Jun. 10--Less than halfway through 2001, Orlando hoteliers are staring into the face of what's beginning to look like one of the worst years in recent history. 

From Kissimmee to Lake Mary, hotels are scrambling to counter the effects of the nation's struggling economy by laying off workers, leaving jobs unfilled, slashing hours for employees, offering special promotions and, yes, even cutting prices. 

But crying over Orlando right now would be akin to feeling for sorry for a millionaire forced to pay luxury taxes on his new yacht. 

After all, this is a market envied nationwide for its ability to sell lots of hotel rooms at ever-increasing prices--average room rates have gone up 26 percent since 1995. 

Certainly there are hotels in the region -- particularly in Kissimmee and central Orlando--where times are rough. In some parts of Kissimmee, for example, demand for rooms has slipped more than 7 percent this year. 

But by and large, 2001 is expected to look bad only when compared with Orlando's recent past. 

"We've gotten used to seven years of unprecedented growth. Now we're just taking a breather," said Alan Villaverde, general manager of The Peabody Orlando on International Drive. "Let's face it. Orlando is not going to be putting up a `for sale' sign." 

The slowdown comes on the heels of breakneck growth during the past decade. 

Orlando's worst year for average daily occupancy was 1994, when 71.3 percent of the area's rooms were filled, according to Smith Travel Research, a Tennessee-based research company that tracks hotel markets. The best came two years later when 80.3 percent of the rooms were filled on the average night. 

Through April of this year, the average daily occupancy was 73.3 percent, though that number is expected to fall as the year grinds onward. 

But even if occupancy dipped below 70 percent, this market would have little to complain about when you consider the national average struggles to top the 60 percent mark. And more important to the pocketbook of hoteliers, Orlando is well-ahead of the 55 percent mark, where hotels generally begin to turn a profit. 

Notably, Orlando has maintained its lofty occupancy levels while adding more than 20,000 rooms, pushing local inventory past the 110,000-room mark, second only to Las Vegas. 

That steady demand, fueled largely by the marketing efforts of Disney and Universal, also has allowed hoteliers to push room rates ever higher. In 1994, the average room sold for $68 a night, compared with $86 a night last year. 

So why are many area hoteliers worried? 

For starters, it's never comforting to hear that the area's biggest people supplier, Disney, is feeling the effects of the nation's sputtering economy. 

If the latest market report by Smith Travel is any indication, Disney's earlier predictions of a soft year are proving accurate for the entire region. 

During April, the Lake Buena Vista area hotels--which thrive on spillover traffic from Disney--were among the hardest hit, with occupancies falling nearly 10 percent, forcing hoteliers to cut room rates by nearly 9 percent. Disney's own hotels are not included in the Smith Travel report. 

"It's a trickle-down effect. When they are busy, Lake Buena Vista does very well," said Jeffrey Brinda, general manager of the Sheraton Safari Resort. "But when Disney experiences a softness, then it impacts us as well." 

The Sheraton Safari, like others in the area, countered by laying off a pair of midlevel managers. Such moves do not appear to be widespread -- with the exception of Disney's recent decision to cut 1,400 jobs from its Orlando operation -- but still represent a marked departure from the way hotels have been operating. 

Area hotels also have been stung by the same thing that ails companies across the nation. Budget projections for 2001 were based on a continued strong economy, not one marred by talk of a recession. 

Though some analysts have predicted improvement next year, others question whether anyone can accurately forecast the expected turnaround. 

"I haven't seen anything or read anything that makes me believe next year will be better," said Scott Brush, a Miami-based hotel consultant who follows the Orlando market. 

So rather than surrender those lofty profit projections -- which owners have come to cherish -- hotel managers are looking for ways to control costs and keep customers coming in the front door. 

At the 176-room Marriott Residence Inn International Drive, managers have reduced housekeepers' hours -- from 40 to as few as 28 -- despite the fact that the hotel is actually doing better than it did last year. 

That tactic is not without risk for an industry whose biggest problems include high employee turnover. There is a fear that valuable employees could look elsewhere for work when the economy improves. 

"That's on our mind every day. And you can't blame them," said Jim Berkley, regional director of operations for Flagstone Hospitality Management, the hotel's owner. 

Hotels also are taking a hard look at the groups they are trying to attract. Some are turning their marketing dollars to industries -- health care and pharmaceuticals, for example -- that have fared better during the current economic storm. Others are simply accepting cheaper group business that wouldn't have made the cut last year. 

Another favored strategy, employed by hotels like the Celebration Hotel, is the packaging of several evenings along with items such as golf, visits to a spa or theme park tickets. 

The 18-month-old luxury property has been focusing on couples bound for Disney as well as small groups, which can mean the difference between feast and famine for a hotel with only 115 rooms. 

"I've got two groups coming in July. To a larger hotel, they'd be pocket change. But for us, it's significant," said Randy Patterson, the general manager. 

Hotels also are resorting to promotions aimed at drawing new customers, or convincing old ones to return. The Holiday Inn Family Suites Resort, a mile from Disney, recently announced a promotion that will give away 300 two-night stays at the resort during September. 

"It's a way to build awareness," said Dan Ward, a spokesman for the hotel. 

The final, and least favorite, way for hotels to boost business is to cut prices, something seen only on a limited basis so far this year. 

According to the Smith Travel report, hotel prices are virtually flat through the first four months of 2001, though hoteliers in Kissimmee and Lake Buena Vista have been forced to cut rates. 

But not enough to attract the attention of tourists like Ted Wernimont, 55, an Iowa resident who visited Orlando last month. 

Scouring the Internet in the days leading up to his trip, Wernimont found nothing in the way of eye-catching deals. 

"To be honest, I didn't see anything real dramatic," Wernimont said. "Nothing that said, `We are cutting our prices to get you here.' " 

Instead he waited until two weeks before his departure and turned to Priceline.com -- which serves as a pipeline for hotels looking to shed excess inventory at reduced prices -- and found a room for $40 a night at the Renaissance World Gate, where rooms typically go for double that price. 

If most area hoteliers get their way, this won't be changing anytime soon. There will be no rampant discounting of rates for the average tourist. 

That's because such price wars have proven rather ineffective at improving business for Orlando hotels, said local hotel consultant David Theophilus. 

In the end, the same hotels tend to be filled with the same number of tourists -- but tourists who are paying less money to be there. 

"Hotels in this town have been through this game enough times to know what happens," Theophilus said. "You reduce your prices, but you don't create any new business." 

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(c) 2001. Distributed by Knight Ridder/Tribune Business News. DIS, HOT, MAR, BAS, PCLN,