Orlando, Florida, boasts the second-largest inventory of
hotel rooms in the world and is the fourth-most visited city in the US, after
New York, Miami, and Los Angeles. This is due, of course, to the city's
popularity as both a tourist and convention destination.
While Orlando was one of the quickest Top 25 markets to
recover post-pandemic, driven by a surge of "revenge" travelers, the area
started to normalize in mid-2023. Tourism numbers remained soft through 2024,
which is attributable to the anticipated opening of Universal's Epic Universe
in May 2025. Visitors are delaying their trips until 2025 to experience the new
theme park.
Orlando is one of the most popular tourist destinations in
the United States and globally for several key reasons:
Theme
Parks and Attractions
- Walt Disney World Resort - Magic Kingdom, Epcot, Hollywood Studios, Animal Kingdom, as well as an array of water parks and resorts.
- Universal Orland Resort - Universal Studios Florida, Islands of Adventure, and Volcano Bay, as well as the highly anticipated opening of Epic Universe.
- SeaWorld Orlando, LEGOLAND Florida, ICON Park
Shopping,
Dining, and Entertainment
- Disney Springs, Universal CityWalk, and International Drive are all popular mixed-use destinations.
- The Mall of Millenia and Orlando International Premium Outlets are also popular for shopping.
Conventions,
Conferences, and Sports Events
- Orange County Convention Center (OCCC): Orlando is a major hub for conventions, trade shows, and corporate events. The OCCC is one of the largest convention centers in the country and draws business travelers in addition to tourists.
- ESPN Wide World of Sports Complex, Camping World Stadium, Kia Center (NBA), and Exploria Stadium (MLS)
Universal's Epic Universe will be the largest theme park at
Universal Orlando, almost doubling the size of the existing resort. It was
budgeted to cost between $6-7 billion. Disney World is also undergoing
significant changes in 2025, including the closure of DinoLand U.S.A. and the
creation of a new Tropical Americas land, a Cars expansion, and a new
Villains-themed land.
Further market expansion includes the $560 million expansion
of the Orange County Convention Center. Upon completion in 2027, the OCCC is
anticipated to house approximately 2.3 million square feet of flexible event
space. Additionally, the Camping World Stadium is expected to undergo $400
million in upgrades, and the Kia Center is scheduled to receive $226 million in
upgrades over the next 10 years.
Trailing Twelve-month Trends: As of February, RevPAR
changed by 0.7% on a twelve-month basis, driven by a -0.5% change in occupancy
and a 1.2% change in ADR. The occupancy declines were more prominent in the
summer months as tourists chose to take international trips or cruises. Despite
the decline in leisure travel, the group segment noticed roughly 5% RevPAR
growth on a twelve-month basis. CoStar anticipates a roughly 6% growth in
RevPAR in 2025, mostly driven by rate, supported by the opening of Epic Universe
and the continued rate growth at upscale and luxury hotels.
Source: CoStar
New Supply: According to CoStar, 11 hotels (roughly
1,900 keys) opened in 2024, and currently, 17 hotels are under construction
with approximately 2,900 keys; luxury and upper-upscale properties account for
five of these hotels (nearly 1,500 keys). Large hotel projects expected to open
in 2025 or have recently opened include the 750-key Universal Stell Nova
Resort, 750-key Universal Terra Luna Resort, and 500-key Universal Helios Gran
Hotel. Additionally, the 400-room Nickelodeon Hotels and Resorts is under
construction and expected to open in late 2026. Many of the other hotels under
development are extended-stay brands.
Transactions: Given the challenging capital market
environment and conditions in the debt markets, sales continue to lag historical
data. While 19 hotels transacted in 2025, which was a five-year low, the sales
volume increased 95% over 2023 to $1.3 billion, primarily driven by the sale of
the 1,641-key Hyatt Regency Orlando and the adjacent parcel for roughly $1.1
billion. This sale represented the largest sale in the nation in 2024. The
hotel was purchased by Ares Management, who also signed a deal to build a
2,500-room Grand Hyatt on the adjacent parcel. Of the remainder of the sales in
2024, nine were economy assets, while the rest ranged from upper midscale to
upper upscale.
Orlando remains a top global tourist destination, driven by
its world-class theme parks, attractions, conventions, and great weather. The
market offers a wide variety of accommodations to suit different budgets and
preferences, with growth sustained by new developments, renovations, and
expansions.
Despite facing challenges, the market has demonstrated
resilience, adapting to shifting consumer preferences for unique and immersive
experiences, such as themed hotels and vacation rentals. With the continued
influx of visitors and the anticipated opening of new attractions like
Universal Studios' Epic Universe, Orlando's hotel market is poised for ongoing
success.
