posted by orlandovacationhome on Feb 28
Spring Break Orlando Florida - Dramtically Lower Hotel and Vacation Home Rates Being Offered
As usual, we have been talking to many hoteliers and vacation home managers in the Orlando area. We do this to get some forecasted near term travel outlook in the local Orlando tourism and convention markets.
Many of the hotels we spoke to have had an okay December 2008 with an unusually strong Christmas. January 2009 was below par when compared to last year. However, February 2009 numbers appear to be way down when compared to last year, and the bookings the pace for spring break (March/April) is significantly slower.
On the bright side, guests are making reservations, but they are booking at the very last minute. As an example, race week for the Daytona 500 in February 2008 filled Orlando three months in advance. This year, hotels were not getting a significant portion of their reservations until 3 days in advance.
Many short term rental management companies we spoke to last week think a general decline of 15-20 % in the number of visitors to Orlando would be realistic for 2009 as the United States and much of the world teeters on the edge of an economic recession, and possible severe recession.
In conclusion, 2009 short term rental bookings in Orlando will be off significantly from 2008. In addition, long term booking windows will become a thing of the past.
Much to the delight of those persons who still decide to visit the Orlando area in 2009, they will benefit from dramatic rate cuts, free upgrades and whatever else short term rental companies can do to entice visitors to stay with them over the competition.
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posted by orlandovacationhome on Dec 24
Read our post why unemployment is increasing in the short term rental industry HERE
Short term rentals include hotels, vacation homes and timeshare rentals (vacation condos).
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posted by orlandovacationhome on Dec 19
In this article we will detail how deep the economic crisis is and might be for Orlando’s largest employer - the short term rental industry. This includes hotels, timeshare rentals and vacation homes alike. We will explain the impact on employment and the need to be fiscally prudent. We will conclude that Orlando is in an economic recession and a technical economic depression is possible, the consequences of which will be far reaching and significant to the local economy.
In October of 2008, tourist tax collections dropped a whopping 9.1%(1).
For November 2008, the Orlando CVB is reporting even bigger drops in metro Orlando’s hotel revenues of 30%+/-(2). This would indicate possible systemic future drops in the Orlando tax collections from the hotel and short term rental industry as a whole.
As a result, much of Orlando’s short term rental industry could be laid off. This is concerning as it is also Orlando’s largest employer(3). As short term rental companies see their gross profit margins plummet they will be forced to reduce their biggest variable cost – labor.
A 20% +/- drop in tax revenues generated by hotels and other short term rentals is a real possibility for 2009, and the implications to the local Orlando economy would be significant.
Projects such as the new $480 million basketball court in downtown Orlando financed in part by hotel tax dollars (5) puts into question the opportunity cost of such a project when thousands of hospitality workers are now losing their jobs(6). The credit crunch has already forced up the cost of the bonds to finance the new Orlando arena as much as $104,000,000 indicating the increased risk of such a project that is now perceived by bond investors.(6.1).
The solution to many of the local fiscal problems are now in the hands of the global economy. As we always explain, no one can predict the future, but the basic math of the immediate problems facing Orlando’s hospitality industry are significant and possibly systemic. If Orlando’s economic GDP drops more than 10% it would be considered by many economists a technical economic depression (7).
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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.
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