Orlando Vacation Homes Orlando Vacation Rentals

posted by orlandovacationhome on Dec 20

On this post, we will explain why the recent issues facing the timeshare industry (1) in Orlando will impact the hotel and vacation home rental markets although they appear at first glance to be unrelated. We believe that a need to generate rental revenue for developers and interval owners will force rental competition with hotels and vacation home rentals.

By now, it is old news that the Orlando timeshare market is dealing with significant problems financing transactions. As a result, some major timeshare companies with a strong presence in Orlando have been forced to layoff numbers of people.

Timeshare companies over the years have become organized at renting their units. This was done in large part to get people to tour the timeshare in the prospect of selling them a unit/slot. However, as the qualified tours dry up as a result of the recent limitations on credit, there is the temptation to just rent the empty units/slots as vacation condos. This competes directly head-on with both hotels and the Orlando vacation home rental market.

In addition, current timeshare unit owners may not want to take a vacation when they are uncertain about their economic future. As a result, many are trying to sell their timeshare weeks to potential tourists who would otherwise be hotel guests or vacation home renters. This is highly evident when visiting sites such as Craigslist.

The current rental trend within the timeshare business model means more players are competing for fewer tourists in an Orlando market that has already begun to be decimated.

Orland hotels and Orlando vacation home rentals should be concerned, as many of the timeshare units in Orlando offer a very high quality of accommodation. Most include full kitchens, large living areas and such amenities as washers and dryers.

In conclusion, the near term downturn of the Orlando timeshare market will mean some timeshare companies and unit owners will begin to aggressively rent their units and compete head on with hotels and vacation homes. This is all in an effort to generate cash to defray their maintenance fees. One can only guess this will put further downward pressure on rates and occupancy for the short term rental industry.

posted by orlandovacationhome on Dec 12

This post assesses if the perfect storm in 2009 could hit Orlando’s massive UK tourism market. We will also detail why metro Orlando is dependent on this market segment for a healthy and vibrant tourist economy.

In 2007, approximately 990,000 British tourists(1) visited the Orlando and Kissimmee area populating Orlando vacation homes and hotels alike. The British spent approx $1,000,000,000 dollars in the metro Orlando area in 2007.

For 2009, the UK market could be negatively hit in a significant manner for the following reasons: 

1. The “wheels” have come off the UK economy(2). With the economy forecasted to slow as much as 2.3% (2B) by some to an incredible 5-10% by others(2C).
2. The British pound(3) has depreciated in value about 30% in the last three months against the dollar. America as a destination is now 30% more expensive for a British visitor.
3. The British typically book their big summer vacation in January, so Orlando has not yet been booked in many cases for the summer of 2009. This January window could slip by due to the dire condition of the British economy and Orlando could lose the chance of capturing this business.
4. Air fares have not dropped significantly(4), despite the drop in oil prices making Orlando very expensive when compared to destinations closer to Britain.
5. The British are some of the worlds heaviest credit card users and these lines of credit are becoming restricted (5).

So a significant drop in UK tourists for 2009 would be significant to the local Orlando economy and could be a real probability. If you reside in metro Orlando, this would most likely affect you.

In conclusion, Orlando relies on the British tourism market especially in September when the domestic vacation market is relatively slow. What the future holds no one knows - no one can predict the future - including us. We merely offer non-professional opinions.

posted by orlandovacationhome on Dec 10

Yesterday Wyndham Worldwide  announced it is laying off 4000 people nationally. Previously, Westgate Resorts also announced it is making major lay offs. Both companies are major employers in the Orlando hospitality market and vital to the local economy. In addition, hotels around Orlando have been quietly laying off hundreds of employees every week and some major restaurant companies have even closed. Other hotel and timeshare companies based in the Orlando area have yet to publicly announce similar cut backs, but rest assured, they are underway.

Hospitality corporations in the Orlando area are cutting back on previously sacred items such as Christmas parties and even birthday cakes for long term loyal employees. Some theme parks according to Reuters may also be looking at significant scaled job cuts . Hotel revenues recorded a free fall in November 2008 in the metro Orlando area and everyone employed in hospitality is now feeling the pinch.

Convention groups are cancelling at record rates, and the ones that are coming are booking very slowly. Companies who were about to book groups in the Orlando area are hesitant to do so, as they are looking for ways to trim budgets.

Orlando’s largest international market, the UK, has seen the British Pound drop like a stone and the cost for a British tourist to visit Orlando shoot up 30%+/- in the last 3 months alone. The UK booking window for the peak summer months is typically done in January. Orlando can expect to see a significant decline in the number of British for the summer of 2009 as the UK economy falls apart. The British will most likely go to destinations much closer to home such as Spain and within Great Britain itself.

All these concerns indicate that the vacation home industry will also get hammered over the next year or two. This is of particular concern to us.

There is no sugar coating this scenario. The world economic crisis impact on the Orlando hospitality economy is having a very bad effect, and about to get worse, much worse. We anticipate the worst economic downturn in Orlando possibly since the great depression, but then no one can predict the future, including us. We are incompetent non professionals just expressing an opinion.

posted by orlandovacationhome on Dec 9

Given all the hoopla that often comes with a new hotel entering the metro Orlando market, we thought we would offer some thoughts different from our usual vacation home industry analysis. A friend of ours in Orlando wrote the following about the hotel industry. The parallels to the vacation home industry can also be drawn.

Some new larger hotels who entered the Orlando market as “newbies” went after the “convention market” and frowned upon regular theme park tourists as not being a viable market. Typically, a new hotel will learn within a year of opening they need to have a comprehensive business mix if they are to survive.

Many large convention hotels in the metro Orlando area are now experiencing significant declines in their “pick up rates”. Given the global recession, this is to be expected. But worse, some convention groups (i.e. many financial services companies) no longer exist. The Orlando CVB documents hotel room revenues dropping 30% +/- in November 2008 for the metro Orlando area. Orlando hotels who have never expereinced a big Orlando market downturn will now learn what it is all about.

The well seasoned and super efficient players such as Harris Rosen understand only too well how the Orlando game works. His world famous Rosen Hotels and Resorts operates debt free to make themselves recession proof even during dire times.

When business is slow, it is not uncommon for some upper level convention hotels to sell inventory for well under $100 a night through various distribution channels. For some newer hotels with debt levels at costs north of $100K (and in some cases more than $200K a room), this can be a devastating thought. Often, even under the best due diligence, failure to plan for economic recessions (on average every seven years) can be a rude awakening for both new hotel owners and their lenders alike.

If you are thinking of developing a hotel in the metro Orlando area, take several local hoteliers out to lunch first and get their opinion. You may also want to join some of the fantastic local hospitality organizations before you launch a project of any kind. Such simple things could be the best pre-investment you make. Relying on MBA type financial analysis by people who do not know the market at an intimate level is always a sure path to disaster.

Many of the plans to build new convention hotels in Orlando have now been shelved, but those that have opened in recent years or are about to open will soon understand why tourism experts in the area call Orlando a “unique market”. Good luck.

posted by orlandovacationhome on Dec 6

If the most recent data is to be believed, hotel revenues in Orlando are dropping at possible catastrophic rates, and this could be an indicator of what some may have already felt in the metro Orlando vacation home industry.

Data for Orlando vacation home occupancy and rate is difficult to collect, as the industry is very fragmented. However, as market indicators, we are inclined to consider hotel data trends to help as a mirror to the vacation home industry.

Recently SMITH TRAVEL RESEARCH, a provider of hotel industry data, reported that revenue per available room tumbled 13.2 percent nationally during the week Nov. 9-15, 2008 compared to a year earlier. Revenue per available room, or RevPar as it is termed, is a key gauge of a hotel’s revenue performance.

At the local level, metro Orlando has begun to see the largest drops in both rate and occupancy across the board for the hotel industry since 2001. For the week ending November 15^th, 2008 hotel Rev PAR dropped by a whopping 27.3 % according to the ORLANDO CVB records .

So what are the ramifications for the Orlando vacation home market? Hotel data now tells us that a short term combination of rate and occupancy are in a state of significant decline. Not a surprise given the current economic environment, but the level and rate of the decline is much more devastating than what is being reported on some media outlets. It remains to be seen if these short term indicators become longer term trends for the Orlando market and can provide some basis for an Orlando tourism forecast.

Possible ramifications in the vacation home industry could include:

1.     Rev PAH (Revenue per available home), is going to most likely drop significantly, as occupancies decline and some owners and home managers alike, quickly drop their rental rates.

2.     This could impact vacation home prices due to the fact that vacation homes would have a lessened ability to generate income, which would logically be reflected in the underlying home sales prices.

3.     Like any business, those homeowners that are best positioned to “hunker down” will be the ones that survive. Such factors could include: limited levels of debt, high rental occupancies, good locations and marketing strategies, excellent maintenance, and the overall experience of a good vacation home management company.

The good news for families, and even some event type groups seeking economic alternatives to hotel rooms, is that they may now logically consider the benefit of vacation homes. This helps the vacation home option become more mainstream. Please see our other posts detailing the economic viability of renting Orlando vacation homes and the value they provide to consumers. In addition, the best run vacation home management companies will most likely survive and the services they provide will become more essential.

In conclusion, there is no sugar coating the data. The drop in both rate and occupancy appears to have come so quickly and deeply that major media, and even many in the tourism industry, do not yet recognize. Expect possible systemic failures in Orlando’s tourism industry if these trends continue. Unfortunately, no one can preidict the future including us.

As always, our blog tries to inform you objectively, so subscribe.  Check the ORLANDO CVB data here.

posted by orlandovacationhome on Dec 5

Vacation home rentals in Kissimmee have stabilized the area along the US 192 corridor. It has been no secret that the southern arm of the Orlando Florida metropolitan area tourism market (otherwise known as Kissimmee) has struggled over the years to increase its share of the transient hotel market. One lone spot has been the increase in vacation home accomodations in the area. 

Bankrupt hotels have been commonplace, and now more shockwaves are moving through the hotel industry in the US 192 corridor. The Orlando CVB recently reported that hotel revenue on the west side of US 192 was down as much as 52%+/-  in November 2008 compared to last year. On the bright side, some of the better performing hotels are off much less, but still down roughly 15% according to our inquiries.

The one bright spot for Kissimmee (Osceola and Polk counties) over the years has been the explosion in popularity of the vacation home market over the last decade. Fortunately or unfortunately, depending on how you look at it, Orange County (“Orlando Proper”) has been slow to embrace the vacation home concept, and there are relatively few vacation complexes in this county.

Vacation homes offer an economically viable alternative to hotels for about the price of a typical hotel room with your own private pool in most instances. Such homes are suitable for many families, and even some groups visiting the Orlando area. Larger vacation homes can offer as many as seven bedrooms and can sleep as many as 16 +/- people. This has allowed many of the US 192 restaurants and businesses adjacent to the larger vacation home communities to stay afloat. For Kissimmee community reviews and ratings, please consult our blog posts area.

posted by orlandovacationhome on Dec 4

If you go to the Walt Disney World Resorts ® web site, they are running some stellar

promotions at the moment.

You can buy a hotel room and a ticket combination package with spendable gift cards included

or amazing values which make it tough for area hotels and other accommodations to compete. Although we don’t promote any company on this web site, this appears to be such a great deal it deserves to be mentioned.

As always, if in doubt, we advocate buying your tickets directly from any theme park you are attending.

Many metro Orlando area hotels we spoke to agree that the “Big Park” is offering some fantastic promotions making it difficult for them to compete even at the economy level. This may be due in part to the fact that the hotel industry in metro Orlando has seen some staggering drops in room revenue (RevPAR) recently. This may also be further evidence of the magnitude and nature of the global recession.

However, Orlando area vacation homes still remain a competitive alternative to all area hotels, as they affordably offer a family or group of people the benefits of an entire house for a little more than the price of a hotel room. We recommend you shop around, assess your needs, and make your own decision. As always, we will try to keep you informed.

posted by orlandovacationhome on Nov 16

At the recent World Travel Market in London, an international trade show, brought recent news and insight for the state of health of the international tourism market. Although the show purportedly had a record 50,000 participants from 200 countries, analysis and moving forward prdictions were virtually the same. Since global tourism has such a strong impact on the Orlando vacation villas rental market, this analysis must be viewed as a leading indicator for the strength of vacation home rentals in the area.

The United Nations World Tourism Organization (UNWTO) reported that global tourism (as measured by the net arrivals) rose a stagnant 2% during the recent summer months. Unfortunately recent numbers indicate that it is getting worse before it returns to strong positive growth. Economists now predict that at that at its most optimistic point in the next year, the global tourism market will show signs of recovery in late 2009. Local vacation villa rental management companies, as voiced by feedback from the CFVRMA show (see blog posting), indicate similiar trends for the Orlando vacation home rentals market. Recent financial analyst meetings from Disney and Orlando  travel and tourism trends also confirm this overall prognostication for Orlando vacations.

Pearls of wisdom from the UNWTO show and forums indicate that successful tourism marketers are focusing on travelers to make more trips closer to home. On a former blog posting, we indicated that because of the petro prices dropping (relative to airline ticket pricing) drive-to destinations become a better Orlando vacation “value” for consumers. So while global tourism trends will return to fill Orlando vacation rental homes soon, successful vacation home management companies may look to build a compelling case for renting a vacation home over other traditional means of lodging in the short term. This begins with testimonials and word-of-mouth marketing for those who have enjoyed the vacation home concept and guest experience in the past for their Orlando vacation. All Orlando vacation home management companies have a vested interest in making sure our brand of hospitality is a good one.

posted by orlandovacationhome on Nov 5

Regardless of what side of the political aisle you are on, we can all agree that Obama’s win is historic. America needs to feel good again about its special place in the world and Obama, at least temporarily, gives us that feeling.

His ascension to the presidency should also have a positive impact on how those in other nations perceive the country as well. According to news reports, Illinois is already banking on the Obama buzz to boost tourism to the state and to the city of Chicago as well.

Barack Obama President - Impact On Orlando Travel

It’s no secret that since 9/11, international travel to the United States has fallen about 10 million visitors per year according to the Travel Industry Council. However, this has mainly been due to customs travel issues. As far as Orlando is concerned, about 3.5 million visitors to the area are international travelers, with half of those being European travelers. International travelers account for 17% of local economic impacts.

Our thought is that it will be now much easier to export American culture due to the star status and “International Panache” that Obama embodies. He will make it cool to be American again after several record years of low international perception of the United States. Interestingly, Obama also has small children in his home, and it will the first time since Kennedy that this is the case. With Disney being a premier pop icon of American culture which captures the imagination of millions of children, we can infer that international travel to the area might get a boost from his Presidency. Obama is also a “feel good” story which is what the Disney “brand” is all about. The two would be a nice match to boost tourism in the area. Local theme parks and vacation home owners would certainly get their fair share of this traffic. Let’s hope that is the case.