HVS Market Report – Central Florida Hotel Market: Orlando’s Transformation – By Donald C. Stephens Jr. and Natalie Pierce

An iconic tourist destination, Orlando is now officially the ‘Most Visited Tourist Destination in the U.S.’ This article discusses Central Florida demand generators as well as growth and trends within its seven unique submarkets.

Orlando Holds a New Title 
The city of Orlando has long been known as an iconic vacation destination, but can now officially boast the title of “Most Visited Tourist Destination in the U.S.”, reporting over 62.3 million visitors in 2014, up 5.1% from 2013.1 With multiple factors driving Orlando’s appeal, it is important to discuss what is on the horizon for the hospitality market in this Central Florida city. 
What Are We Looking At? 
As of July 2015, 118,442 hotels rooms spread among seven unique submarkets comprise the Metro Orlando hotel market – Orlando North, Central, and South, International Drive, Lake Buena Vista, and Kissimmee’s East and West submarkets. Due to the proximity to Orlando’s most popular attractions, the Lake Buena Vista and International Drive submarkets account for 64% or 76,005 rooms of Metro Orlando’s  inventory. The following graphs illustrate room distribution throughout Orlando’s submarkets, and by product segment.
Strong Growth for Orlando Continues
Following a steady restabilization period since the economic downturn, Orlando’s hotel market is back on top. Through the first half of 2015, all three indices, occupancy, average daily rate (ADR) and revenue per available room (RevPAR) continue to demonstrate significant growth. Comparative to period ending June 2014, Orlando’s current room inventory reflects a mere 1.7% increase, while demand (occupied room nights) increased 5.7%.
Orlando’s occupancy rate increased from 76.9% to 80.1%, representing a percentage change of 4.1% over the same six-month period in 2014 – surpassing an occupancy threshold for the first time since 1998, seventeen years ago. Average rate grew 4.4%, and RevPAR ended the first half of the year up 8.7%. 
At the May 2015 Central Florida Hotel Market Review presented by HVS in Orlando, annual metric estimates were presented. Donald C. Stephens, Vice President of HVS Consulting & Valuation based in Orlando, indicated a RevPAR growth estimate of 8.6%. Based on updated data presented in the following tables through June 2015, it would appear projections are trending toward market levels.
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