ORLANDO – As Gerald Barrack sees it, Central Florida’s hotel and hospitality industry should be looking at a terrific year in 2011.
“I think definitely there is an upswing in business,” Barrack said. “The first quarter is looking good. We are definitely ahead of last year’s results.”
Barrack is the general manager of the Embassy Suites in Downtown Orlando and Lake Buena Vista, which have experienced rising occupancy rates this year.
“Embassy Suites Downtown is extremely strong, very positive,” he said, adding that Downtown Orlando’s hotel market has done well so far in 2011.
Even in Lake Buena Vista, where bookings haven’t been as strong, “We will run at 82 percent occupant in the first quarter,” Barrack said.
If there’s a wrinkle in all this for Barrack, it’s a problem shared throughout the industry: room rates, which fell sharply in 2008 and 2009 as the impact of the collapse of the housing market, the banking crisis and the national recession took a painful toll on Central Florida’s tourism industry, forcing hotels to slash rates to remain competitive.
Even as bookings go up, Barrack said, hotels are nervous about charging more.
“It’s all financially driven,” he said. “It’s a slow process. We have positive occupancy figures, but we’re not seeing room rates go back up yet. We don’t know how long it will take.”
Not as slowly as some might think, said Lana Yoshii, a researcher with Smith Travel Research. Her firm has estimated that average daily rates in the Orlando hospitality industry are projected to rise by 3.3 percent in 2011, a solid improvement following several years of declines.
“Consumers will be willing to pay a higher price,” Yoshii said. “We’re very, very optimistic about the Orlando market – which I can’t say for every other market.”
Yoshii was the guest speaker today at the Central Florida Hotel & Lodging Association’s annual Smith Travel Research luncheon, held at the Hyatt Regency Grand Cypress. For an industry that’s experienced its share of rocky times in recent years, the mood was upbeat, and the outlook for the next two years appears decidedly positive.
Yoshii said the industry has good reason to feel that way.
As part of her “Lodging Industry Performance Overview,” Yoshii noted that “The good news is that (nationally) everything was up except for room rates,” with occupancy rising 5.6 percent for the industry, while average daily rates fell by 0.1 percent, essentially staying flat.
“What we saw with the last recession was fewer heads in beds,” she said. “We had a really bad dip with the last recession. The good thing is that is moderating down. We were down 16.1 percent – a really big hole for us to dig out of.”
But even as occupancies go up, Yoshii said hotels are not convinced the time is right to increase the rates they charge customers.
“Hotels are still skiddish about raising occupancy rates,” she said. The exception, she said, has been luxury hotels.
“It was actually the luxury hotels that were most aggressive about raising rates, by 3 percent,” she said.
Barrack said one reason why hotels have been slow to charge more is competition: Greater Orlando has 115,000 hotel rooms, he said, second only to Las Vegas, which has 163,000, and new hotels are still being built here, despite the drop in room rates.
“Look at inventory,” he said. “We picked up a lot more rooms. More new hotels were built over the last couple of years.”
Across the nation, there were 53,250 hotel rooms under construction in January 2011, Yoshii said, and if that sounds like a lot, it’s about 40,000 less than in January 2010.
“There’s a lot less competition coming on board,” she said. But even so, “Orlando is the third largest (hotel) market with rooms in construction,” with 2,143 new hotel rooms being built here in January, followed only by New York with 6,317, and Washington, with 3,273.
Barrack – who received CFHLA’s February Lodging Member of the Month award at the luncheon – said this region still has strong assets, including the fact that Orlando remains a world destination and that the theme parks continue to innovate. Universal Studios had great success last year with the opening of the Wizarding World of Harry Potter attraction, Walt Disney World has announced changes on the way for Fantasyland and Pleasure Island, and Merlin Entertainments is building Legoland Florida in Winter Haven for a fall opening.
“The positive is the volume of business we’re all seeing now,” Barrack said. “It’s a destination people want to visit. There’s also a very strong drive-in market. It’s all very, very positive. If the main attractions can continue to keep things exciting, then we’ll continue to do well.”
Two dark clouds on the horizon, Yoshii said, are rising gas prices – which could pinch the drive-in market, or people who travel to this region by car – and the region’s stubbornly high unemployment rate.
“When we did this (research), we didn’t factor in the change in gas prices,” Yoshii said. “That is a concern, but I don’t think it will really alter our projections. But if gas prices get to $5 a gallon, I’ll have to start all over again.”
Orlando’s unemployment rate remains high, at 9.6 percent, she said, above the national average of 9 percent.
“That’s a concern, because of leisure travelers,” she said. “If they don’t have a job, they can’t take a vacation.”
Still, she noted that “Business is coming back across the United States,” and that should provide this industry with a lift this year and into 2012.
“We expect a nice little bump this year, 4.2 percent across the United States,” she said. “We really expect some pretty strong growth in 2012.”
During the awards ceremony, CFHLA presented numberous awards, including the January Lodging Member of the Month award to the entire staff of The Peabody Orlando, and the 2010 Public Servant of the Year Award to state Rep. Mike Horner, R-St. Cloud, who represents a lot of the region’s tourism industry and has worked with many of these businesses as the president of the Kissimmee/Osceola County Chamber of Commerce.
“It should be noted that Mr. Horner boasts a pro-tourism voting record,” said Richard J. Maladecki, president of the association.
Horner said he was honored to be accepting an award from an organization that is “one of the state’s premiere advocates for the hospitality industry.” He pledged to make one of his top priorities the Tourist Safety Act, which makes it easier for law enforcement officials to target criminals who prey on tourists. It’s also known as the “Pizza Flyer” bill, because it targets organized crime rings that hire young people to distribute fake flyers advertising pizza deliveries to local hotels.
“We’re going to get the Tourist Safety Act through this year, I feel very strongly about that,” Horner said. “We’re going to make it happen.”
And, despite the state’s budgetary challenges, Horner promised to fight to protect the budget for VISIT Florida, the state’s top tourism marketing agency.
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