Orlando Vacation Homes Rentals

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.

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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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