LAKE BUENA VISTA – Looking back at 2011, Brittany Baldwin said there was plenty of reason for Central Florida’s tourism and hospitality industry to be positively cheering – starting with the fact that occupancy at the region’s hotels soared last year.
“Healthy demand is certainly here in Florida,” Baldwin said. “We like to joke that heads are being put in beds in Central Florida.”
At the same time, she added, the number of vacant hotel rooms got smaller last year.
“Demand is back – that’s the biggest thing, and supply is not, which is a great thing,” she said.
But Baldwin, the director of business development and destinations at Smith Travel Research, said there’s only one dark cloud over the entire horizon for the hotel and lodging industry: room rates. They fell so dramatically at the height of the recession in 2008, she said, that hotels have been fearful of raising them – and have even lost some bargaining power because those rates went so low.
“Pricing power is coming back, but right now we’re still playing catch up,” she said.
This afternoon, the Central Florida Hotel and Lodging Association — the world’s largest regional hotel association, representing about 80 percent of the hotels in Orange, Osceola and Seminole counties – held its annual general membership luncheon at the Hilton Orlando Bonnet Creek Resort in Lake Buena Vista. During the luncheon, Smith Travel Research made a presentation titled “Orlando Hotel Occupancy and Projections,” which looked back at occupancy and room rates in 2011, while also making projections about where the industry was headed for the rest of 2012.
Baldwin, who gave the power point presentation, said the industry rebounded nicely in 2011, as pent up demand for a vacation in Central Florida helped fill up local hotel rooms that had gone vacant at the height of the recession in 2008 and 2009.
“We set records for 2011,” she said.
She noted that RevPAR — or revenue per available room, a performance metric in the hotel industry – was up in 194 of 212 American tourism markets, including Orlando, last year, as well as worldwide.
“Globally, we are seeing strong improvements in RevPAR,” she said. “This industry is extremely important and extremely profitable, even when coming out of a downturn. Folks are getting back on the road. We are seeing the strongest demand rebound ever.”
The same is true locally. In 2011, Orange County collected more than $177 million in resort taxes, or taxes collected on sales from hotel room stays. That broke records and was higher than the last profitable year for the local industry, in 2007, the last year before the downturn, when Orange County collected $165.8 million in resort taxes.
Leading the way, she said, have been luxury hotels, which have been outperforming upscale, midscale and economy hotels – although all categories of lodging experienced strong improvements in 2011, she added.
“We’re seeing some strong occupancy across the board,” Baldwin said. “We’re really hoping luxury will be the engine that leads the way in the next couple of years. We’re seeing all the money being made in the luxury segment.”
But if there’s one problem hotels still have, it’s what they’re charging customers. While occupancy is back up, guests are still paying less than they did before the recession started in 2008, Baldwin said.
“During the downturn, rates went down pretty dramatically,” she said. “Hoteliers panicked and it will take a while to get the rates back up.”
In some instances, she said, hotels agreed to book rooms six months in advances at rock bottom prices – a move that might have made sense at the time, Baldwin said, but has since chipped away at their bargaining power, since customers have come to expect those low rates to stay in place.
“That’s what we’re seeing now, the effect the downturn had on pricing and how it’s haunting the market today,” she said.
Just when the region’s hotels can expect to begin raising rates, she added, isn’t clear.
“Will it take seven years to get back up to those (pre-recession) rates? We don’t know,” Baldwin said. “That will be up to the hoteliers.”
But she added that Florida cities like Orlando and Miami are likely to experience another strong tourism rebound in 2012, as more people fill up the local hotels.
“Really, we’re seeing some nice, positive things happening for Florida’s areas,” she said.
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