'It looks like a very promising year' - A solid U.S. economy bodes well for Central Florida's hotel and convention industries

This hasn't been the kindest of decades to Central Florida's hotel and convention industries. The terrorist attacks of 2001, the economic downturn of 2002 and the hurricanes of 2004 all played havoc with reservations and contributed to uncertainty.

After all that turbulence, the industries have reason for optimism in 2007. The economy remains solid and after two years without a hurricane, Central Florida is regaining a sense of stability.

"It looks like a very promising year," said Greg Hauenstein, general manager of the Buena Vista Palace Hotel & Spa and chairman of the Central Florida Hotel and Lodging Association. "We continue to have a strong economy and nobody I know is expressing concerns about 2007."

But there are caveats. Hotel occupancy rates were consistently lower last year compared with 2005, though rising room rates softened the impact on revenue. And a bevy of planned luxury hotel projects expected to open near the end of the decade could alter the dynamics of the market, forcing older hotels to remodel or face obsolescence.

Hauenstein said that renovating older properties is costly, but he said the market is better served when improvements are made. And he said new hotels bring more attention to the region's tourist industry.

"New competition is good for all of us," Hauenstein said. "Every time a new product comes on the market, it does its own advertising and promotion, which brings attention to the area."

But there is a risk. Even with a strong economy, demand for rooms has fallen.

"You have a supply of hotel rooms that exceeds demand," said Dave Theophilus, president of DMT Hospitality Associates, an Orlando consulting firm. "We are continuing to get more and more rooms in the high-end category. I think it is the right strategy, but other hotels with a lot of room inventory are getting hit."

High-end hotel rooms were in short supply until recently, but the situation is changing. Last fall, the Rosen Shingle Creek opened less than a mile from the Orange County Convention Center with 1,500 rooms, and other major projects are planned for the same area.

Though an overabundance of rooms could become a problem for older inns, the pricey new hotels could help the convention center, which uses them as lures to attract events.

Kathie Canning, the center's deputy general manager, said 2006 was a solid year for events, and 2007 is expected to be even stronger. The center expects about 1.2 million people to attend trade shows at the convention center during fiscal 2007, which began last October, up from 1 million in fiscal 2006.

"As long as corporations are still willing to spend money, business remains good and the unemployment rate is down, it should be a good year for us," Canning said.