Costs, airlift concern CITA

The need for increased airlift and high costs of doing business are the two biggest challenges facing Cayman Islands Tourism Association members.

This was the message delivered by CITA President Karie Bergstrom at the Annual Tourism Conference at the Grand Cayman Marriott Resort Thursday.

The main challenge with airlift now is about the revival of previous routes that tourism relies on. The North East market is under utilised in direct airlift, she said, and the North East region is the number one US producer of visitors for Cayman.

Minister Clifford also noted that increased airlift from the North East, especially the New York area, is a critical success factor for the US market.

The CITA and the DoT are currently in talks with several air partners to get increased airlift from the North East in place as soon as possible.

‘Our hope is that we can have this in place for the upcoming winter season of 2007,’ Ms Bergstrom said, noting that hotels say they have large numbers of turned down bookings because customers are unable to get direct airlift, or even airlift.

A lower room stock in 2005 following Hurricane Ivan in September 2004 resulted in US carriers pulling out their normal flight schedules, she said. She also thanked Cayman Airways for adding seats to compensate for loss of airlift from US carriers in 2005.

Sometimes the issue is from New York to Miami, Ms Bergstrom said. ‘The increase in cruise business has impacted this as cruise passengers have to get to Miami to get on ships.’

Director of Tourism Pilar Bush explained that the government and private sector are putting a paper together outlining how they can best mitigate the risk for airlines coming here.

She said they have reason to be hopeful that airline partners (including American Airlines) are willing to come back to the table to look at what the Cayman Islands has to offer. She added that CAL will also look at how to continue to support the tourism economy.

Discussions with airlines will also involve how to make improved connections for those not travelling on direct service.

Ms Bush also acknowledged the need for continued, at the very least, or even increased airlift in Europe.

She and Mr. Clifford have committed to British Airways. ‘As long as we continue to work together we will be able to be aware of their viability and the capability of the existing frequency and be open to discussion for increasing that frequency.’

While none of the airline partners have yet committed to increasing airlift they are open to talking about increasing it, she said.

The CITA President addressed the high cost of utility bills for tourist accommodations. She displayed a graph comparing data from hotels here and in other destinations, sourced from Ritz-Carlton hotels. Per kilowatt hours (kwh) of electricity this is how Cayman compares: US$0.2934 compared to US$0.2461 for Jamaica, US$0.2441 for St. Thomas, US$0.2281 for Hawaii and US$0.1541 for San Juan.

‘Even more disheartening is the recently released financial report from CUC,’ said Ms Bergstrom. The statement of earnings from year ended 30 April 2006 showed their earnings for the period from 2005 increase from $4.2 million to $22.7 million.

‘Our members are also questioning why they are still paying high increases in the fuel factor and in the Ivan recovery surcharge.’

For water costs the same comparison was done. Per 1,000 gallons, water costs US$28.56 in Cayman compared to US$6.9 both in San Juan and Jamaica and US$3.53 in Hawaii.

At Friday’s Cabinet press briefing Minister Clifford said his ministry is looking at solutions to address the cost of tourist properties doing business in Cayman. ‘There is a significant difference in the cost of water and electricity compared to other Caribbean countries.’

But Mr. Clifford said CITA was not taking everything into consideration.

‘Those other countries have other costs like taxes. If you take all of that into consideration, the costs would balance out.’

Ms Bergstrom noted that one hotel pays $600,000 per month for water. ‘These monopolies will stifle growth if they are allowed to continue unchecked. These increasing costs are driving the price point in our industry. We’re pricing ourselves out of the market.’

While there is no simple answer to the challenges of airlift and cost of doing business, work needs to be started on some kind of resolution, she said.

Staff costs are also extremely high, she noted.

‘We do have a labour force shortage here. We have to source from overseas.’

She also cited increased work permit fees, increased trade and business licence fees and high housing prices as adding to costs.

People are simply working in order to pay their bills, she said, and that does not make for a happy worker.

Ms Bergstrom told the Minister she would not address the Immigration Law and rollover policy until the amendments are made public on Wednesday.

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