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Orlando-area hotels Have Worst August in at
 Least 22 Years - 58% Occupancy

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

September 22, 2009 - This year's summer season was the worst on record for Orlando-area hotels.

According to a survey released Monday, the Orlando hospitality market wrapped up the three-month season by filling only 58 percent of its available rooms in August, or 8.9percent fewer than in August 2008. That's the worst August on record since Smith Travel Research started keeping track in 1987. The June and July occupancy rates were also the worst for those months since the hotel-tracking company began conducting its local surveys.

And hotel operators were not able to make up for the empty rooms with higher prices: Room rates were down by double-digit percentages all summer compared with a year ago, including a 14.4 percent drop in August to an average $76.29 a night.

"Rooms that we rented last year for $50, we're now renting for $30," said Rizwan Saferali, owner of the Super 8 Kissimmee Suites on Vine Street. "At the end of the day, we're not really making anything."

Though the slack demand and steep discounts are great for deal-seeking travelers, they are causing continued pain for local hoteliers and Orlando's tourism-dependent economy. The slump in hotel use has already slowed the pace of downtown Orlando's public-venue construction projects, which are funded in part by a "resort tax" collected from visitors staying in hotels and other short-term lodgings.

The falloff in those tax collections has delayed construction of the $425 million performing-arts center, which will now be built in stages. And it has put off for a decade or more a planned $175 million renovation of the Florida Citrus Bowl. Only the new downtown arena is still on schedule.

"This is the worst I've ever seen it," said Scott Smith, a lodging professor in the University of Central Florida's Rosen College of Hospitality Management. "You look at the rate and how far the rate has dropped. ... That 14.4 percent change [in price from August 2008] shows that hoteliers are making drastic changes to react to market conditions."

The average occupancy rate in Orlando was below that of the U.S. last month, but the bright spot in that comparison was that the local market didn't fall as far in the past year (8.9 percent) as the country overall (9.9 percent). Smith said that could be an indication that the steep discounts being offered in Orlando, and Florida generally, are at least drawing a few extra tourists here.

Jay Leonard, general manager of the Regal Sun Resort, said his hotel has had a "phenomenal three months" in terms of occupancy, but mainly because of special deals that put his guests in a hotel on Walt Disney World property for what they would have paid a year ago for an off-property room.

Even though many economists have already declared the current recession over, it could be months before hotels see a turnaround, those in the business said. Travel historically is one of the last segments to join an economic downturn, as many people stick to vacations planned in better days, but it's also one of the last to recover, as people wait for signs of recovery before booking trips for weeks or months down the road.

"For me, the number I look at is unemployment," said Saferali. "It's Main Street people. If they have jobs, they'll travel."

Unemployment is expected to remain stubbornly high and even climb a bit more before receding by the middle of next year.

"The hospitality industry always bounces back last relating to a recession," said Rich Maladecki, president of the Central Florida Hotel & Lodging Association.

Maladecki said he expects September's hotel report to also be the worst on record for that month -- worse even than September 2001, when the terrorist attacks grounded all air traffic for several days and triggered a long slump in travel.

"Unfortunately, we believe the hospitality industry will continue to suffer here in Central Florida over the next two, three months," he said.

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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