Orlando Economics Archives - Page 2 of 4 - Orlando vacation home rentals near Disney. Orlando vacation rentals

We had previously identified that the perfect stormcould be about to hit the massive UK tourism market (approx. $1,000,000,000) to Orlando. It would appear the perfect storm is now happening.

The British pound just hit a 25 year low against the dollar and is getting worse. The cost to a British person to visit Orlando based purely on the exchange rate is now at a 25 year high.

The reason for the dramatic devaluation in the pound is due to the problems in the banking industry in the UK which have reached dire proportions and are getting worse by the day. Royal Bank of Scotland’s problems appear to be wreaking more havoc on the UK economy.

In conclusion, the implosion of the UK economy will be tough on Orlando tourism and the economy as a whole. A 15% to 20% decline in this market for 2009 would not be unrealistic given the current circumstances, but then no one can predict the future including us – we are incompetent non-professionals.

On this post, we develop three scenario forecasts for the Orlando Florida short term rental industry for 2009 compared to 2008. This market includes hotels, vacation homes and timeshare rentals.

As we always indicate, no one can predict the future. If you had listened to economists predictions for Florida over the last two years you would realize that most of them have been stunningly wrong.

Although some Orlando short term rental products will fare better than others, 2009 will most likely be very bad and possibly have longer term systemic consequences than what is generally recognized today.

Best Case:

Occupancy Down 7%

ADR Down 8%

= Total Room Revenue Decline of 14.4%

Expected/Most Likely

Occupancy Down 13%

ADR Down 18%

= Total Room Revenue Decline of 28.6%

Worst Case

Occupancy Down 20%

ADR Down 24%

= Total Room Revenue Decline of 39%

Short term rentals in Orlando will be affected at many levels. Inferior product in inferior locations will be effected the most, while good product in the best locations will be affected the least.

We are advised from professionals in the field that large feeder markets to Orlando such as school groups, conventions and the UK are rapidly evaporating. Gas prices are also sneaking back up and affecting the drive markets. In addition, some theme park ticket prices are now at record highs for single day passes – even as short term rental properties slash their rates.

How we calculate the numbers using an algorithmic statistical regression is not disclosed, so always deem the authors of this blog as incompetent, and read our disclaimer above.