Florida Hotels Making Comeback: E&Y

MIAMI— The Florida hospitality industry is beginning to improve, but at a slower pace than the nation, according to a just released report by Ernst & Youngs Hospitality Advisory Services Group, with the key markets of Miami, Orlando and Tampa, though behind 2001 performance showing levels are improving. “Florida hotels are still performing below 2001 levels but have been steadily improving over the last six months. We are seeing signs of improvement in both occupancy and room rates for the hospitality industry,” said Mark Lunt, E&Ys Southeast/Caribbean Hospitality Practice Leader. “Even though travel is still down overall, the primary leisure markets of Florida have helped to improve the performance of one of the states leading industries. The major markets of Orlando, Miami and Tampa, heavy with theme parks, prime beaches and nice weather are helping to lead the state in hotel performance statistics.” The report found that some markets are faring better than others. Orlando is faring the best, where the hotel market is expected to finish the year stable with 2001 and has the most positive outlook for 2003. Tampa, without a glut of new supply to contend with, recovered faster than other Florida markets and is closing the gap on Orlando. Miami, more dependent on Latin America, corporate travel and conventions, is facing the toughest challenges, and is anticipated to continue in negative territory through early 2003. Lunt predicted back in February that most Florida hotels would have to discount rates to maintain or increase their occupancy. The major markets through the first six months of 2002 show hotels reduced prices on average between 4% and 10% from 2001 rates. Benefiting from increased drive-in tourism, Orlando has rebounded the quickest of the major markets. “Orlandos average daily rates in June were still down 4.2% but had improved from being down almost 10% in January,” said Lunt. Occupancy rates, although still below normal, are improving as well. Orlandos occupancy was down 14.6% in January of 2002; by June was only down 5.9%. The Tampa market occupancy was down as much as 12.2% in January and by June was down by 6.6%. The Miami hospitality market was down 13.5% in January and by June was down 9.6%. “Even though FL is still below normal in terms of rates and occupancy we are seeing steady signs of improvement,” said Lunt. “Im encouraged that were seeing steady improvement through the first half of 2002,” he added. However, Lunt cautioned that FL was not out of the woods completely. “We are still dealing with some tough economic conditions and hotel operators will have to continue to find ways to improve their performance,” he said. Lunt believes most operators will continue to discount room rates slightly throughout the rest of the year to help boost occupancy numbers. “The long-term health of the Florida hospitality market is good. Florida is still the second most visited state in the nation,” said Lunt. The report, a follow-up to Ernst & Youngs 2002 FL Lodging Forecast, provides an updated analysis of the Florida lodging industry, and is based upon market research provided by Smith Travel Research and independent interviews conducted by Ernst & Young.