Orlando hotel occupancy was 55.6 percent for the week of May 23, down 0.8 percent from the rate of 56 percent reported the year prior, said Smith Travel Research.
Average room rates for the week were $83.15, a 21.2 percent plunge from $105.51 paid in the same period in 2009.
In addition, revenue per available room — a common indicator of the industry’s health — was $46.22, down 21.8 percent from the $59.12 recorded the previous year.
In the world of hotel/motels, vacancy rates and rental rates are pretty much everything. The industry is known for being extremely cyclical, and often puts poorly capitalized owners out of business. It's also an industry that's often tough to get financing because of these issues.
Experiencing a steep decline in both occupancy and rates is detrimental to the financial operations of any hotel/motel property, but its also the key data point to why so many hotels are being revalued much lower. Recently: Iconic Allerton Hotel in Foreclosure.
As the economy remains sluggish or even softens, the staycation will continue to pressure vacancy rates and room rental rates. That coupled with over building (supply) and we should expect to see more hotel/motels ending up in foreclosure with banks taking losses, as they do not generate the cash flow to service debts and expenses.
Hope all is will.
J.D. Rosendahl, Rosey