FL Hotels Making a Comeback; Ernst & Young Report Shows Signs of Recovery as Orlando Tops Miami and Tampa.

Business/Travel Editors

MIAMI, Fla.--(BUSINESS WIRE)--Sept. 9, 2002

The Florida hospitality industry is beginning to improve, albeit at a slower pace than the nation. After surviving what may be its toughest twelve months in the past decade, the hospitality industry is beginning to show signs of life. After absorbing the deadly combination of the 9/11attacks, drop in the stock market, new supply pressure and prolonged reductions in corporate and leisure travel, the key markets of Miami, Orlando and Tampa, though behind 2001 performance levels are improving. In a report released today, Ernst & Young's Hospitality Advisory Services Group assesses the market's improvements, ongoing challenges and solutions for hotels trying to navigate out of what is likely the toughest economic condition faced in years.

"Florida hotels are still performing below 2001 levels but have been steadily improving over the last six months. We are seeing signs of improvement in both occupancy and room rates for the hospitality industry," said report author Mark Lunt of Ernst & Young. "Even though travel is still down overall, the primary leisure markets of Florida have helped to improve the performance of one of the states leading industries. The major markets of Orlando, Miami and Tampa, heavy with theme parks, prime beaches and nice weather are helping to lead the state in hotel performance statistics," Lunt added.

The report, a follow-up to Ernst & Young's 2002 FL Lodging Forecast, provides an updated analysis of the Florida lodging industry. The report is based upon market research provided by Smith Travel Research and independent interviews conducted by Ernst & Young. The full report titled, "Florida Mid-Year Lodging Report" is available at: www.ey.com/us/reas

Not surprisingly, the report found that some markets are faring better than others. Orlando, a top tourist destination, is faring the best, where the hotel market is expected to finish the year stable with 2001 and has the most positive outlook for 2003. Tampa, without a glut of new supply to contend with, recovered faster than other Florida markets and is closing the gap on Orlando. Miami, more dependent on Latin America, corporate travel and conventions, is facing the toughest challenges, and is anticipated to continue in negative territory through early 2003.

Report author, Mark Lunt - E&Y's Southeast/Caribbean Hospitality Practice Leader, predicted back in February that most Florida hotels would have to discount rates to maintain or increase their occupancy. A quick look at the major markets through the first six months of 2002 shows that hotels reduced prices on average between four and ten percent from 2001 rates. Benefiting from increased drive-in tourism, Orlando has rebounded the quickest of the major markets. "Orlando's average daily rates in June were still down 4.2 percent but had improved from being down almost 10 percent in January," said Lunt.

Occupancy rates, although still below normal, are improving as well. Orlando's occupancy was down 14.6 percent in January of 2002; by June was only down 5.9 percent.

The Tampa market occupancy was down as much as 12.2 percent in January and by June was only down by 6.6 percent. The Miami hospitality market was down 13.5 percent in January and by June was only down 9.6 percent. "Even though FL is still below normal in terms of rates and occupancy we are seeing steady signs of improvement," said Lunt. "I'm encouraged that we're seeing steady improvement through the first half of 2002," he added.

However, Lunt cautioned that FL was not out of the woods completely. "We are still dealing with some tough economic conditions and hotel operators will have to continue to find ways to improve their performance," he said. Lunt believes most operators will continue to discount room rates slightly throughout the rest of the year to help boost occupancy numbers.

"The long-term health of the Florida hospitality market is good. Florida is still the second most visited state in the nation," said Lunt.

The complete report which includes Ernst & Young's original research and market analysis on numbers compiled by Smith Travel Research, can be downloaded at: www.ey.com/us/reas

Or for more information contact report author Mark Lunt at: 305/415-1673 - [e-mail]

About Ernst & Young (E&Y) Hospitality Service Group

The Hospitality Advisory Services Group, a Real Estate Advisory Services practice of Ernst &Young is considered one of the largest and most effective advisory practices in the world. The Hospitality team is focused on delivering value-added solutions that are focused and quick to implement. Industry authorities for over 25 years, the E&Y Hospitality team provides research and analysis of worldwide industry movements and opportunities. Market research and analysis is just one component of its full range of client services. From lodging to tourism, from finance to operations, the industry looks to Ernst &Young to create value in its coordinated delivery of advisory, tax and audit solutions. The hospitality team covers markets in North America, Europe and Asia.