posted by orlandovacationhome on Oct 14
A recent noteworthy article by the Financial Times indicates that the Blackstone purchase of SeaWorld is a marked indicator that the world’s largest private equity firm has now turned optimistic on the economy and the worst is behind us. More specifically, and as the prestigious publication notes, Blackstone is selling assets in other areas to focus on industries and lines of business that could improve significantly in the coming years. This would certainly include theme park attendance, as indicated by its accumulation of $2 billion in assets in this area. Click here for the Blackstone Asset Group’s corporate website.
Why is this noteworthy? This is an important indicator because Blackstone has been traditionally very good as a market barometer, especially when picking companies in improving industries.
All sources acknowledge that Blackstone has been tops at exploiting opportunities and picking market winners before they become apparent. Some indicate that the roughly 2x sales purchae price was very cheap, and that it was simply a “fire sale” purchase. We believe that this purchase might be at a sweet spot - low valuation metrics and at a time when business conditions are set to turn up noticeably for the theme parks. The latter would not only be good for Blackstone, it would also be good for the local economy.
Improved amusement park attendance would certainly bolster occupancy at a time when Orlando hotels and resorts have been struggling. Peak booking periods tend to come around spring break / Easter and a little good news is needed to restore confidence.
Some of the best resorts in the Orlando area are running enticing holiday specials to kick start business moving into 2010. This will hopefully be the beginning of an improved business cycle, and one that the Blackstone Group has presciently predicted by its actions.
This could be great news for Orlando vacation rentals which are typically an outstanding way to stay in Orlando. For reviews on over 80 vacation home communities, consult our unbiased community reviews section. Each community review includes a quality rating, amenity information and distance to major attractions to help you make an informed decision. Our goal is to provide independent research to save you time and ultimately help you enjoy a pleasurable vacation in Orlando. Vacation rentals can provide you an opportunity to do just that.
Aquatica Sea World Orlando
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posted by orlandovacationhome on Sep 23
The Orlando Sentinel (1) recently noted that Orlando hotels are now facing the worst economic conditions since recordkeeping began over 20 years ago. These are business conditions possibly worse than the aftermath of 9/11.
We projected that many hotels in Orlando would be facing some type of systemic failure back in December of 2008 (2).
Checking rates for September 28th 2009 for one night, we identified several major luxury hotel brands offering rates under $99 directly on their websites. The irony is that thousands more branded new luxury hotel rooms have either recently opened or are just opening, further increasing supply in an oversaturated market.
Some related articles are claiming that as many as one in five hotels are now in some stage of foreclosure (3). Hotels are now also facing their most aggressive competition from timeshare rentals and vacation homes.
Orlando vacation homes can now be rented for the price of a typical hotel room, but offer multiple bedrooms, living spaces, full service kitchens and even private garages, pools and game rooms. Based on personal experience, once a consumer has rented a vacation home and understands the concept, they will not rent a hotel room again.
What does this mean for our readers? We think that booking a vacation home with a reputed and accredited vacation home management company is always the best value and solution for travelers.
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posted by orlandovacationhome on Jul 29
The group travel segment which has been the core of the hotel industry in Orlando has discovered the operational and financial benefits of staying in Orlando vacation homes. Group travel insiders are embracing vacation homes as a viable alternative to Orlando.
For example, a baseball team from Puerto Rico that we are personally familar with has booked a hotel in Orlando every year for the last 17 years. This year the coach booked a vacation home. The coach explained that he has 18 people in his group, and they would normally book 7 hotel rooms. Last year this cost him $420 a night. This year they booked a seven bedroom vacation home in Emerald Island for $270 a night. This saved the team $150 a night over 6 nights or approximately $900 total.
Next, the coach explained that rather than eating out for breakfast and dinner, they buy groceries and cook together in the home’s spacious kitchen. This saved the team he estimated another $116 a day.
Bottom line, he estimates that the group saved $1600 +/- over the 6 night stay by booking a vacation home.
We inquired as to how the team liked staying in the house and he explained: “The kids loved it, all the rooms had televisions, they could swim in the pool and visit the amenity center clubhouse and on the last night we did a great barbecue”.
As the benefits of vacation homes become understood, more and more groups are booking them. We have seen family reunions, religious groups, sports teams, high school bands and this year many high school groups from Latin America switching to vacation homes instead of traditional hotel rooms.
Group Bookings - Orlando Vacation Homes
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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.
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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 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:
- 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).
- 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.
- 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.
- Air fares have not dropped significantly(4), despite the drop in oil prices making Orlando very expensive when compared to destinations closer to Britain.
- 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.
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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.
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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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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.
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