|The Orlando Sentinel, Fla.|
Knight Ridder/Tribune Business News
July 21, 2004 - The nation's hotel business is showing the first real signs of a rebound from its prolonged construction slump, though Orlando won't see many new rooms for several years, a new industry survey said Tuesday.
The amount of hotel construction entering in the planning pipeline rose in each of the first two quarters of 2004 -- the first back-to-back quarterly increases in more than four years, according to Lodging Econometrics, a Portsmouth, N.H., market research firm.
"Nationally, we're seeing a modest upturn -- not great guns, but we are in the beginning of a new construction cycle that should last three or four years," said Patrick Ford, president of Lodging Econometrics.
During the second quarter of the year, 282 new projects with a combined 35,604 rooms entered the pipeline, Ford said.
The consecutive quarters of growth end a long decline that began in 1998-99 as interest rates rose and the economy peaked, Ford said, and persisted because of excess capacity, recession and the slump in travel following the September 2001 terrorism attacks.
Fueling this year's nascent comeback: an improved economy, a healthy hotel environment, and newly available capital, he said.
Orlando -- the nation's second-biggest hotel market, with more than 116,000 rooms -- will have relatively few hotel openings during the next 18 months, Ford said. That's good news for the region's existing hoteliers, who are likely to see healthy occupancy rates and some growth in room rates, he said.
"There is a wonderful opportunity for both hotel owners and investors to do well in Orlando," he said.
A total of 14 hotels with 7,055 rooms are in the Central Florida pipeline through 2008, according to Ford's report. But only two of those hotels are opening this year and only one is scheduled to open next year.
And one of the 14 -- an 800-room facility tied to a proposed convention center in Osceola County -- could fall by the wayside if the County Commission doesn't approve the center project in a vote next week.
Including two hotels that opened earlier this year, four new properties with a combined 1,068 rooms are expected to welcome guests this year, with the October opening of a 730-room Omni Orlando in ChampionsGate leading the way.
The 1,500-room Rosen Shingle Creek & Golf Resort is scheduled for a fall 2006 opening. The Peabody Orlando Hotel is planning to a 1,000-room tower in 2006 or later. And a 1,500-room Hyatt on International Drive is in the early stages of planning and could open in 2008.
"Occupancy has increased year-over-year for the past 12 months," noted Paul Pebley, marketing director for the Omni Orlando, "and we are optimistic that demand growth will continue, fueling occupany and average rates for the market."
Richard Maladecki, president of the Central Florida Hotel and Lodging Association, said: "We know the markets are opening up and we financing is becoming available."
"We hope to see more groundbreaking opportunities in the Central Florida market, particularly near the Orange County Convention Center."
Lender interest in hotel development evaporated after the 2001 terrorist attacks, especially in Orlando, which now lags the rest of the country, said Alan Villaverde, general manager of the Peabody Orlando.
And fear of another terrorist attack is still in the back of many people's minds, because it could once again cause disproportionate damage to the region's tourism-dependent economy.
"It's the elephant in the room," Villaverde said.
By Chris Cobbs and Jerry W. Jackson
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