Orlando Vacation Homes Rentals

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.

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posted by orlandovacationhome on Nov 20

Let’s be clear, no one can predict the future. If we could, we wouldn’t be writing a blog. This post is  just an opinion. DISCLAIMER. As with any economic opinion, take it with a grain of salt. The authors of this blog are not professionals and do not give out professional advice.

The Orlando vacation house market has been hit hard, especially for many buyers who purchased vacation homes around the years 2005-2006. Prices have dropped in some vacation home subdivisions over 30% from their peak 2 to 3 years ago. For the metro Orlando area as whole, prices appear to have dropped. Click HERE STATISTICS(1).

There are arguments that prices will continue to DROP(2):

Vacation homes are much harder to finance than primary homes, and in the current market even primary homes are now hard to finance (2A).

Foreclosures are piling up. As people struggle with their primary home mortgage, they may give up their second homes.(2B)

There are large inventories (2C).

A few vacation home subdivisions struggle with upkeep of resident exterior areas. Vacation home managment struggles to keep this under aesthetic control for vacationers.(2D)

Banks will begin to compete against each other to sell foreclosed homes, and this could negatively effect vacation home pricing (2E)

Tourists are cutting back big time on Orlando (2F).  Thus, the demand for vacation rentals is also dropping. This means that owners have less income to pay the current mortgage which increases the risk of foreclosure.

In a depressed economy, the last thing people often want to do is buy a vacation home, but the first thing they may want to do is sell if they own one (2G).

Homeowners unable to refinance their vacation homes (they may owe more than the home is now worth) might let the home foreclose if they are unable to modify the loan terms (2G1)

When the world is facing an economic crisis (2I), discretionary items such as vacation homes are no longer in demand. If the USA enters a severe recession, the demand for some vacation home products could dry up.

There are arguments that prices will STABILIZE(3):

It would appear that the rate of price decline in some subdivisions is SLOWING(4) down, but prices are still dropping.

Some subdivisions are making the transition from primarily a short term rental market to subdivisions that cater to full-time owner occupiers as the prices drop, and the vacation homes become affordable relative to regular homes.

The government is reacting on a massive scale to solve the problem(4A).

There are some SIGNS(5) that the number of home sales has been increasing.

In conclusion, vacation homes in the Orlando and Kissimmee area face a unique set of circumstances that has allowed for significant price drops from their peak prices over the last 2 to 3 years. Forecasting the future with absolute certainty is an impossibility.

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As always, please consider the people writing this post/bog to be unprofessional and incompetent at all times. Due to your own due diligence at all times.

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