Craving Normalcy
The Orlando hotel market is hurting, but bullish signs are surfacing.

By Ken Ibold

The slowdown in vacation and business travel has some hotels in central Florida on the brink of failure, and many of the rest are tightening their belts. Disney has shuttered 16% of its 22,000 rooms and delayed the opening of what will be its largest resort, the 5,760-room Pop Century.

Central Florida now has the highest share of troubled hotel loans in the country. At the end of 2001, Standard & Poor's reported 14 area hotels were delinquent on loans totaling $170 million -- 24% of the national total. And the troubles are not limited to smaller hotels. The Hotel Royal Plaza was delinquent on $35 million, and the Hyatt Orlando in Kissimmee was behind on $23 million.

In addition, convention attendance has dropped off 5% to 15%, according to the Orlando/Orange County Convention & Visitors Bureau.

"I saw in early 2001 that 2001 would not be as good as 2000, which wasn't a great year either," says hotelier Harris Rosen. He says business travel is slowly returning, but the leisure market is harder hit by the fear of travel.

Despite the troubles, the area's hotel industry remains bullish. Among the reasons for optimism is the Gaylord Palms, a recently opened $450-million property boasting room rates that start at nearly $250 a night. Pinning its hopes on convention attendees who bring their families along, the hotel is geared for both. Room safes include electrical outlets for keeping laptops secure while they're recharging; the hotel pool is shaped like an octopus.

The resort boasts 380,000 square feet of meeting space, including one room big enough to host a Broadway show; it also has an on-site La Petite Academy that will feature a Space Camp, Animal Safari, Cooking Camp and Super Sports Camp.

Before the hotel even opened, it had booked more than 1 million room nights through 2012, including enough to guarantee a 60% occupancy rate for 2002 with no additional bookings.

Amid the overall retrenching at Disney, the Walt Disney World Swan and Dolphin hotels announced a $75-million expansion, the largest in its history. The Army's 287-room Shades of Green near Disney World will undergo a $50-million expansion to double its size. The occupancy rate has been 90% to 100%, even post-Sept. 11. The guests, whose room rates are based on rank, must be active or retired military or federal workers.

"I think things will be back to normal within eight to 12 months," Rosen says, "and normal would be terrific."

In the News

Clermont -- Lennar Homes (NYSE-LEN) has been fined nearly $62,000 for drawing too much water to irrigate the 181-acre Clermont Legends Golf & Country Club development. Lennar had counted on using treated wastewater provided by the city for irrigation, but the city was unable to provide sufficient reclaimed water. The company then got permission to pump water from the aquifer until reclaimed water is available later this year but pumped far more than its permit allowed.

Cocoa Beach -- Developer Richard Hanor is scheduled to begin construction this quarter on the 1.1-million-sq.-ft. Brevard Crossings Mall, a regional mall that will include a 300-room hotel and multiplex cinema with 3,300 seats.

Lake Mary -- Team Information Services landed a $3-million contract from SBA Communications of Boca Raton to manage outside employees involved with SBA's network of 3,000 cell-phone towers.

Melbourne -- Harris Corp. (NYSE-HRS) has signed a $200-million contract with General Dynamics United Kingdom to supply 10,000 radio systems to the British military.

Orange County -- AT&T Corp. eliminated 70 jobs from its Local Network Services division in east Orange County -- about 20% of the total -- as part of a restructuring but added 70 jobs to its local call center after closing a call center in New York City.

Orlando -- Walt Disney World is closing a quarter of its Disney Institute resort and plans to build an additional 192 time-share units starting this spring.

OurBeginning.com, the online stationery store that enjoyed fleeting fame with its "battling brides" Super Bowl commercial two years ago, filed for Chapter 7 bankruptcy liquidation after burning through $7.5 million in venture capital.

Historic Creations of Orlando has proposed a $50-million, 15-story condominium tower in downtown Orlando. The proposed development, bordered by Church, Pine, Osceola and Eola streets, would include 288 living units and 10,000 square feet of commercial space.

Universal Studios Florida is discounting sound-stage rental fees by 80% to small filmmakers. To qualify for the $500-a-day rate, the film's budget must be $5 million or less and 80% of the crew has to be hired from within Florida.

The Greater Orlando Aviation Authority is exploring surcharges to airline tickets to help pay for renovations and other changes needed to improve security. The authority estimated the cost of the changes would likely exceed $50 million and could top $100 million.

Tiffany's & Co. will join other high-end retailers at the new Millenia Mall scheduled to open this fall at I-4 and Conroy Road. Crate & Barrel is also a possible addition in 2003. The mall's anchors include Bloomingdale's, Macy's and Neiman Marcus.

Country Fresh, a Houston-based food distributor, plans to move to a new location near Orlando International Airport and nearly triple its space to 45,000 square feet. The move will also allow the company to double employment to 200.

Osceola County -- Reading, Pa.-based American Casualty does not have to cover a $240-million judgment Walt Disney Co. had to pay for stealing the idea for the Wide World of Sports complex. Disney claimed the judgment should fall under its insurance coverage.

Titusville -- An unidentified developer has committed to build Titusville's first new hotel since 1975. The project will be adjacent to the Astronaut Hall of Fame. The hotel will be a nationally known brand. Opening date is projected in 2003.

For sale: Orlando Magic
ORLANDO -- Orlando Magic owner Rick DeVos plans to sell the NBA team for about $185 million. DeVos says he's ready to retire and can't come up with a way to give the team to his daughter and son-in-law.

Agere Plant
ORLANDO -- Agere Systems plans to sell its semiconductor plant in Orlando and close two others in Pennsylvania. The Orlando facility employs more than 1,100. All told, the moves will result in about 300 job cuts. Last year, Agere, which is being spun off from Lucent, cut 7,000 jobs.