As Universal Orlando builds more lodging for its visitors, the competition could pressure nearby hotels to fight back with room renovations or new amenities, tourism experts said.
Universal last week unveiled plans for the 1,000-room, Caribbean-themed Loews Sapphire Falls Resort, scheduled to open in 2016. Others will likely follow. Universal now has 4,200 rooms in four hotels, but executives have said they see potential for up to 15,000 rooms.
Sapphire Falls, which is already underway, is part of a post-recession tourism resurgence that has included a rise in Central Florida's hotel-occupancy rates. But forecasts call for a dip in those rates as the supply of rooms created by new hotels climbs faster than demand.
"We're growing, but growth will slow down," said Abraham Pizam, dean of the University of Central Florida's Rosen College of Hospitality Management. "Rationally, you can't expect the growth to continue at a very fast pace forever."
A Visit Orlando forecast shows the region's occupancy rate declining slightly next year, to 71.7 percent from 72 percent this year. Experts who have seen a forecast from Smith Travel Research, however, say it shows a continued decline through 2018. STR would not provide the data.
Universal had no comment on its potential impact on the hotel market. But Rosen Associate Professor Duncan Dickson said hotels around Kirkman Road and International Drive could be vulnerable.
"If I were the Holiday Inn across Kirkman Road, I'd be a little bit frightened," Dickson said. "I think this kind of draws away from them, or even the DoubleTree across the street there."
Managers of two nearby Holiday Inns and DoubleTree by Hilton could not be reached for comment.
Pizam said the competition will motivate others to step up their game.
"It forces the others to renovate, to refresh," Pizam said. "And ultimately, the ones who may be lagging behind and not do it because they don't have the resources … sooner or later they will find out the consequences. They may be driven out of business."
Experts say the market is still strong and note that forecasts call for continued increases in revenue per available room, another key indicator.
"People are willing to spend more, but they want more ... and that's going to be challenging," said John Gerner, founder of Leisure Business Advisors in Richmond, Va. "Universal is giving people early access to the parks."
Gerner said consumers will ask: "Marriott and Sheraton, what are you going to give me for that price?"
Hotels can answer that question with amenities such as pool waterslides, Gerner said.
Maria Triscari, chief executive officer of the International Drive Resort Area Chamber of Commerce, takes the "rising tide lifts all boats" view.
"The more successful Universal is as a resort destination, the more successful the International Drive resort area is," she said.
Universal, which has experienced double-digit attendance growth at its theme parks, opened the retro Cabana Bay Beach Resort this spring. It was Universal's first hotel in more than a decade and its first moderately priced one. Cabana Bay has 1,800 rooms.
Universal's upscale Royal Pacific Resort is expanding its meeting and event space from 85,000 to 140,000 square feet. That should create more demand for rooms, Dickson said.
And documents submitted to the Orange County comptroller's office show that Universal is contemplating two other hotels — one with about 400 rooms and another with about 800. The documents gave no timetable.
With its hotel expansion, Universal is pursuing a strategy used for years by rival Walt Disney World, which has more than 30,000 hotel rooms. The idea is that on-site hotels encourage visitors to stay — and spend — on company property.
Experts said Universal's hotels probably would not hold much appeal for Disney vacationers, who will want to stay nearby.
At Universal hotels, guests like the convenience of transportation to its theme parks.
But Cabana Bay also attracts people making only brief visits to Universal — or none at all.
Jean Webb, 67, rented a suite there last week for a visit to the Holy Land Experience and Daytona Beach.
Its 1950s- and '60s-era theming intrigued her.
"It was new," she said, and at $125 a night for a suite, "the price was good."