Central Florida’s hospitality industry could take years to recover economically, expert says

Effects of virus caused biggest loss in history for Orange County tourism tax dollars

Central Florida’s hospital industry could take years to recover economically, expert says
Central Florida’s hospital industry could take years to recover economically, expert says

ORANGE COUNTY, Fla. – Orange County was on par for a record year in tourist development tax dollars, according to comptroller Phil Diamond. He said due to the coronavirus, tourist development tax collections were down by more than 56% in March.

“That was a pretty big reduction. That was a loss of $17 million or $18 million for us,” said Diamond. “This has been the biggest dollar decrease from year to year since we started collecting the tax, it was huge. I think April will be even worse because so much was closed.”

Diamond said hotels are the biggest contributors to that tax income that supports projects like convention center renovations and funding for arts organizations and downtown venues. While the county is taking a hit, Diamond says Orange County has a safety net: two reserve funds that hold approximately $280 million that could help.

"The idea is not to dip into reserves if you can, but that's why we have reserves is because sometimes things happen where you might need to," said Diamond.

CEO of the Central Florida Hotel and Lodging Association, Richard Maladecki, said hotels and its workers aren't in the same boat.

"So many of our employees are working paycheck to paycheck and owners of the various properties are struggling because they still have a debt service they need to satisfy," said Maladecki.

Maledecki said it could take two to three years before hotels recover from the economic effects of the virus.

Wednesday, Marriott International released a statement regarding the continuing impact of COVID-19 and its business.

“The COVID-19 pandemic is having a more severe and sustained financial impact on Marriott’s business than 9/11 and the 2008 financial crisis, combined. From the first warning signs of this unprecedented event, the company took a number of steps to adapt and strengthen its business including reducing costs significantly and improving liquidity. Today, Marriott informed its associates that the company will need to implement additional measures in light of the increasing likelihood that it will be some time before lodging demand and RevPAR levels recover.”

In addition to reducing costs and improving liquidity, the company said it will be extending furloughs and reduced work schedules through October, with plans to layoff more employees later this year.

"The state of the Central Florida lodging industry is devastating... just devastating," said Maladecki. "It's obvious, having 200,000 hospitality workers that have been furloughed or laid off and not all those individuals will be hired back because of the social distancing standards we will have to perform."

While some hotels and resorts are opening at the restricted 25% capacity, Maladecki said the profits may not be enough to break even. He encourages locals to help in the recovery of the hospitality industry by taking staycations.

Budget talks are expected to begin in July where Orange County commissioners will decide whether or not they’ll dip into any of those reserves.

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