Bankruptcies Loom for Small Hotel Operators

At least a half dozen businesses already have filed for protection, according to the clerk's office at U.S. Bankruptcy Court in Orlando.

The tax amounts involved range from $20,000 to $100,000. They are legally due by March 31 to avoid a 3% penalty. The bill would also delay the sale of tax certificates on delinquent properties by 30 days.

Paul M. Guyet, a vice president at Orlando-based Smith Equities Corp. and a longtime hotel consultant, has predicted a fire sale of smaller hotel properties in the east Kissimmee and airport corridors in 2002 if the economy is long-lived.

"The vultures will show up this year, for sure, if the market doesn't pick up," Guyet tells GlobeSt.com.

The tension among the Mom-and-Pop business category has been increasing since 9-11 and has worsened during the recession, despite a mild comeback in hotel occupancy since the first of the year, smaller entrepreneurs have been telling Osceola County Tax Collector Patsy Heffner.

The special amendment, sponsored by Rep. Randy Johnson (R-Winter Garden), isn't pleasing everybody along motel/hotel row on U.S. 192 because it isn't a blanket extension. Qualifying business categories are hotels, motels, museums, restaurants, theaters and golf courses--but not gift shops, even though they may be 100% tourist-related.

To qualify, a small business owner has to show Heffner he or she doesn't owe taxes from a previous year and has lost at least 25% in sales in the six months beginning Sept. 1, 2001 compared to same 2000 period.

An indication of how soft the hospitality industry has become in Central Florida is gained from the most recent resort tax collection numbers compiled by individual counties. For February, a total $11.8 million was aggregately collected in Orange, Seminole, Osceola, Lake, Volusia and Brevard Counties. That figure compares with $13.9 million collected in the region in February 2001.

In Orange County, where the bulk of the area's 113,000 hotel rooms are located, January hotel room tax collections of $7 million were 22% down from January 2001. January collections equate to an annualized $84 million total for 2002 if the same amount were collected each month over the next 11 months. Collections in 2001 totaled $95 million.

Prior to the 2001 recession start in March 2001, Orange County had been averaging $100 million in annual collections which come from a 5% tax on the daily room rate.

January occupancy was 54% versus 63.2% in January 2001, according to Smith Travel Research of Hendersonville, TN. Average room rates dropped to $91.83 compared to $101.34 for the same month last year.