United States -  Orlando

Overview:

Orlando's economy is fueled by a strong tourism industry, healthcare services and research, financial services, and educational institutions. In addition to being recognized as one of the nation's foremost vacation destinations, anchored by Walt Disney World Resort and Universal Orlando, Orlando is also the major center for commerce in the Central Florida region. The Central Florida Research Park, totaling more than 1,000 acres, is ranked as one of the top ten research parks in the nation and is home to over 125 companies. Moreover, the University of Central Florida (UCF) is the second-largest university in the nation, with more than 60,000 students.

In 2015, occupancy in the metropolitan Orlando hotel market reached its highest level, at 73.8%. Although supply has steadily increased since 2012, the market experienced significant RevPAR growth, at 8.6%, in 2015; this followed an impressive 10.6% gain in 2014. Market-wide average rate reached a historical high in 2015, at $112.08, resulting in a 4.2% year-over-year gain. Recent data reveal that while occupancy rebounded relatively quickly after the Great Recession, average rates were slow to gain momentum. In fact, it was not until a year after occupancy rates hit their lowest point in the past decade that average rates finally bottomed out in 2010. Notwithstanding, the favorable surge in occupancy gave way for strong RevPAR growth during the past five years. Orlando's popularity as a year-round tourism destination has historically contributed to the area's overall economic strength. New or expanded tourism attractions and refurbishments to area resorts are expected to continue to support growth in the tourism industry. Additionally, Orlando’s convention market has shown significant improvements year-to-date in 2016; as of March 31, 2016, convention attendance had increased 20% over that recorded during the first quarter of 2015.

Transaction activity remains strong in Orlando, despite the growing amount of supply in the market. Twenty-nine hotels totaling over $2 billion in transaction volume have sold since January 2015, including the JW Marriott Orlando Grande Lakes in May 2015 (highest total price paid at $617,750,129 or $618,988 per key). While improving market conditions and high investor interest have put downward pressure on capitalization rates, driving hotel values to peak levels, further growth is expected to be held in check given that interest rates and capitalization rates are now beginning to rise. As Orlando is viewed as one of the nation's top leisure destinations, hotel investors consider the market a viable long-term addition to their portfolio.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Orlando United States
Previous Year +1% (46 of 71) +1% (49 of 71)
Growth in 2017 +2% (35 of 71) +2% (36 of 71)
Growth in next 3 years +10% (37 of 71) +10% (36 of 71)

Change In Value For Market:

Orlando RevPAR % Change

For more information, please contact:

Donald Stephens Jr.
dstephens@hvs.com
  • +1 407 203-1122 (w)
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