Optimism for tourism despite challenges – CITA

Returning Cayman Islands Tourism Association President Karie Bergstrom expressed optimism about the tourism industry in the islands, despite the many challenges it faces at the organisation’s Annual General Meeting last Thursday at the Hyatt Beach Suites..

After noting the private sector association’s optimism, she added, ‘But we also can’t bury our heads in the sand. We have challenges ahead of us and we have an industry that’s trying to recover. We are trying very hard to recover.’

Recent catalysts for a downturn in stayover tourism included the 9/11terrorism attacks in the United States and Hurricane Ivan in 2004, but a general declining trend has been seen since 1998.

However, the industry has seen some victories in the past year, Ms Bergstrom asserted.

Victories include the revision of the marine laws for greater protection of the marine environment; a stronger working relationship with the Department of Tourism on marketing efforts and events; and the re-scheduling of direct flights between New York and Grand Cayman by Cayman Airways.

Ms Bergstrom praised the DoT for doing a fantastic job in general, and Cayman Airways for undertaking to introduce the New York flights.

She said she believed the AGM was a good forum in which to give a presentation on the state of tourism in the Cayman Islands.

Giving some background, she noted that the Deloitte Economic Impact Study on tourism (2003) in the Cayman Islands showed that the tourism industry provides 63 per cent of GDP for the Cayman Islands.

The study also showed that stay-over visitors contributed US$959.2 million towards GDP in 2001, while cruise visitors contributed US$156.1 million.

Cruise and stay-over tourism combined contribute $1.1billion to the whole economy, the study showed.

Ms Bergstrom then pulled up other statistics from the DoT.

‘Unfortunately the trend line for air arrivals is declining,’ she said, displaying a graph of air arrival figures with a peak in 1998 of around 340,000 to fewer than 270,000 in 2006.

At the same time cruise tourism has gone up from just over 600,000 in 1996 to over 1.8 million in 2006.

Ms Bergstrom stressed that cruise tourism is important to have, but there needs to be a balance that is going to be sustainable by both sectors – cruise and stayover tourism

According to Economics and Statistics Office reported figures, a 24-per-cent decline in stay-over tourism from 1998 to 2004 created a loss of $132.9 million into the local economy for the year 2004 alone.

Ms Bergstrom commented that with regard to room stock, the islands are around the same levels as they were back in 1998 both for hotels and condos and villas. For hotels this is just over 2,000 rooms and for condos over 2,000 rooms also.

But air arrivals in 1998 are much higher than 2006. ‘So if you own a business that’s directly servicing the tourism industry you can see from numbers here why you’re having to struggle.’

There is a serious problem with the condos and villas sector, Ms Bergstrom warned.

”Those people that bought the condos as an investment are looking for a particular return on their investment and they’re not getting it any longer. What does that mean for the industry?

‘That means that those people are considering selling it to someone who doesn’t want it for investment and then will pull it out of the rental pool. So we are, I believe, at risk right now of losing the room stock that we have in our condo and villas sector.’

This issue will have to be worked on because 48 per cent of room stock is in the condos/villas sector, she said.

The target for sustainability in occupancy would be 75 per cent for both hotels and condos relating to current costs, she said.

However, for 2006 hotels were at an average of 60 per cent and condos an average of 40 per cent occupancy.

So far in 2007, the air arrival numbers show a slight increase over 2006 for the first two months. ‘We still have some work to do to get where we need to be,’ Ms Bergstrom said.

The 2007 air arrival figures trail those of 2004 by 2,000 in January and 4,000 in February. Ms Bergstrom noted that 2004 has been pegged as the banner year when a lot of work and marketing had been done to get 2004 back up to the figures from the mid 90s, so the 2007 figure is good, she said.

‘Yes we’ve increased. We’re really happy about that,’ she stated, before quickly adding, ‘We’ve got to do more.’

Occupancy for hotels for January and February is showing a slight increase on the same months in 2006, but for condos and villas the occupancy percentage has gone slightly down.

Through some calculations done by CITA based on the number of rooms and plane seats available – with 50 per cent of seats allotted for visitors – it was estimated for the 2007/08 winter season that not enough seats are scheduled to provide more than 49 per cent occupancy. ‘You can see the push for us to really work on airlift,’ Ms Bergstrom said.

However, this was calculated prior to Cayman Airway’s announcement of the JFK flights, which commence in June.

‘I need your sectors to get more involved and work together to provide incentives and packages to get people here.

‘People have to be here first and then businesses can compete,’ she told members.

Infrastructure also needs to be addressed, Ms. Bergstrom said, at the port where cruise visitors have to queue in the sun for hours, and at the airport.

Describing an overcrowded airport recently when security lines were going out the door, Ms Bergstrom put it down to four charter flights being run in amongst the scheduled flights.

Visitors were overheard saying they would not be back, she said.

‘We need to lobby whoever we need to lobby to make sure these charters are not going out the same time as the scheduled flights.’

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