Orlando Hotel Market Q3 2024: Pricing trends, booking patterns, and short-term rental growth

Pricing in Orlando and the overall US appear to be moving nearly in unison

Orlando’s TTM pricing⁽¹⁾ curve began its steady downward slope in April of 2023. At that time, Orlando’s TTM hotel pricing peaked at an approximate 6.0% premium relative to that of the United States overall. From April 2023 onward, Orlando’s TTM price curve gradually ramped downard, and while the United States’ TTM pricing curve was similarly ramping downward, it was doing so at a more gradual clip, resulting in a diminishing of Orlando’s pricing premium.

At the end of Q2, in June 2024, the Orlando and United States TTM pricing curves ostensibly synced up, with only 6 cents separating TTM June pricing for the two geographies. The big question heading into Q3 was whether Orlando’s pricing would continue to drop at the same clip, or if it would level off. Looking at the TTM pricing curves for Q3, we can see that the two curves have moved nearly in tandem since converging in June. The TTM pricing delta has widened slightly ($0.22 and $0.40 in August and September, respectively), but it appears as though the two are ostensibly in sync, with Orlando accelerating ahead marginally. Looking ahead to Q4, one of the big storylines will whether the two curves continue to move in tandem, or if Orlando will be able to leverage the holidays to pull ahead of the overall US from a pricing perspective.

Regional pricing data on a YOY basis shows significant improvement in Q3

Compared to H1 2024, where 5 of the 6 major Florida markets analyzed experienced YOY pricing declines (with Miami being the sole market to have experienced YOY pricing growth in H1) Q3 2024 represented a marked turnaround for the region. Of the 6 markets examined for this analysis, only Jacksonville and Tampa experienced YOY pricing declines (with Tampa’s decline being a modest -1.3% YOY). In H1 2024, Orlando experienced a YOY pricing decline of 5.3%, compared to 1.4% YOY growth for Q3. Miami, which was the lone market to experience YOY growth in H1 2024 of 2.0%, experienced acceleration in Q3, with price increasing 5.5% YOY. Tallahassee, however, was the biggest grower in Q3, with YOY price appreciation of 5.9%.

Weekly hotel pricing in Q3 2024 shows marginal YOY increases from equivalent week in 2023

From a weekly standpoint, pricing in Q3 2024 experienced marginal growth YOY. Across the 14 weeks spanning from the week starting July 1st through the week starting September 30th, nine weeks experienced YOY pricing growth compared to five weeks which experienced YOY declines. Moreover, for the most part, the YOY pricing movements were fairly muted, with 10 of 14 weeks experiencing declines/growth ranging in magnitude from -1.8% to +2.6%. Averaging the weekly price movements across the 14 aforementioned weeks, YOY growth averaged +1.0%. Looking at Q4 weekly advertised pricing and comparing it to actualized pricing from 2023, only one week is currently priced at a YOY discount compared to the 2023 equivalent week, and the average YOY growth as of this analysis, across all weeks ranging from the week beginning October 7th through the week beginning December 23rd, represents an approximate 4.6% growth rate.

Clear and fundamental shift in pricing strategy in 3Q 2024

Examining the price evolution curve for 3Q 2024 shows a clear and fundamental change to pricing strategy. This new pricing approach is a divergence from both 2Q 2024, as well as looking back YOY to 3Q 2023. In both 2Q 2024, as well as 3Q 2023, hoteliers in Orlando priced hotel rooms at a marked premium at the 120-day lead time mark ahead of given stay date - pricing at the 120-day lead time mark was at an average 13.5% and 8.3% premium in Q3 2023 and Q2 2024, respectively.

In Q3 2024, however, pricing began at the 120-day lead time mark at a marginal 0.9% average premium relative to final price (i.e. the lowest rate bookable on the stay date itself), which ramped downward and quickly converted to a discount relative to final price at the 113-day lead time mark. Thereafter, the degree of discounting grew steadily through the 7-day lead time mark, one week before the stay date itself. Thereafter, the discount quickly diminished until the final price was reached on the stay date. Looking forward, it will be interesting to see if this rate-setting strategy persists beyond this quarter.

Forward looking hotel prices for the next 90 days have largely adjusted downward

Consistent with the price evolution curves we’ve observed in both Q2 and Q3, pricing for Q4 2024, as well as pricing for early January ‘25, has largely adjusted downward relative to where prices stood for those same dates as of 90 days ago. When comparing advertised prices for the 90-day stretch from October 16th through January 12th, advertised pricing as of September 30th was on average 5.7% lower than prices for those same dates as of July 1st.

From a day-of-week perspective, the declines when comparing the July 1st outlook to the September 30th outlook impacted most days-of-week fairly evenly. Other than Fridays, which were the least impacted (with Friday night prices declining by 3.4% on average), all other days-of-week declined, on average, between -5.2% and -7.1%.

Short-term rental supply in Orlando is (still) significantly below the January 2020 peak

Short term rental supply growth in Orlando is proving to be highly incremental. Short-term rental supply in Orlando peaked at 90,500 units in January 2020, right before COVID. Once COVID’s impact was felt in the US, short-term rental supply fell quite precipitously, reaching a supply nadir of approximately 40,500 units in June 2021, less than half the supply of the previous peak. Comparatively speaking, the peak of studio + 1 bedroom supply (i.e. those most comparable to traditional hotel rooms) was achieved at a similar point in time (7,400 units in November 2019), and the supply nadir of 5,200 units was reached in May 2022, an approximate 30% supply drop from peak to trough. As of September 2024, studio + 1 bedroom supply reached 8,870 units, an approximate 20% premium over the previous November 2019 peak.

Given Orlando’s heavy reliance on groups and leisure demand, larger multi-occupancy units are the primary focus when it comes to short-term rentals, with studio + 1 bedroom units comprising approximately 16.5% of the total supply as of September 2024. Despite the heavy variance of the multi-occupancy short-term rental supply in the market, it is the opposite for the studio + 1 bedroom supply, which has been remarkably stable over the years.

Short-term rental ADR continues market-wide decline, but studio + 1 bedroom units see rate appreciation

In the last issuance of this newsletter, we identified a trend that we started to observe back in March 2024, where TTM ADR⁽²⁾ across all short-term rental units began to decline, however ADR isolated to strictly studio + 1 bedroom units was actually increasing. It was unclear if this trend would persist beyond Q2 2024, and now looking at the Q3 data, is is very apparent that this trend is indeed continuing. Since March earlier this year, the aggregation of studio + 1 bedroom units experienced a TTM ADR increase of 12.3%, whereas the all units aggregation experienced a -3.6% rate decline.

Occupancy for studio + 1 bedroom short-term rental units in Orlando is consistently below market-wide occupancy

Considering Orlando’s heavy emphasis on group and leisure travel, the consistent occupancy⁽²⁾ premium of multi-occupancy units over the aggregation of studio + 1 bedroom units very much correlates. In the previous issuance of this newsletter, we identified that since 2019, there were only 4 months where the studio + 1 bedroom aggregation outperformed the all units aggregation in terms of occupancy, and two of those occurrences happening in the month of September.

While the occupancy for studio + 1 bedroom units certainly didn’t eclipse market-wide occupancy in September, the trend did continue with the market-wide occupancy premium being the smallest of all months of the year. The delta is quite remarkable - since January 2019, the average market-wide occupancy premium in September is a single percentage point, whereas the average premium across all other months is nearly 7.3 percentage points.

⁽¹⁾Actualized lowest price for a given time period represents the average of the lowest bookable rates for a standard hotel room for all hotels within Lighthouse’s data set within the given geography, as of 10 days before each stay date within the time period in question

⁽²⁾Lighthouse’s short-term rental performance data is comprised of Airbnb data