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Orlando Hotel Occupancy

Poor hotel guest turnout in Orlando

Hazel Heyer, eTN Staff Writer  Feb 18, 2009

Orlando, Florida (eTN) - Strange as it seems, despite last weekend being sandwiched by Valentine’s Day and Presidents Day, poor visitor turnout was reportedly recorded in the magical city of Orlando, Florida. Top hotel activity monitoring firm, Smith Travel Research (STR) reported that occupancy rates at Orlando area hotels dropped 20 percent in the last week of January over the same period in 2007. Orlando registered the second largest drop of any metropolitan area in the country, second only to New Orleans, which reported a drop of 22.4 percent.

According to the group, the trend was nationwide. An overall drop in occupancy of 12.6 percent for the week was experienced across all markets. Only Tampa/St. Petersburg saw increased occupancy of 64 percent previous to last week due to the Super Bowl, according to the news source.

Still, Orlando did fine if latest forecasts were to be considered. The worse is yet to come. Dr. Bjorn Hanson, clinical associate professor at New York University’s Tisch Center for Hospitality, Tourism and Sports Management, forecasts occupancy for 2009 across the country to drop to 56 – 59 percent, a 3.5 percent decline from last year and the lowest since 1971. Together with vacancy, average daily rate with see the largest decline of 2 – 5 percent across America. Revenue Per Available Room (RevPAR) growth in 2009 too will also decline as echoed by the analyst reports from STR (5.8 percent), PKF Research (5.8 percent), Morgan Stanley (4.5 percent), Deusche Bank (9.7 percent), Goldman Sachs (10 percent) and Pricewaterhouse Coopers (11.2 percent).

Earlier, with Orlando, the STR reported occupancy of 65.9 percent in the Metro area, which was down from 67.9 percent in 2007. The Orlando Convention and Visitors Bureau and Smith Travel Research have divided the Metro Orlando area into seven sub-regions such as Lake Buena Vista, International Drive, Kissimmee East, Kissimmee West, Orlando North, Orlando Central and Orlando South. Lake Buena Vista, where most Disney World hotels are located, recorded the highest average daily rate of $123.77 in 2008.

Orlando's occupancy rate ranked 12th in STR's list of the Top 25 markets, 9.1 percent higher than the national average of 60.4 percent. The STR said the decline of occupancy resulted in a 2.7 percent decline in RevPARs to $69.88. However, it recorded increases in rooms - 352 rooms (+0.3 percent) to the Metro Orlando area inventory in 2008, bringing the total to 111,700 rooms, room-night supply increased 0.7 percent while demand declined 2.1 percent in 2008 compared to 2007. Also average daily rates (ADR) increased 0.3 percent in 2008 to $106.11; however, the ADR was 0.4 percent below the national average of $106.55.

Frank Nocera, president of Visit Florida, said that people are beginning to respond to their “value” message into the Spring and Summer seasons. “It’s now coming strong for Central Florida and for the entire state. But 2009 will be a year in which we would have to work hard for the business. There was a significant increase in the Canadian business in 2008,” he said.

In the first three quarters of 2008, Visit Florida’s director for Canada Jackie Lutz reported a 15.5 percent rise in Canadians traveling to Florida over the same period in 2007, despite the economic downturn. Even in a recession, Canadian snowbirds still flock to Florida – the second largest US destination after New York.

On the brighter side of tourist statistics, Nocera reported that in a record year, Florida received 84 million guests. In a recession year, they report 82 million. Following 9/11, Florida had 73 million guests in the calendar year 2002. In 2001, the total 69 million visitors to the Sunshine State.

“If we were in a recession all year, we were probably doing better than most destinations. For 2009, it appears that we will really have to work hard for the business for the first half of the year. Recovery in the industry may happen somewhere in the second half of the year,” said Nocera, adding that if what they have seen before in recessionary times is a pent-up demand for travel, then numbers should start looking better once the recession begins to break.

Despite the meltdown, giant tourist projects are still ongoing in Orlando such as the Orlando Magic Arena in the downtown area which costs $480 million in tourist taxes, state sales tax and city funds; and the $425 million Dr. Phillips Orlando Performing Arts Center and the $175 million Florida Citrus Bowl, both of whose funding status may be in limbo at this point.

Poor hotel guest turnout in Orlando

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