The numbers are watched closely because the annual average $110 million in tax money collected from metro Orlando's 115,000 hotel rooms pays for the $750 million, fourth phase Orange County Convention Center due to be completed in May 2003.

The tax funds also pay for ongoing tourist promotions and could, pro-arena supporters argue, pay down a portion of a proposed new 18,500-sf basketball arena or the retrofitting of the existing 11-year-old, 17,300-seat, 350,000-sf T.D. Waterhouse Center.

Right now, however, the monthly collections of five cents on every dollar spent by tourists and business travelers on the area's hotel and motel rooms are down for March, April and May and could be down for June as well, brokers following Orlando's lodging industry tell GlobeSt.com.

The lodging association confirms tax collections decreased 2.2% in March, 3.8% in April and 8.7% in May. June figures are expected to be out in a week.

Four declining months of tax collections is unprecedented in this area's hotel market. Five months in a row could be approaching crisis levels, say some area hotel brokers.

Such a decrease could mean county officials would have to scramble to find other monies to pay off industrial revenue bonds already pledged for the convention center expansion. It could also mean the end of visions for a new National Basketball Association arena or even a renovated one.

Robin L. Webb, a hotel industry specialist for 20 years and the vice president/managing broker of Arvida Real Estate Services Commercial Division in Winter Park, FL, sees several emerging trends responsible for the declining tourist tax funds.

He doesn't feel corporate travelers are bypassing Orlando for nearer venues, as some hoteliers do. "Clearly, corporate America is tightening its belt," Webb tells GlobeSt.com. "However, business travel in the Central Florida market is a relatively small percentage of the hotel occupancy."

He sees the drop in the tourist tax kitty largely due to "lower numbers of conventioneers attending meetings and the tendency of consumers to spend less, stay shorter (periods) and travel closer to home on vacation when consumer confidence is suffering and financial times are perceived to be tight."

Webb calculates the loss in tourist tax dollars also comes from a 4% decline in occupany "with the balance being represented by rate reductions and more aggressive packaging by hotels."

Adding to the tourist tax dip is another trend, Webb points out. "A clear trend for the five-star hotel guest to be staying in the four-star hotel and the four-star guest leaning more to the limited service and extended-stay brands, particularly when he or she is spending personal funds," the Arvida executive tells GlobeSt.com.

He says, "One of the little accounted-for-facts in a market the size of Orlando is that a one-night shorter stay by guests has a significant impact on room revenues in the market."

He cites Smith Travel Research of Hendersonville, TN as showing the average daily rate in metro Orlando is above $80 per night. "With 100,000-plus hotel rooms, the loss of a single night's revenue at full occupancy is over $8 million, and I might add, the loss of $400,000 in tourist tax revenue for the counties," Webb says.

Another emerging trend from declining tourist tax monies could be the health of some hotel properties themselves.

"The lessening of overall travel will certainly place highly leveraged hotels in a much more precarious financial position," Webb acknowledges. "However, it is positive to note that very few lodging properties in Central Florida currently are facing foreclosure, according to public records."

Instant Insights /

GlobeSt.com UPDATE: Tumbling Tourist Tax Could Crimp Center

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