United States -  Orlando

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In 2018, Orlando continued to benefit from strong demand given the overall health of the national and regional economies. Orlando continues to be the gold standard of hospitality in the U.S. given its ease of accessibility, world-class entertainment and sporting venues, and wide-ranging hotel accommodation choices. In April 2019, AAA ranked Orlando the top destination for summer travel in the world, ahead of iconic cities such as London, Rome, Paris, and Honolulu. The significant increase in developments in recent years and continued investment in existing assets are evident throughout the Metro Orlando market. After strong demand in late 2017 and early 2018 stemming from Hurricanes Irma and Maria, as well as a focus on average rate (ADR) growth, occupancy was modestly down for 2018; however, ADR growth continued at nearly 5%, similar to 2017, resulting in a $10 increase in overall ADR and RevPAR growth in the Metro Orlando market since 2016. Through February 2019, occupancy declined modestly and ADR remained relatively flat, resulting in a roughly $3 RevPAR drop. RevPAR growth in 2019 is anticipated to be predominantly ADR-driven as new supply enters the market and major new attractions open at area theme parks. Forecasted economic growth throughout the MSA, ongoing expansions at Orlando International Airport, and ongoing developments at area resorts and attractions should support moderate demand growth in the near term.

The number of passengers utilizing Orlando International Airport surpassed Miami International Airport for the first time in 2017, making it the busiest airport in Florida. In 2018 and through the first quarter of 2019, passenger traffic at Orlando International Airport continued to increase, showing an over 6% increase in early 2019 over the same period in 2018. International passenger traffic increased by approximately 15%, while domestic traffic increased by roughly 6%. Much of this increase can be attributed to new and additional flights from Spirit and other airlines, added seats on existing flight routes, and strong demand. These strong gains continue to support the nearly $3 billion in airport improvements underway, including the South Terminal that is anticipated to open in 2020. The three major theme parks have continued to open, construct, and invest in new attractions and hospitality projects, and area hotel operators are awaiting the opening of the highly anticipated new attraction "Star Wars: Galaxy's Edge" at Walt Disney World Resort in late August 2019. Moreover, the meeting/group segment continues to drive significant demand to the Orlando market. The Orange County Convention Center (OCCC) is the second-largest convention center in the nation and had a record year in 2017, as the facility drew an estimated 1.5 million attendees to the Metro Orlando area. Construction work on Orlando’s Interstate 4 is ongoing, as the major transportation route is being transformed by a seven-year, $2.3-billion makeover, including the reconstruction of 21 miles of highway through two Central Florida counties. 

In 2018, supply increased just under 1%, which included the 600-room Aventura hotel at Universal Orlando Resort that opened in August 2018, as well as a variety of limited-service hotels that entered the market in late 2017 and throughout 2018. The former Wet 'N Wild water park, owned by Universal, is being redeveloped into a beach-themed complex known as Universal’s Endless Summer Resort, which will include the 2,050-key Dockside Inn & Suites, opening in 2020, and 750-key Surfside Inn resort, due to open mid-year 2019. Additionally, Margaritaville Resort Orlando opened in early 2019 and is anticipated to spur growth in the surrounding area. Work is also underway on the JW Marriott Bonnet Creek Resort & Spa minutes from Disney; this hotel is scheduled to open in early 2020 and will offer a new luxury product with approximately 50,000 square feet of meeting space. Various branded, limited-service properties are also under development throughout each of the Metro Orlando submarkets. Some trends to keep an eye on include the continued addition of meeting space at larger resort and meeting-oriented hotels and the redevelopment and renovations of older existing hotels. Another important factor for the area is the ongoing transformation of theme parks into destination resorts by the addition of themed hotels, including the planned Star Wars-themed Disney resort, as well as retail, dining, and entertainment developments, which can have a profound impact on the economics of these attractions.

The Orlando transaction market ended 2018 with the fourth-quarter sale of the Grande Lakes Orlando Resort, inclusive of the 582-room Ritz-Carlton and 998-room JW Marriott, that sold for a reported price of over $860 million ($550,000 per room). Blackstone REIT purchased the newly opened, dual-branded, 134-key SpringHill Suites by Marriott and 120-key Residence Inn by Marriott near Orlando's Mall at Millenia for a reported $48 million. This dual-branded property was developed through a JV of PRISA Group and Peachtree Hotel Group. Furthermore, Blackstone sold the Hilton Garden Inn Orlando at SeaWorld in November 2018 for nearly $31 million ($138,000 per room). Additional transactions of limited-service hotels occurred in the Altamonte Springs, Kissimmee, and Airport submarkets, among others. Orlando remains one of the nation's top 25 primary markets, ensuring that hotel investors will continue to pursue assets in this growing Florida market. Ongoing expansions and developments at area resorts and attractions are expected to support demand growth in the near future. Moreover, Orlando's diversification into the health services sector and its recognition as a national corporate headquarters location will further bolster the city's presence nationally.

* 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.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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