Orlando hotel market expected to be ‘firing on all cylinders’ in 2020

A new decade brings the same sunny outlook for the Orlando hotel market.

Paul Sexton, vice president of Orlando hotel services firm HREC Investment Advisors, tells Orlando Rising that 2020 is expected to be another stellar year for the area’s hotels with theme parks continuing to attract record number of visitors year after year.

“It’s kind of a boring story at this point, but we’re pretty much firing all cylinders here in the market,” Sexton said. “The demand generators are doing well. SeaWorld is starting to turn around. Disney is doing exceptionally well, and we’ve got additions to the supply which are meeting the needs of the market.”

Among the notable 2019 additions were the first phase of Universal’s Endless Summer Resort, the 750-room Surfside Inn & Suites, and the Jimmy Buffet-themed Margaritaville Resort Orlando along U.S. Route 192 in Kissimmee. Sexton said both new hotels had an impact on their respective submarkets, with the caveat that Universal’s expansion onto International Drive came with some attractive introductory rates (as low as $73 per night based on a seven-night stay).

What did surprise him and hotel operators was the response to Star Wars: Galaxy’s Edge. Initially expected to open towards the end of 2019, the 14-acre land at Disney’s Hollywood Studios instead opened in August with only one of its two rides operating.

“I did do some chatting in that market with some of the operators and it did not have any kind of effect,” Sexton said of the Galaxy’s Edge’s impact on hotel demand near Disney World. “Their occupancies were down a little bit over the fourth quarter of 2019, so Disney didn’t go a terrific job with regards to rolling that out.”

The December opening of Rise of the Resistance appears to be driving more demand, just as Disney itself predicted to shareholders. With the land’s marquee attraction now open, Sexton said the word of mouth from hotel operators is January 2020 has been very busy.

2020’s theme park additions aren’t as large as last year’s — when three parks added new lands and Universal expanded the ultra-popular Wizarding World of Harry Potter — and the slate of new hotel projects similarly appears to fall short of 2019.

Universal will open the second phase of the Endless Summer Resort in March. While Disney itself won’t be adding another hotel this year, a 516-room luxury JW Marriott hotel will open in Bonnett Creek in February. Otherwise, most additions and renovations will be too small to have a noticeable impact on the market as a whole.

The key to the Orlando hotel market’s continued success in 2020, according to Sexton, will be performance of the overall economy, which currently boasts low unemployment and no hint of an impending recession.

“I think from an economic perspective, you’ve got the backdrop that’s going to make for a good market,” he said. “You’ve got Star Wars: Galaxy’s Edge completely open, [Disney’s] doing some other amusement stuff and Universal’s at the top of their game.”

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