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Orlando Area  Resort-tax Collections Up  in August '06- Even as Hotel Occupancy Slips;
Rising Room Rates and Growing Number of Time-share Units Help Increase
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By Christopher Boyd, The Orlando Sentinel, Fla.McClatchy-Tribune Business News

Oct. 3, 2006 - Orange County's resort-tax collections rose in August -- a peak month for tourist travel to Central Florida -- even as hotel occupancy levels slipped.

The county Comptroller's Office reported Monday that tax revenue rose 12.1 percent from last August, increasing $968,000 to nearly $9 million. Collections through the first 11 months of the fiscal year surpassed all of the revenue taken in during the entire 2004-05 fiscal year.

The increases stand in contrast to local hotels' room-occupancy rates, which have been down almost every month this past year when compared with the same month a year earlier.

Smith Travel Research, a company that monitors occupancy throughout the country, reported year-over-year occupancy fell 0.6 percent in August in the Orlando area. The biggest decline came in the economy and budget hotel categories.

Abe Pizam, dean of the Rosen College of Hospitality Management at the University of Central Florida, said the disconnect between collections and hotel occupancy results from two trends -- rising room rates, which can generate more tax from fewer guests, and the growing number of time-share units, which generate resort taxes when they're rented out like hotel rooms.

"There are a significant number of time-share and other rentals that aren't being included in the hotel data" but which collect the resort tax from certain guests, Pizam said. "There is now a very significant number of time shares out there."

The average daily room rate in the Orlando area rose 8.4 percent to $85.46 from $78.83 in August 2005, Smith Travel reported.

Richard Maladecki, president of the Central Florida Hotel & Lodging Association, said his group is "pleased" with the increase in collections but "concerned with actual occupancy numbers."

The resort tax, officially known as the tourist development tax, is levied primarily on hotel and motel rooms. It rose from 5 percent to 6 percent last month, with the extra proceeds to initially be used to promote the tourism industry.

"Marketing is important," UCF's Pizam said. "If you just open the doors to more hotels and don't do marketing, occupancy levels could continue to decline."

The use of tax revenue for marketing was part of a compromise agreed to by the tourism industry, Orange County and the city of Orlando last summer when the increase was approved.

The county and city hope to use part of the revenue increase to build a new indoor sports arena, refurbish the Citrus Bowl and create a performing arts center.

Christopher Boyd can be reached at cboyd@orlandosentinel.com or 407-420-5723.

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Copyright (c) 2006, The Orlando Sentinel, Fla.

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