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Orlando Hotels Endure Worst Year in Decades with
Occupancy Barely Above 60% and REVPAR Down 12.7%

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

Jan. 22, 2010--Orlando's hotel industry ended 2009 with another bad month in a string of bad months -- and, by many measures, its worst year on record.

Hotels in the Orlando area were little more than 60 percent full on average in December. That was down just 2 percent from the same month a year ago, but hoteliers also continued slashing prices, cutting the average daily room rate 10.9 percent to $86.69, according to data released Thursday by Smith Travel Research.

Revenue per available room, a key industry measure, fell 12.7 percent to $52.21.

"It's the economy. You almost throw your hands up in the air and say, 'What can we do?' " said Scott Smith, a lodging instructor at the University of Central Florida's Rosen College of Hospitality Management. "There's not a whole lot you can do."

The December sag capped a year in which occupancy overall was down nearly 8 percent from 2008, rates slid 12.2 perceent from the year before, and revenue per available room plunged 19.1 percent, according to Smith Travel, which does not include Walt Disney World hotels in its local survey.

Last year's average occupancy -- 60.7 percent -- was the worst on record for the Orlando market since Smith Travel began tracking the local industry in 1987. The annual percentage declines in room prices and revenue per available room were also the worst on record.

"It was bad all the way around," said UCF's Smith, who is not associated with Smith Travel Research. "Everyone's saying it's the worst year they've seen in the hotel industry."

There were a few bright spots as the year came to a close: Some submarkets actually improved their average occupancy in December, including downtown Orlando, west Kissimmee, north Orlando and the Lake Buena Vista area. But properties in those areas also cut their average prices by 10 percent or more to draw those customers.

"They gave it all away in rate," Smith said.

The hardest-hit area in December was International Drive, where occupancy fell 5.8 percent despite a 13.2 percent drop in room prices from a year earlier. Hoteliers there had hoped that Orlando's two yearend college football bowl games would help fill rooms.

Now they're holding their collective breath, waiting to see how January turns out. The second week of the month is generally the start of the busy season for many Orlando hotels, including convention properties, downtown hotels, and those in the business-oriented north Orlando submarket. The first quarter is important for many in the industry, Smith said.

"If you have a bad first quarter, there's no way you can recover," he said.

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

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Copyright (c) 2010, The Orlando Sentinel, Fla.

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