I not a firm believer that the recession is over or even that the economy is that much better than it was 4 years ago. However, there is a lot of construction going on, and I wanted to explore the impact of this new construction with regards to existing hotels near Disney World and Universal Studios in Orlando.
Last year Disney opened the Disney Art of Animation Resort. This is a budget suite hotel which is located on Disney World property. When Disney built this hotel their target market is the larger families (4 and 5 members) who want to stay on Disney property but they also are trying to stay within a budget. The Art of Animation sports the largest pool on the Disney World property and all the rooms are multi-room suites.
This year, Universal Studios is finishing up their newest hotel…Cabana Bay. This is also going to be budget oriented suite hotel which will be located on Universal Studios property. This hotel is going to offer guests the experience of jumping back in time to the 1950’s and 1960’s.
Universal Studios newest hotel is under construction.
So what is the impact these two suite hotels are going to have on other Orlando hotels? Well for one these two hotel rooms combined adds close to 4000 new hotel rooms to the Orlando hotel market. Many or most hotels in Orlando do great for about 6 to 8 weeks out of the year (Christmas, Springbreak, Easter, and 4th of July) and the rest of the time their occupancy rate and/or daily average rate is much lower than what they desire. When you go and add 4000 more resort hotel rooms, these hotels are still going to do just fine during those 6 to 7 weeks, but they are going to find it harder to fill their hotels during the other 45 to 46 weeks out of the year.
One thing which is almost a given is that non Disney World or Universal Studios hotels are going to have reduce their rates and boost the amenities they offer guests. Guests coming to Orlando are always looking for a deal, so the easiest way to boost occupancy is to simply reduce rate. The only problem with this is that the hotels still need a significant amount of revenue each and every month to keep their doors open. Another thing which Orlando hotels are going to have to do is offer families amenities which other hotels in the area are not offering. One such hotel which has done this is the Nickelodeon Hotel, they have built a grand water park area in the middle of their hotel.
