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Orlando Hoteliers Better Prepared in this Downturn
as Occupancy Falls to Levels Last Seen in 2001

By Sara K. Clarke, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

Oct. 22, 2009--Despite big discounts, local hotels came dangerously close last month to the worst month in recent memory: September 2001.

The average Orlando-area hotel was less than half full in September for a second year in a row, even though the industry slashed its rates last month by an average 14.5 percent compared with last year's.

The average occupancy rate of 45.1 percent was just a bit higher than the 43.8 percent rate recorded in September 2001, when terrorist attacks in New York and Washington, D.C., grounded all U.S. air traffic for several days and triggered a long slump in travel.

"It's close. And that's what's obviously very disappointing for the lodging community here in Central Florida," said Rich Maladecki, president of the Central Florida Hotel & Lodging Association.

The rule of thumb in the hotel business is that a property is just breaking even when it fills between 55 percent and 65 percent of its rooms, Maladecki said.

"During the month of September, the majority of the hotels in Central Florida were in the red," he said.

The average room price in the Orlando market fell to $76.06 in September, according to the monthly report released Wednesday by Smith Travel Research. Revenue per available room was $34.27, a 15.7 percent decline from the same month last year.

September is a slow month for Central Florida hotels even in good times. With children and teens back in school for the fall and conventioneers continuing to avoid the heat and hurricane season, "there's not a reason to be here," said Michael Terry, a professor at the University of Central Florida's Rosen College of Hospitality Management. "Nothing good happens in September."

Terry said that, despite the similarity in occupancy rates for September 2009 and September 2001, hotels are better positioned to deal with the current slump. Although the country was in a recession at this time eight years ago, the 9-11 attacks created a sudden, sharp and unexpected downdraft. The current slowdown, by comparison, has been building for months.

"They've known, and they've seen this hurricane, this tsunami coming," Terry said. "They've been tightening and tightening as the months went on."

Jerry Barnes, general manager of the Crowne Plaza Orlando Downtown Hotel, agrees that hoteliers are better prepared now than they were in 2001.

In September 2001, when he was working at another hotel, occupancy plunged almost overnight from more than 60 percent to near 15 percent.

"It was as if somebody just turned off the entire demand chain," he said. "All of a sudden, nothing came in at all."

Even so, business at his hotel last month was down 34 percent from a year ago. This month, his hotel received a boost from the Dew Tour and also managed to steal some market share by offering extra-good deals.

"We haven't seen a whole lot more business coming to the downtown area," he said. "It's just kind of shifted hotels."

Sara K. Clarke can be reached at skclarke@orlandosentinel.com or 407-420-5664.

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Copyright (c) 2009, The Orlando Sentinel, Fla.

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