion occurred with just a subset of the whole group. My subset
might not have been an accurate reflection of the entire group.
With that caveat I’d offer the following two broad observations:
1) I would say the central theme of our group’s discussion was skepticism:
There was skepticism about the extent of a bed base imbalance or problem in Aspen.
There was skepticism that the city should, could or would intervene in the market place.
There was deep skepticism that a large (relatively) low-priced hotel could be successful
on an ongoing operating basis, even if development was subsidized. (Actually, there was
skepticism that any new hotel, at any price point, could be successfully developed and
operated in the current market and under current regulations.)
There was skepticism that the lack of low cost rooms was the core problem in attracting
a broader market.
City staff provided survey data on lodging and accommodation trends but these data seemed
to suggest that the city in recent years has actually gained lodging and gained low-cost
lodging capacity. The 2012 MTRIP data indicates a 7.5 percent increase in all pillows and an
a 118 percent increase in Aspen economy lodging (pillows) between 2009 and 20121 . Our
group, which included owners and managers of current small/lower costs lodging projects,
rity or even the existence of a low-cost lodging availability problem. questioned the seve
1 MTIP 2012 Transient Lodging Survey, page 10.
P91
I.
PAGE 4
Additionally, our group debated the merits of MTRIP’s occupancy data (general agreement
that small lodges are underrepresented in sample); longer term lodging trends (most saw a
modest loss of transient bed base, but in keeping with changing market demographics); and
the role of interval ownership and Vacation Rental by Owner (VRBO) in providing varied
and robust lodging offerings (most perceived this as favorable).
There was a general consensus in our group that the existing lower cost lodges were
underperforming the remainder of the Aspen market, in terms of occupancy and
profitability, and that adding to the supply of underperforming properties didn’t seem an
effective strategy. Comments were made to the effect: “We have many low cost lodging
options, but the demand isn’t there. … building more of something that isn’t needed and isn’t
financially feasible, isn’t a solution”.
There was a reasonable consensus that expanding the general visitor market, particularly
the younger Aspen, less affluent, entry level market, was a worthwhile endeavor, but
moderately priced bed base was perceived as only a small part of the resort’s problems in
attracting that market segment.
2) Our group was interested in the Alan Richman Report and in stimulating
se. redevelopment of all residential units as a means of improving the bed ba
There was interest in the findings of the Alan Richman report, which documented the
problems of overlapping regulation throughout the community, and the stifling effect it has
on property renovation and modernization. There was enthusiasm for regulatory reform
that would allow—“enco urage rather than penalize”—residential p roperty owners of all
kinds to renovate aging and deteriorated units. Our group felt strongly that encouraging
remodeling, renovation and updating of all forms of housing—con dos and lodging—would
have a far more beneficial impact, and less public costs, than would promoting a subsidized
hotel. Comments were made to the effect: “We have more of a problem with an aging and
deteriorated bed base, than with inadequate affordable lodging.”
The group’s support for remodeling also underscored additional observations that the
council’s resistance to private condominium development was over stated. Generally, our
group believed that private condominiums—although not hot beds in the same manner as
hotels—were still valuable additi ons to the rental housing stock and that council’s apparent
aversion to private units was misplaced.
Some members of our group had familiarity with an older HVS study of Aspen hotel
development feasibility, which demonstrated how challenging it was (and is) to build and
operate an economically viable hotel of any kind in Aspen. Our group supported the
conclusion that a small hotel project could only be done with a complement of private units
and interval units, and generally did not consider this mix a problem. Questions were raised
to the effect of: “If you can’t build a free market hotel, why would anyone consider an
affordable project? What’s wrong with a mix of lodging units—if it’s the only way to get any
hotel rooms built?”
P92
I.
PAGE 5
Personal Observations
It struck me while participating in this charette that the process suffered from some confusion
over ends and means.
The conversations that I was part of centered around the reasonableness of public intervention
to support a lower-price point hotel project. I think the broader issue of Aspen’s aging
demographic and its implications for the city’s long-term vitality—an issue shared with many
mountain resorts—didn’t get a fa ir hearing, or much direct discussion. I’ve said that our group
was skeptical, perhaps even dismissive, of public subsidy for affordable lodging, but I think they
would agree that Aspen has a problem with narrowing visitor demography and few points of
entry exist to introduce a new generation of Aspen visitors.
I think the city would have benefited from first presenting the demographic issue and then
asking how the community might address this narrowing market problem. In this context, the
city could then test interest in additional affordable lodging, in conjunctions with other
strategies to address this challenge. Because our group seemed to know of the city’s
consideration of a low cost lodging proposal, we were very quick to take up that issue without
much discussion of motivations.
I hope these observations are of value in your discussions. It was a very interesting afternoon
and I appreciate being invited to participate.
Sincerely,
Ford C. Frick
Managing Director
P93
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 1 of 8
EXHIBIT E - NOTES FROM OCTOBER 23, 3012 LODGING CHARRETTE
Participants:
Alan Richman
Warren Klug
Charlie Bantis
John Sarpa
Michael Berhandt
Chuck Frias
Stan Clauson
Helen Klanderud
Bob Schultz
Richard Stetter
Charley Case
Bill Tomcich
Michael Brown
Mitch Haas
Donnie Lee
Debbie Braun
Bob Daniel
David Corbin
Craig Melville
Rick Moore
John Corcoran
Scott Sinta
Chris Striefel
EPS Consulting
BBC Consulting
NEW LODGE DEVELOPMENT
New Lodge Challenges
• Difficulty in getting loan approvals before a development is approved – which is difficult
• Ask for more than code allows – code is restrictive (reaction to what community thinks “we”
should be)
• Cost of land – residential alternative drives cost and needs to be included in cost/funding of
new/redevelopment
• “It’s a lot of money” – drives skepticism/distrust in policy makers toward proposals
• Size/Density sensitivities
• How to pick a few spots that allow for more size/density that allows the math to work.
• Seasonality limits occupancy % (about 55%) and drives up Average Daily Rates (ADR)
• How many big spec homes get built before it’s not what we want around us?
• How to be economically viable?
• What kind of lodging do we want? Do we want new lodging?
• We have a variety of price point/product that serves a wide market
• Cost and availability of land
• Capital is dried up…reputation in Aspen for difficulty in getting projects approved. Folks aren’t
coming here to do projects.
• How to convince policy makers?
o Independent analysts
o “Isn’t it like it was when I got here?” – that is not what you’re telling me now??
o IRR required seems high to policy makers
o Technical understanding goes against myth people create for themselves about the
community
• Product is aging – other resorts are accommodating upgrades, not us so much
• Our history is that policy makers do not hold/maintain long-term views that investment
decision-makers can rely on
• Footprint/cost/financing/length of review & approval process
• Attitude that condos are bad
• Funding the model that woks – condo used by owner and still rented as a hot-bed
• Condo product out-dated for market
• GEMS – opposed to new lodging
P94
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 2 of 8
• Push for new/moderate lodging has an impact on existing lodges
• If existing moderate lodges have a problem of occupancy, why would we create new?
• Council/staff that understands economics of buy/build/operate – occupancy at 55%...how can
you entice development. What is possible in relation to other city goals (housing, etc)?
• REGULATIONS = TIME that gets in the way…takes too much time, nitpicking, layers of
hoops…rules change all the time…too much cycle-time to get through approvals…don’t see the
purpose/goal of it…makes moderate lodging impossible and luxury difficult
• Action-reaction cycles to growth…investment decision-making is hard to accommodate those
policy swings
• You can’t just be a lodge developer in the City today – you have to be a condo/AH/etc developer
to make economics work/comply with regulations.
• Multi-Family Replacement makes condo re-development to lodging a problem
• Lodge investors can see greater opportunity in other resorts and avoid the “hassle” of Aspen
approval process
• Condo upgrades for older stock – how to make this happen? Role of city?
• Overnight rental market – what does city’s regulatory process show?
• Competitive impact on existing owners/operators – e.g. Zupancis @ substandard land cost
• Is there really a need for new units?
• Only thing doable includes residential/fractional
• Cost of development approval is high and creates impediment to others to try it too…
• Community’s appetite for development suggests a “small bite” approach to approvals
• Mechanism of HOAs make some redevelopment difficult…Multi-Family Replacement impact
New Lodge Opportunities
• 2006 HVS Study – “what is takes” math…$40 per square foot or less
• If a land owner is willing to take that risk, the City should do all it can to help them do it.
• If you want lower priced rooms, you need more of them (>100)…and it can’t be just hotel rooms
– need residential to bring land cost to $0 to $40 per square foot
o Revenue sharing with buyers?
o Price point <$1mill – these buyers might be interested
• City needs to be more active in lodging industry
o Regulations that work for industry
o Decide if you want more/improved and what kind.
• Aren’t we talking about only 2-4 opportunities for development? Isn’t mountainside
appropriate? Figure out how to allow that to proceed.
• More middle – upper lodging. Then City help that get developed.
• How can SAS help drive business to “Gems”…coming
• Proceed at Lift 1A sites
• TIF made available – City’s portion not significant enough
• Incentives – not just freedom from disincentives
• Relief from designation to help redo existing lodging
• Use of Zupancis property
o Sold – not at market prices
o RFP for development
• Instead of subsidizing new, help to increase occupancy of existing
o Marketing budgets are a challenge
P95
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 3 of 8
o Technology is a challenge
o Difficulty obtaining access to capital
o Historic register properties – how should the city deal with/help these properties
• How to make it financially feasible to let existing properties stay relevant at their existing
properties stay relevant at their existing price points…only then will the market look at investing
in new properties
• 2006 HVS Study – “this is what it takes.” Is the City prepared to do it?...was the answer that
people wanted to hear?
• Build “smaller” condos that can function as hot beds (1,000 – 1,200 square feet)…is that the size
point at market?
• Create a model that works economically – how to get policy makers to buy into math? Instead
of “throwing it out there and getting beat down” to what won’t work.
• Incentives to condo buyers to help them decide to put unit into rental pool?
o High association dues, lodging tax break, property tax break – competitive issues
o City buys back value for deed restriction that puts unit into pool.
• Lift 1 area – make it happen there if someone applies for it…will help other lodges in the area
• Would City incentivize SkiCo to put better lift access in at 1A – on par with desire to incentivize
lodging?
• City incentivize other development around proposed new lodging?
• If city wants lodging, approve what is proposed
• Where are land opportunities for moderate lodging
• MELVILLE/SKY properties for redevelopment
New Lodge City Role
• Regulations that provide for 5-% of units to be put into rental pool
• The “go-go days” are gone. The City needs to seek out areas to help – investments are going
elsewhere…need to determine to act in areas it thinks need help
• Step back from some limits on height and mass that is necessary to let investment happen
• Let re-investment happen
• Zupancis is not the best location for lodging
• CONVICTION – not “sound bites”…if you really want lodging, create codes that can make lodging
work
• Focus less on affordable housing – if you want lodging, focus on it
• Creation of footprint
• Don’t let today’s “feelings” make decisions – put it into code and keep to it.
• Civil discourse
• Use City $ to provide loans to existing moderate – low cost operators
• DON’T subsidize a competitor
EXISTING LODGE REDEVELOPMENT/REINVESTMENT
Existing Lodge Challenges
• Lower priced lodging has lower demand
• Expansion-costs don’t address ROI
• Challenge of keeping small lodged in business
• Relying only on exiting bed base => lower competitive advantage
P96
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 4 of 8
• No longer unique. There’s greater competition.
• Small scale does not equal substantial redevelopment
• Repeat shut downs prohibit new applications
• Lower-end culture not here – mythical
• Many people don’t want redevelopment
• Bringing entire property into conformance with modern zoning
• Time, Money, and Risk of reviews
• Costs of mitigation
• Owners not wanting to risk equity
• Costs of new product too expensive even without city costs
• Myth of lodging inventory loss
• Challenge of greater competition within the local economy and other lodges
• Condo Challenge – fixed up condo gets removed from the short term inventory
• Smaller lodges not involved with trade programs, points, etc
• Compliance with ADA
• Challenge of internal (to City) competition between existing properties
• Greater price competition with similar resorts
• Other resorts with younger market. High competition. Our product is not evolving.
• We are perceived as “expensive.” Challenge of myth.
• Small lodges are not in MTRiP’s numbers
• Demand for budget lodging is lower. Lower occupancy.
• Smaller lodges have less rooms to spread redevelopment costs.
• Total costs for fees exactions taps costs overwhelming.
• Inconsistent “activities” for small lodges
• Seasonality of demand (3 nights Oct - Dec 2012 over 30% occupancy)
• Challenges of “simple” projects, historic regulations, permitting
• Multi-family replacement
• Non-conforming regulations
• ADA triggers
• Lack of amenity package on older properties
• Development standards/restrictions. Collision of public policy and expectations (parking,
density, FAR)
• Mitigation
• Difficulty of meeting ROI expectations
• Properties not getting larger
• Nostalgia factor
• Financing
• Tough for the “little” guy
• Historic Designation
• “Fear” of city
Existing Lodge Opportunities
• Lower taxes for existing lodges
• 4 star property and keeping existing lodges here
• Leveraging the Quality of the Aspen Experience. Occupancy, etc
• City work with tax structure between condos (residential) vs. Lodge (commercial) state issue
P97
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 5 of 8
• Allowing greater density = free land
• Flexibility in zoning & Process. Height and Density
• Deciding how big as a community we want to be. Where our balance is.
• Becoming more comfortable with 4 star properties and family groups
• Example – City’s repeal of outdoor seating limits. Showed flexibility, got out of the way.
• Lower or minimize risk for proposals
• Strongest market is 4 star and families. They are now going to condos.
• Growing our seasons (color season)
• Portfolio of attractions: downtown; activities; retail.
• Address barriers to entry
• Not “stuck” in aging demographic
• Increased marketing
• Allowing small lodges to redevelop while staying moderate
• Conference facility to replace Given
• Incentives for redevelopment of small lodges and for simple projects
• Opportunity to think beyond Aspen City Limits. BRT and valley wide opportunities
• Higher occupancy in existing lodges & better marketing, relook at existing inventory
• Smaller lodge organization
• Opportunity for another limelight
• Opportunity to “feel” of new supply without diluting existing demand
Existing Lodge Role for City
• Identifying areas that could handle more density/higher buildings. City being more flexible in
these areas, and creating more certainty.
• Identify certain segments of market where City could provide direct benefit or assistance for
redevelopment
• Determine if there is an underserved market – focus on what our problem is and is that a city
issue of a market issue.
• Reducing costs for redevelopment
• Reducing costs of capital/equity
• Fees, taxes, land, exactions
• Continue with residential component in redevelopment
• Make Lift 1A area happen. It’s a second portal
• Recognize the demographics of our customer
• Relaxed mitigation to allow properties to be economically feasible
• Recognize need to improve quality of existing beds
• Investment in “points of entry” to create demand for lodging and encouraging return
clientele…bike race, music festival, special events
• Simpler process, less expense
• Incentives focused on full redevelopment
• Mind set – focusing on what we want, not prohibiting what we don’t want
• Times period of reduced taxes. Related to $ invested
• Reducing costs of $
• “getting out of the way” by reducing process burden
• Relook at height and floor area. Be less phobic about mass.
• Code equity between lodging condos
P98
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 6 of 8
• Ideal room 450 square feet; fridge. Size is biggest issue
• Better definition on what else we want. Providing clarity, easier path, sustained regulations not
always changing
Marketing efforts and recognition and important of partnerships
• Seeing city as partner (not foe)
• Better Air service coordination with City. Indirect role to support redevelopment . No direct
person in community
• Coordination with transit to Denver. BRT to Glenwood, what to Denver?
• More events. Bike race, etc. Spread seasons
• Art Museum conference space, public amenity
• Redevelopment district/renewal district. Requirements of state.
• Focusing on City resources on small lodge
o refurbishment, remodels, investments
o capital, development regs, simple process
o creating template for redevelopment
• 3rd party economic advisor who understands $ dynamic. Resource 1st to existing lodges
• Product defined by user (not city). What does the customer want?
• Reducing barriers. Reducing process.
• Focusing on small lodges first
• Incentive “season” to encourage redevelopment. Economies of scale. Could focus on type.
• Additional FAR Amenities/front desk/services
• Focus on area of town to focus redevelopment efforts. Program being scalable/purposeful.
Create opportunity or venue to let specific set of properties redevelop.
CONDOMINIUMS
Condominium Challenges
• Shouldn’t be as difficult to condominiumize a loge. They work, and are difficult to convert.
• Lodges want affordable housing – a way to control some housing for employees
• It is cost prohibitive to develop economy lodges
• It doesn’t make financial sense to redevelop economy lodges
• Make it easier for HOAs
• Some HOA declarations prohibit short term rentals
• The answer is NOT deed restrictions
• Lodge incentives are offset by disincentives
• Upgrades are done piecemeal and are very expensive need to make these more cost
effective. Changing the uncertainty in reviews would help
• All affordable housing requirements are too expensive.
• Non-conformities make it really difficult to do anything to upgrade, improve, and expand units
• Code is unclear and is a real struggle for individual owners and developers alike.
• Costs to upgrade are cost prohibitive
• Assembling owners is difficult
• The mix should be dictated by the market
• Multi-family replacement requirements are onerous
• There is a strong bias against condos – need to equalize
P99
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 7 of 8
• Removing units from the rental pool is less related to the amount invested in the unit than an
owners general goal for the unit.
• Condo owners invest because they want the unit, not because they want to rent it.
• Occupancy may be lower than lodges
• There is ebb and flow in demand there’s never one solution that works
• There’s a general fear of new, rich condo owners.
• Older product cannot compete with newer lodges
• It is cumbersome to renovate a condo (bringing it up to code, navigating the system, city fees,
etc…there’s no help from the city)
• Differences in each owner’s financial ability to upgrade
• There’s a disincentive to invest in your unit. The bad units bring the rest down.
• Non conformities are a serious issue. For example, the Alps is 83 units. Today with zoning they
could only develop 31 units.
• Concerns that small lodges are converting to condos.
• We’ll keep losing inventory if we don’t do something
• Existing condos are stuck. There’s nowhere to grow.
• Condo hotels are a risky development investment because it’s another layer of complexity.
There are also operational challenges
• Challenge in updating
• Age is the primary issue. We need to meet guests expectations, and we don’t
• People are emotionally tied to their unit. People don’t want to lose their unit for a period of
time, which make upgrades difficult if not impossible.
• There has been a steady reduction in rentals because owners want to spend more time here.
• Higher value rentals don’t want to rent.
• Fractional owners are now like the condo owners in the 1970s fewer weeks at a lower price.
• People are still intimidated by Aspen.
Condominium Opportunities
• Economy does not equal cheap here. Our visitors are different than the I-70 corridor visitors
• There’s a reluctance to accept what we are. People looking for cheap accommodations don’t
come here. We are not a moderate priced town.
• Condominiums fill the moderate market here.
• When we’re full it’s because of the relative value – it’s not price specific.
• Creating “lodge infrastructure” within condos probably increases the likelihood of rentals (front
desk, conference facilities, etc)
• Don’t restrict how an owner can use their unit. These owners are huge supporters in of the
community, and many do rent while they are not there.
• Condominiums provide an important accommodation option
• Determine if there is demand for a certain type or level of condo
• Creation of brand standards at property levels. Units in the same complex can have very
different levels of quality and amenities – standardization would help
• There’s no consistency in product and no rating system – may be an opportunity.
• We need to address obsolete buildings and units
• City could identify potential locations for condos. And then be flexible on mitigation, etc to
encourage them.
• Find out what other communities are doing.
P100
I.
Exhibit E, Notes from 10.23.2012 Lodging Charrette
Page 8 of 8
• 60% of inventory is in 2-bedroom units…we should look to encourage 3 & 4 bedroom units.
• Community-wide rating program
• There are a lot of long-time owners.
Condominium Role for City
• The City Keeps asking the community what lodges and price points are appropriate we should
be asking the guest. Who is our customer? We need to ask them what they want.
• Other communities are investing in condos. We need to be competitive with those resorts.
• Encourage modernization and reinvestment
• There should be some legal structure that restricts use, or allows for the hybrid lodge/free-
market use.
• Properties don’t fit into just lodge or just multi-family residential make room for and define
this hybrid.
• Push incentives to what we want.
• Incentivize renting your unit – subsidize HOA dues, etc. But, this is not really economic – it’s like
an art.
• Property tax incentives, parking, etc to incentivize individual owners to rent their unit
• Give an FAR or density bonus to put in a front desk to help it operate like a lodge
• Get rid of the inherent multi-family dis-incentives in the lodge zones.
• Eliminate the multi-family replacement requirements.
• Remove regulatory barriers
• Create incentives: fee waiver, etc in exchange for renting units for a certain period of time
• City should incentivize both conods and lodges
• What does the data say? Where do we compare to other resorts?
• Prepare for improvements to existing condos
• The city needs to help facilitate re-investment
• Make it easier to and even encourage upgrade and expand units
• Add more height and density allowances
• Lower regulations incentivize improvements
• Encourage on-site amenities
• Allow more residential (condo) development with hotel amenities
• Encourage lock offs in condos and more units…could be a way to enable 3-4 bedroom rentals in
our 2-bedroom heavy rental pool.
• Give more density…upzone.
• Encourage a joint hotel-condo project.
• City policing rentals would be difficult
• What happens as our condo stock becomes old, tired, and dated? Guests don’t want to stay
there, and rentals decline…could be an opportunity for improvements.
P101
I.
Page 1 of 2
MEMORANDUM
TO: Mayor and City Council
FROM: Jessica Garrow, Long Range Planner
MEETING DATE: Tuesday, December 11, 5:00pm Council Chambers
RE: Employee Generation Study Update
REQUEST OF COUNCIL: No action is required. This is a check in meeting to provide City
council with an update on the Employee Generation Study. The project is on scheduled, and will
be completed at the beginning of the new year.
BACKGROUND: Earlier this year, City Council identified a number of AACP implementation
priorities. One of the top priorities was updating the ten-year old study of employee generation
figures. The last study was completed in 2002, and this update ensures the employee generation
numbers in the land use code account for the changes and fluctuations in the market since then.
The City contracted with Economic Planning Systems (EPS) out of Denver to conduct the work.
Attached is the draft report.
EPS and city staff surveyed 110 managers and owners of local businesses and lodges during late
September. The businesses and lodges surveyed represent a statistically valid sample of business
from the following categories: Hotel, Business/Professional Office, Non-profit Office, Real
Estate, Restaurant/Bar, Retail, and Services.
Using that information, as well as business license records and employment data from the State,
EPS was able to provide updated employee generation figures. Based on the study, there have
been minor fluctuations in all land uses, which is to be expected over a 10 year period. The table
below outlines those changes:
P102
II.
Page 2 of 2
It is important to note that the land use code currently aggregates all similar businesses into
general land use categories for purposes of mitigation and impacts fees – for instance, retail,
restaurant, and galleries are all considered “commercial uses,” and a small lodge and a large
lodge are both considered “lodge uses.” The generation rates are then based on zone district,
with different generation rates in the downtown, SCI zone, and on Main Street (Mixed Use
Zone). This standardization ensures that all businesses within specific geographic areas are
treated fairly, and that the city is not in a position to require affordable housing mitigation every
time a tenant changes in a particular space.
The study includes some information on comparable communities. This information does not
impact Aspen’s numbers, but is intended to provide a general idea of where Aspen’s employee
generation numbers fit amongst other resorts. EPS as also included an analysis of what other
communities require in terms of mitigation rates.
NEXT STEPS: Based on the survey data, staff is interested in surveying an additional group of
lodges to ensure the mitigation levels are accurate. The hotels surveyed are all larger, and may
not reflect employment patterns in the smaller lodges. EPS also recommends surveying some
additional service uses. This can be done over the next few weeks and the study updated
accordingly.
The Land Use Code will need to be updated to reflect the revised employee generation numbers.
Staff plans on bringing that code amendment forward to City Council in January
ATTACHMENTS:
EXHIBIT A: Draft Employee Generation Study
P103
II.
D RAFT M EMORANDUM
To: Jessica Garrow, City of Aspen Long Range Planner
From: David Schwartz and Andy Knudtsen,
Economic & Planning Systems
Subject: Employment Generation Rate Updates
Date: December 7, 2012
Background
The City of Aspen contracted with Economic & Planning Systems (EPS)
to update its employee generation rates from 2002 for the Growth
Management Quota System (GMQS). Given the economic volatility of
the last decade, employment levels have fluctuated and certain
conditions, such as the housing and financial crisis, have contributed to
shifts in employment in the City. The timing of this project allows for a
simultaneous update of employment generation rates and also an
examination of the underlying trends. In this environment, providing
and implementing affordable workforce housing policy solutions continue
to be a critical component of the City of Aspen’s long-range and land use
planning efforts.
Methodology
Since this analysis will be used to update development code standards in
the GMQS with the current employee generation rates based on a
representative survey of businesses, EPS recognizes the importance of
surveying a sample of businesses not only representative of the
commercial uses most likely to be included in redevelopment proposals
in the downtown area, but also representative of the distribution of
employment by industry in the City.
P104
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 2
123053-DR-120712
Accordingly, EPS and City of Aspen staff surveyed 111 businesses in September 2012. The
businesses included in this effort reflect the distribution shown in the City’s business license
records, as well as the distribution of establishments in the Colorado Department of Labor and
Employment (see Table 1). A copy of the survey instrument is included in the Appendix of this
memo, as well as other supporting materials.
Table 1 compares data from the Colorado Department of Labor & Employment (CDLE) Quarterly
Census of Employment and Wages (QCEW) with data from the survey sample. Each contains the
count of establishments and jobs. In 2011, the Department of Labor reported 10,261 wage and
salary jobs in the City of Aspen. The 2012 survey results account for approximately 13 percent
(or 1,286) of the city’s jobs.
Table 1
Survey Sample Characteristics
City of Aspen Employee Generation Study
Est.Jobs
See Note [2]
Business Type
Hotel282%1,18712%98%37829%32%32%
Office - Business / Professional35630%1,90519%1917%18715%5%10%
Office - Nonprofit / Civic292%1,46314%65%453%21%3%
Real Estate22319%8488%1211%897%5%10%
Restaurant / Bar1018%1,75217%1614%33726%16%19%
Retail17114%9379%3632%14711%21%16%
Services 290 24%2,169 21%13 12%103 8%4%5%
Total1,198100%10,261100%111100%1,286100%9%13%
Note [2]: These job counts have been seasonally adjusted and are reported as totals of PT and FT jobs.
Source: Colorado Department of Labor & Employment; Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Survey Design\[123053-Survey-120512.xlsm]t1 - Survey Stats
as % of CDLESurvey (2012)CDLE (2011)
Note [1]: These are seasonally-adjusted Wage & Salary jobs as reported by the Bureau of Labor Statistics; EPS has categorized them by the City's land use groups.
EstablishmentsJobsEstablishmentsJobs
See Note [1]
The consultant team and City staff interviewed the managers or owners of local businesses and
organizations. Most interviews were conducted on-site while some were completed through
follow-up telephone calls. The survey included 12 questions and requested information about
the number of hours worked by each employee. The data provided by employers represents
both job totals as well as full-time equivalency (FTEs). Business owners were asked about
summer and winter staffing, as well as several other questions concerning issues such as
housing availability affecting their ability to hire qualified staff, which is presented at the end of
this memorandum.
As shown in Figure 1, nearly half of all responding businesses have been in operation in Aspen
for more than 20 years, making the survey sample representative of established business
operations. Approximately 20 percent of businesses have operated in Aspen for 10 to 20 years,
and 35 percent of businesses surveyed have operating in the City for fewer than 10 years.
P105
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 3
123053-DR-120712
Figure 1
Survey Respondents, Years in Aspen
Employee Generation Study
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Less than 2 years2 to 5 years5 to 10 years10 to 20 yearsMore than 20 years
Source: Economic & Planning Systems
Employee Generation
The following illustrates the location of businesses surveyed. EPS and city staff targeted specific
locations in the City to achieve desired response rates by business type and zone district.
Figure 2
Businesses Surveyed by Zone District
Employee Generation Study
P106
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 4
123053-DR-120712
As mentioned previously, the data collected are representative of both jobs and FTEs. The
following figure illustrates the FTE generation rates of the 111 businesses surveyed. The x-axis
reflects a point in the chart for each business and has been grouped by business type. While a
vast majority of businesses in the City generate fewer than five FTEs per 1,000 square feet, a
few business types generate considerably more, depending on the intensity of their use. Hotels
and lodges, not shown (as they are measured in FTEs per room), range from approximately 0.1
employees per room to 2.0 employees per room, depending on its service level.
Figure 3
Employee Generation Rates by Land Use
Employee Generation Study
0.00
5.00
10.00
15.00
20.00
25.00
020406080100120
Fu
l
l
t
i
m
e
Eq
u
i
v
a
l
e
n
t
s
pe
r
1,
0
0
0
sq
f
t
Businesses Surveyed
Office ‐ Business / Professional
Office ‐ Nonprofit / Civic
Real Estate
Restaurant / Bar
Retail
Services
Source: Economic & Planning Systems
Rates by Business Type
Businesses in Aspen generate an average of 4.5 full-time equivalents (FTEs) per one thousand
square feet, as shown in Table 2. Note this overall average excludes hotel and lodge generation
rates, which use the metric per room. Among the seven business types, generation rates range
from 2.5 FTEs (retail) to 9.9 FTEs (restaurant / bar) per 1,000 square feet. The generation rate
for hotel and lodge uses is 0.5 FTEs per room.
These rates represent an increase over the generation rates estimated in 2002 for the City. The
overall rate has increased from 3.9 FTEs per 1,000 square feet to 4.5 FTEs. It seems more
employees are being utilized in the same amount of space than a decade ago. Some very slight
adjustments up and down occurred, such as hotel and lodge rates, retail, as well as nonprofit
and civic uses. Some changes were more pronounced, including restaurants and bars in
particular, followed by services, real estate, and business professional office uses.
The smallest change occurred in nonprofit and civic uses, retail, and hotel uses did not change.
Office business professional and real estate uses declined, but restaurant and services increased.
P107
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 5
123053-DR-120712
Table 2
Employee Generation Rates
Employee Generation Study
2002 n =2012 n =
Business Type
Office - Business / Professional4.4 per 1,000 sqft 12 3.6 per 1,000 sqft 19
Office - Nonprofit / Civic3.7 per 1,000 sqft 6 3.9 per 1,000 sqft 6
Real Estate6.0 per 1,000 sqft 2 4.1 per 1,000 sqft 12
Restaurant / Bar7.3 per 1,000 sqft 13 9.9 per 1,000 sqft 16
Retail2.6 per 1,000 sqft 34 2.5 per 1,000 sqft 36
Services3.3 per 1,000 sqft 10 4.8 per 1,000 sqft 13
Hotel 0.5 per room 3 0.5 per room 9
Overall [1]3.9 per 1,000 sqft 80 4.5 per 1,000 sqft 111
Note [1]: Excludes hotel / lodge.
Source: Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Survey Design\[123053-Survey-120512.xlsm]t2 - Rates by Type
Variation in Employment
Two factors contribute to variation in employee generation rates – seasonality and the level on
which the business is located. Employers were asked about the seasonal fluctuation in
employment of part-time and full-time employees during high and low seasons. Figure 4
illustrates this seasonality by business type. As with most resort-oriented economies,
employment levels in the hospitality industry (hotels and lodges, as well as retailers, restaurants
and bars) fluctuates greatly from high to low season to season.
Figure 4
Seasonal Variation in Rates
Employee Generation Study
0
50
100
150
200
250
300
350
400
450
500
HotelRetailRestaurant /
Bar
Office ‐
Nonprofit /
Civic
Office ‐
Business /
Professional
Real EstateServices
Fu
l
l
t
i
m
e
Eq
u
i
v
a
l
e
n
t
s
High Season
Low Season
Source: Economic & Planning Systems
P108
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 6
123053-DR-120712
Figure 5 illustrates the range of generation rates by floor level. Overall, generation rates range
between 4 and nearly 8 FTEs per 1,000 square feet, depending on level. For business
professional and services, upper levels generate higher intensity uses, whereas basement levels
had lower uses and the rates of those on street levels (including basement and / or upper levels)
fell toward the lower end of the spectrum. For restaurants, rates were higher for businesses
sampled with an upper level, but the majority of restaurant rates occurred below 10 FTEs per
1,000 square feet, as indicated previously in Table 2.
Figure 5
Generation Rates by Floor Level
Employee Generation Study
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Office ‐ Business
/ Professional
Office ‐
Nonprofit / Civic
Real EstateRestaurant / BarRetailServicesTotal
Jo
b
s
pe
r
1,
0
0
0
sq
f
t
Variation in Employee Generation Rates
Basement
Street (incl
Basement and / or
Upper)
Upper Levels
Source: Economic & Planning Systems
Rates by Zone District
Updated rates by zone district for 2012 are shown below contrasted to the existing 2002 rates.
Overall, rates have increased slightly. In the City’s GMQS, four zone districts are aggregated in
a general commercial district (commercial, commercial core, neighborhood commercial, and
commercial lodge), which generate an average of 4.1 FTEs per 1,000 square feet. Using 2012
employment information, the aggregation of these same zone district businesses yields an
average of 4.5 FTEs per 1,000 square feet.
Two rates have changed slightly, including the hotel and lodge rate, as well as the Mixed-Use
zone rate. The hotel and lodge rate has remained constant at 0.5 FTEs per room, and the rate
for mixed-use has decreased to 3.6 FTEs. The most substantial increases are in public and SCI
(service, commercial, industrial) districts, which have increased by 1.2 FTEs and 1.7 FTEs,
respectively.
P109
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 7
123053-DR-120712
Table 3
Generation Rates by Zone District
City of Aspen Employee Generation Study
20022012Change
Zone District
Commercialn/a4.5 per 1,000 sqftn/a
Commercial Coren/a4.8 per 1,000 sqftn/a
Neighborhood Commercialn/a4.1 per 1,000 sqftn/a
Commercial Lodgen/a 3.2 per 1,000 sqft n/a
Zone Average4.1 per 1,000 sqft4.6 per 1,000 sqft0.5 per 1,000 sqft
Hotel / Lodge0.5 per room0.5 per room0.0 per room
Mixed-Use3.7 per 1,000 sqft3.6 per 1,000 sqft-0.1 per 1,000 sqft
Public3.9 per 1,000 sqft5.1 per 1,000 sqft1.2 per 1,000 sqft
Service / Commercial / Industrial3.5 per 1,000 sqft5.2 per 1,000 sqft1.7 per 1,000 sqft
Source: Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Survey Design\[123053-Survey-120512.xlsm]t3 - Rates by Zone
Comparable Community Implementation Issues
This section provides a general overview of several comparable mountain communities’
commercial linkage implementation programs. Specifically, EPS tried to more clearly understand
if these programs supply employee housing units required by the mitigation programs on-site,
off-site, or whether developers often pay fees-in-lieu. In addition, of the off-site units being
built, are they concentrated in just a few areas of the community or are they relatively
dispersed? How does the community react to this? Finally, we asked whether each community
has plans to significantly revise its commercial linkage program in the near future.
Telluride
The Town of Telluride is relatively successful in having employee housing units generated by its
commercial linkage program built on-site. Several factors contribute to this success, including a
code that makes it much more complicated to build such units off-site.
The Town’s Land Use
Code requires more
burdensome
guidelines for building
employee units off-
site, and in addition,
developers often
encounter unfriendly
Home Owners
Associations which
must approve such units within their developments. Town zoning always allows for mixed use
development; while the first 35 vertical feet has to be pure commercial use in certain zones,
upper floors can always be used for residential, allowing developers to more easily include the
required employee units on-site. In addition, commercial developers can only “buy out” of 10
percent of their total mitigation requirements or when the mitigation calls for less than the
Employee Generation Rate
Business Type
Commercial/Public facility Uses4.5 employees per 1,000 s.f. of Net Floor Area
Hotels and Accomodations Uses0.33 employees per unit
Multi-family Dwelling and Mixed Use Residential0.33 employees per dwelling unit
One and Two-family Dwellings0.07(e)(0.000322 X Gross SQFT)
Source: Town of Telluride; Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Comp programs research\[Employee Generation Rate Implementation Programs.xlsx]t2 - Telluride
P110
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 8
123053-DR-120712
required minimum 500 square feet per employee unit, further encouraging the building of on-site
units.
Off-site units built or provided by developers tend to be scattered throughout the town, while the
units built using the town’s housing fund are more concentrated in a few developments, mostly
toward the western end of town. In general the location and level of concentration of affordable
units are not viewed as a problem by the community.
In general, Telluride feels its commercial linkage program is working well and meeting its goals,
although there is a slight imbalance between affordable units for sale (which are often not being
purchased) and available affordable units for rent (which are very scarce). There are no plans to
significantly modify the program in the near future. The Town of Telluride currently mitigates
commercial and hotel uses consistently at 40 percent of the employee generation rate.
San Miguel County
The commercial linkage program in
San Miguel County was last updated
in 2012, and requires that
15 percent mitigation of the
employee generation across all use
categories. In spite of differentiable
use categories, San Miguel County’s
generation rates are consistent
across uses.
The County also has a separate employee impact fee for residential construction jobs (based on
floor area) as well as for construction employment. Information is still being collected on this
program and may be supplemented for a final memorandum.
Vail
The Town of Vail’s employee housing mitigation program was established in 2007 and requires
that at least 50 percent of employee housing mitigation be provided on-site unless the developer
provides sufficient evidence that such units are not possible. The regulations governing such
exemptions were modified somewhat in 2008 in response to the economic downturn which has
limited commercial development in Vail over the past five years. To the extent that development
has occurred, however, this basic requirement has been very successful, although there is a
clear distinction between the types of development where on-site mitigation happens. Hotels
provide almost all of their required mitigation on-site, while commercial/retail projects generally
provide almost all required units off-site.
Because the Town of Vail is almost completely built out, there are nearly no available sites for
building off-site units. Instead, developers purchase individual condominiums which are then
designated as deed-restricted employee housing. These tend to be concentrated in several
condominium associations in West Vail. This concentration is generally not viewed as a problem
by the community, as many of these buildings have long been employee housing. Thus, new
affordable units represent a continuation of current use rather than a noticeable change in use.
Employee Generation Rate
Business Type
Office3 per 1,000 square feet
Restaurant3 per 1,000 square feet
Retail3 per 1,000 square feet
Hotel1.5 per unit
Source: San Miguel County; Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Comp programs research\[Employee Generation Rate Implementation Prog
P111
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 9
123053-DR-120712
In general, Vail’s
commercial linkage
and employee
housing mitigation
programs are not
likely to change
significantly in the
near future. Two
issues that might
soon be addressed
relate to balancing
business needs
(lowering
development costs)
against community needs (providing ample affordable housing), and the concern that the on-site
requirement provides only the smallest type of housing units (often dormitory in nature), and
fails to create more family-oriented units in the valley. The Town of Vail currently requires a
consistent mitigation rate of 20 percent of employees generated by all types of uses.
Steamboat Springs
The Town of Steamboat Springs is illustrative of the challenges faced by mountain communities
when balancing the needs of affordable housing options with economic vitality. The town
implemented its first commercial linkage program in the mid-2000s, only to remove the program
in the face of the economic crisis in 2008. The town council and planning leadership decided that
the additional burdens such a program placed on developers and businesses impeded growth and
negatively impacted the business climate. Due to the limited duration of the program’s
existence, town planners say it is difficult to ascertain whether the program would have
successfully generated the levels of affordable housing needed in Steamboat. Given the still
struggling economy and changes in the town council, there are no immediate plans to revive the
program.
Employee Generation
Rate
Business Type
Accomodation unit/limited service lodge unit0.7 employee per unit
Business office and professional office (excluding real estate office)3.2 employees
Conference facility0.8 employee
Eating and Drinking establishment6.75 employees
Health Club 0.96 employee
Real estate office5.1 employees
Retail store/personal service/repair shop2.4 employees
Spa 2.1 employees
Source: Town of Vail; Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Comp programs research\[Employee Generation Rate Implementation Programs.xlsx]t1 - Vail
P112
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 10
123053-DR-120712
Trends & Issues
This section provides additional contextual information about the City of Aspen’s employment
trends, as well as issues cited by businesses surveyed.
Employment Trends
The following chart illustrates the trend in wage and salary jobs for the City as well as number of
establishments. Between 2002 and 2007, the increase in jobs outpaced the growth in
establishments, implying more intense use of space (i.e. possibly higher employee generation
rates than represented by the 2002 or 2012 survey data). The growth in employment was
largely attributable to the increase of jobs in the office professional businesses, as shown in the
Appendix Figure A1). From the onset of the recession in 2007, employment fell more
considerably than the number of establishments, bringing the two metrics in line proportionally,
implying a rebalance of employment intensity per establishment. (It should be noted here that
CDLE does not report on floor area of establishment.)
Figure 6
Wage & Salary Job Trends
Employee Generation Study
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
20012002200320042005200620072008200920102011
EstablishmentsJobs
Jobs
Establishments
Source: CDLE, Quarterly Censusof Employment & Wages; Economic & Planning Systems
7%over 2001
Projection of Employment
Employers were asked whether they planned to increase or decrease their workforce for next
year or hold it constant. The net effect of those changes is illustrated in Figure 7. Hotels and
services indicated their intent to increase their workforces by approximately 16 percent in the
following year, followed by real estate and business professional office users at approximately 8
percent. Nonprofits indicated they would increase jobs by approximately 2 percent, but retail
and restaurants planned for no net change.
It should be noted that not all businesses gave a response to these questions (this represents 83
of 111 businesses). Furthermore, it was anticipated that retailers and restaurant owners would
not forecast hiring more staff over the next year, as these industries are highly dependent on the
growth and demand from other sectors of the economy.
P113
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 11
123053-DR-120712
Figure 1
Wage & Salary Job Trends
Employee Generation Study
16.4%
8.3%
2.4%
8.6%
0.0%
0.0%
15.6%
0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%
Projected Change in Employment Next Year (2013)
Services
Retail
Restaurant / Bar
Real Estate
Office ‐ Nonprofit / Civic
Office ‐ Business / Professional
Hotel
Source: Economic & Planning Systems
Employers were also asked whether they considered the availability of housing to be an
impediment to hiring qualified staff. Interestingly, in 2002 more than half of businesses (54
percent) indicated that it was a major concern versus just 32 percent. Still, 22 percent viewed it
then and now as a minor concern, but nearly half do not see it now as an issue today.
Table 4
Impact of Housing on Ability to Hire
City of Aspen Employee Generation Study
Major
Concern
Minor
ConcernNot an Issuen =
Business Type
Hotel80%0%20%5
Office - Business / Professional31%23%46%13
Office - Nonprofit / Civic25%0%75%4
Real Estate25%38%38%8
Restaurant / Bar33%25%42%12
Retail23%14%64%22
Services 33%44%22%9
Total32%22%47%73
in 200254%22%23%81
Source: Economic & Planning Systems
H:\123053-Aspen Employee Generation Study\Data\Survey Design\[123053-Survey-120512.xlsm]t4 - Housing Avail
Housing Availability as Problem
P114
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 12
123053-DR-120712
Implementation
Based on these considerations, it is recommended that the City of Aspen to continue with the
current system of requiring mitigation at time of development approval, using the updated
generation rate data. This recommendation is based on the following considerations.
Use vs. Zone District: EPS recommends that the City continue to estimate employee
generation on the basis of zone district as opposed to business type. Changing the
administration of the program to mitigate on the basis of business type would require a
complex administrative effort.
Mitigation Rate: It is recommended that the City of Aspen maintain a consistent mitigation
requirement across all zone districts. Comparable communities, such as San Miguel County,
the Town of Telluride, and the Town of Vail also maintain consistent mitigation rates across
various commercial uses. Based on the evolution of local business activity over the past
decade, average employee generation rates have increased by 12 percent. Accordingly, it is
recommended that the City keep its standard current with business practices and increase its
rates to reflect changes over the past decade.
P115
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 13
123053-DR-120712
Appendix
Survey Instrument
P116
II.
Draft Memorandum December 7, 2012
Employment Generation Rates Page 14
123053-DR-120712
Figure A1
Wage & Salary Job Trends
Employee Generation Study
0
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
13,500
15,000
20012002200320042005200620072008200920102011
Jo
b
s
by
Bu
s
i
n
e
s
s
Ty
p
e
Hotel / Lodge
Office ‐ Business, Professional
Office ‐ Nonprofit, Civic
Real Estate
Restaurant, Bar
Retail
Services
Other
Source:CDLE,QCEW;Economic &Planning Systems
Figure A2
Wage & Salary Job Trends
Employee Generation Study
0
100
200
300
400
500
600
700
800
900
1,000
5 years agoCurrent
Jo
b
s
by
Bu
s
i
n
e
s
s
Ty
p
e
Hotel
Office ‐ Business / Professional
Office ‐ Nonprofit / Civic
Real Estate
Restaurant / Bar
Retail
Services
Source:CDLE,QCEW;Economic &Planning Systems
P117
II.