|By Sara K. Clarke, The Orlando Sentinel,
Fla.McClatchy-Tribune Regional News
Dec. 23, 2008 - Orlando hoteliers slashed prices last month, without much success, as the local lodging industry experienced its worst November since 2001.
The average hotel in the Orlando market was only 53 percent full, compared with 62.6 percent in November 2007, according to Nashville, Tenn.-based Smith Travel Research. In November 2001, as the country was recovering from the 9-11 terrorist attacks and the subsequent slump in air travel, the local occupancy rate was 51.4 percent.
"Everyone knows this is a very serious situation, and they're just trying to hold on and minimize the losses," said Scott Smith, a lodging professor in the University of Central Florida's Rosen College of Hospitality Management. "I doubt you would find anyone who thinks we've bottomed out."
After six straight months of year-over-year declines in occupancy, the region's hotels are starting to move from trimming hourly workers' schedules to eliminating upper-management positions, putting industry veterans at risk, Smith said.
When it comes to making money, Orlando hoteliers are in a dangerous position: The minimum occupancy rate needed to turn a profit is generally considered to be 55 percent, said Richard Maladecki, president of the Central Florida Hotel & Lodging Association. In November, the majority of Orlando's sub-markets -- including the International Drive area and the budget-oriented Kissimmee area -- were well below that threshold.
"Any time you're under 55 percent, you're going to see operators and owners that are running in the red," Maladecki said. "We're in for a slow period of time for the next 12 to 18 months."
As hotels tried to lure more guests in November, they gave in to the temptation to offer discounts. The market's average room rate fell 8.8 percent from a year earlier.
That, combined with the 15.2 percent drop in average occupancy, caused the market's revenue per available room -- a key industry measure -- to fall 22.7 percent compared with November 2007, according to the Smith Travel survey, which does not include Walt Disney World hotels.
Orlando's drop in average occupancy in November was one of the sharpest in the country. Among the top 25 hotel markets in the country surveyed by Smith Travel, only San Diego, Phoenix, Chicago and Seattle also reported year-over-year declines of more than 15 percent.
The nationwide recession, now known to have begun more than a year ago, is now hurting both business and leisure travel, noted Paul Tang, general manager of the 750-room Hyatt Regency Grand Cypress in Lake Buena Vista.
"Our November was very tough," Tang said. "Right now, the problem is even the people who can afford it -- they won't go, because they're not sure" about the economy's direction.
Orlando's primary tourist strip, International Drive, sustained heavy damage in November: I-Drive's average occupancy rate dropped 20.4 percent, while its average room price fell 9.7 percent.
Sara K. Clarke can be reached at 407-420-5664 or firstname.lastname@example.org. For complete chart, see printed copy.
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