In his newest report, Scott notes the last fully audited period in October of 70.7% occupancy is a 15.52% improvement over September but still 5.35% under the 74.7% level of October 1999.

"Central Florida hotel occupancy rates are now categorized as 'moderate', a bit less wrenching than the previous rating of 'weak'," the professor tells GlobeSt.com. He expects the final occupancy rate for 2000 will come in near 71.7%, matching the 1999 performance.

"Given the added room options in metro Orlando, it is difficult to project overall annual occupancy rates much in excess of 72%" for 2001, Scott predicts. The area's two strongest years were 1983 and 1989, which saw identical occupancy levels of 81.3%. Current industry watchers say a 65% occupancy mark is about the lowest a property can attain before it starts losing money.

"You want to be in the 70%-plus area all of the time," Robin L. Webb, vice president/managing broker of the commercial division at Arvida Realty Services Inc., tells GlobeSt.com. "Constructing new hotel rooms at a per-unit cost of say, $200,000-plus per room, makes it difficult, if not impossible, to reach a break-even position."

One locally based hospitality organization that has practiced that tenet for years is CNL Hospitality Corp., the hotel industry investment and development division of CNL Financial Group Inc. CNL Hospitality is breaking ground on a 350-suite Residence Inn in Orlando and a 174-room Courtyard by Marriott in Weston, FL, 20 miles north of Downtown Miami.

CNL doesn't disclose hard or soft construction costs but industry estimators familiar with CNL's practices say the two projects are being built at no more than $100,000 per suite and $90,000 or less per room. At those costs, daily room rates can be competitive with the going market range and keep the occupancy level strong, analysts say.

Scott's assessment of the hotel market here is based largely on the changing economy in metro Orlando. "Central Florida business conditions are definitely on a slower track than has been the case for several years," the professor notes. Current or near-term assessments are rated "strong" only in the area of the local rate of unemployment. Non-farm payroll jobs growth was scaled back to a "slower" rating from a previous "strong" ranking.

Scott is holder of the Phillips-Schenck Chair in American Private Enterprise and executive director of the Dr. Phillips Institute for the Study of American Business Activity.

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