ORLANDO-For the first time since the Orlando/Orange County Convention & Visitors Bureau Inc. started keeping detailed monthly occupancy and room rate records in 1989, the area’s 117,000 hotel rooms dropped to a 65.7% level. That’s 13.3% below the May 2000 level of 75.8%.
The previous lowest May occupancy mark on record is 68.8% in 1994. The national average for May was 63%, according to Smith Travel Research of Hendersonville, TN.
That still leaves Orlando inns ahead of the main pack but not good enough for an area that depends on the daily 5% room tax to generate an average $110 million a year in funds for general tourist promotion.
That kitty has been slipping for the first time as well this year. March, April and May saw a string of declines, unprecedented in this area’s hotel collection annals. Hoteliers and tourist promoters await the June figures for a turnaround. But that may not happen, based on the May numbers from Smith Research.
Only three of the seven major hotel submarkets raised their room rate, marginally increasing the so-called bed tax of five cents on every dollar spent.
The largest submarket in Lake Buena Vista–Walt Disney World country–lowered its average daily room rate by 2.4% to $114.15 from $117.01 at this time last year, according to Smith’s statistics. Lake Buena Vista occupancy was 74.8%, down 12.5% from 85.5% a year ago.
One longtime hospitality industry consultant, Robin L. Webb, 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.”
Webb is vice president/managing broker of Arvida Realty Services Commercial Division, Winter Park, FL. 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 occupancy “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.
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.”
Average daily room rates in Central Florida’s seven submarkets were $85.73, down 0.7% from $85.16 last year. The hardest-hit sector was West Kissimmee with 60.2% occupancy, down 18% from 73.4%. South Orlando was just as bad, with occupancy of 55.7%, down 17.2% from 67.3%. The second largest submarket after Lake Buena, the International Drive tourist/retail sector, posted a 14.3% occupancy drop going to 66.7% from 77.8%.
Other submarkets show East Kissimmee, 59.4% from 67.1%, down 11.5%; North Orlando, 58.9% from 64.5%, down 8.7%; and Central Orlando, 57.4% from 60.8%, down 5.6%.
Only three submarkets risked raising daily average rates. International Drive went to $83.97 from $81.52, up 3%; Central Orlando, $68.27 from $66.36, up 2.9%; and South Orlando, $67.71 from $66.64, up 1.6%.
Dropping their rates were West Kissimmee, $60.75 from $63.24, down 3.9%; East Kissimmee, $47.19 from $48.34, down 2.4%; and North Orlando, $64.94 from $66.49, down 2.3%.
(Please see related industry story on MIAMI page, “Extended Stay Misses Q2 Forecast.”