It’s going to be a tough year ahead for Cayman’s tourism industry.
That seems to be the general consensus from hotel and condo managers regarding the recent global economic crisis and its effects on tourism.
Concerns from managers include drop in demand for bookings, and the fact that those booked may still cancel going forward.
Some feel that good airlift, including new gateways from Cayman Airways, will encourage new tourists to the islands.
Director of Sales and Marketing at the 295-room Grand Cayman Marriott Beach Resort Carolina Voullieme reports the demand indicators for 2009 are very concerning.
‘We’re forecasting to have a softer year for 2009 compared to this year,’ she said.
While demand for bookings is up on last year for this coming December, for January and February 2009 they are below demand compared to this time last year.
Booking pace for January and February is also below that of last year, but it is the lower demand that is worrisome, she said.
While booking pace reflects the levels of bookings coming in, demand reflects who is showing interest in looking at the hotel to book. ‘When that’s below it’s concerning because it means people are not travelling,’ she said.
Hotels have various different methods of tracking demand.
While indicators show that demand for December is 11 per cent up on last year, for October demand is 13 per cent below last year and for November it’s down 20 per cent on last year.
Although in general summer was not too bad at the hotel, September was terrible, a result of cancellations because of heavy hurricane activity in the Caribbean region.
‘It was really bad with one storm after another, and although they weren’t really affecting us, the negative news in the US turned visitors off coming here,’ she said.
The 365-room Ritz-Carlton, Grand Cayman, which has always responded positively to questions from the Caymanian Compass on how bookings are looking, declined to comment this time around.
At the 343-room Westin Casuarina Resort, General Manager Dan Szydlowski said that although there is a concern that those booked could cancel if the economic situation worsens, there is a need to be optimistic about things.
So far Christmas looks to be solid and equal to previous years while Thanksgiving is also around the same as last year.
‘Unless anything changes October and December should be better than last year. November may be flat or slightly slower as people and companies are still sensitive to the economic conditions,’ he said.
But, in saying that, last year was not exceptional, he added.
While they have lost some bookings, it made way for others to book, he said.
Into 2009 Mr. Szydlowski said they are lucky so far in that no large groups have cancelled, and that it’s too soon to tell how things look with transient guests. ‘Hopefully things will improve after the elections,’ he said, admitting the situation is concerning.
Mr. Szydlowski is hoping that Cayman Airways’ Chicago and Washington DC winter flights will help give tourism a boost.
‘Of course we’d also like to see utilities and the cost of doing business go down,’ he said.
In explaining the hotel’s optimism, he said, ‘Maybe we’ll lose a visitor from a certain segment or geographical area, but we might open rooms during peak times for first time visitors and develop a broader base for clientele.’
The hotel has introduced a special fall rate in an effort to woo visitors to the island.
At the Reef Resort, a 166 bedroom property in East End, Director Tom McCallum said forward bookings have slowed radically with the economic crisis.
‘Bookings into next year are about 25 per cent ahead when compared to the same time last year, though as of 15 September we were over 45 per cent up,’ he said.
Mr. McCallum said he is naturally concerned about the possible impacts on tourism.
‘My own view is that we are looking at a protracted and deep depression, and clearly Cayman tourism will suffer from this.
‘However, we are already seeing strong evidence that people feel a vacation is a necessity, not a luxury, so if they can trade down and still take that Cayman vacation, they will,’ he said.
‘At The Reef, we represent excellent value for money whilst providing the luxury of all beachfront relaxation and tranquillity, so we are seeing a strong trend for people ‘trading down’ to The Reef from more expensive resorts, both in Cayman and elsewhere in the Caribbean,’ he added.
Mr. McCallum believes that if things worsen the greatest concern could well be corporate group bookings, as things like incentive travel groups may just be cancelled by corporations. ‘Anecdotally, I just heard of a group with a $4 million room block for February at an Orlando hotel that cancelled and told the hotel to keep the room block deposit.’
The vacation ownership part of business is actually very buoyant, he said. ‘This normally happens in a recession, as people still want their own piece of Cayman, and find that through vacation ownership they can do this for a lot lower entry point than a whole condo.’
All in all, Mr. McCallum says it’s going to be a tough year ahead, but Cayman is looking good in comparison to other Caribbean destinations in terms of airlift and now it is getting better still with Cayman Airways new gateways.
General Manager at the 108 room Comfort Suites, Ken Thompson said that while he is concerned one still has to be optimistic and take a long term view.
‘Tourism and the business community here is heavily backed by the US and if they are impacted we are,’ he said.
But he added that people will still need to travel such as for business, although even this may not stay as strong as it has been.
October is doing all right and close to last year for bookings, while November and December are reasonably good, but Mr. Thompson said people may be holding off a little yet for last minute bookings.
At the 41-room Brac Reef Beach Resort General Manager Trudy Viers said she has not had any cancellations and bookings are strong for the rest of the year. She said that if things do continue to worsen in the US she believes there will be trickle down effect but for the moment they are not seeing any major effects.
With the biggest dive show of the year, DEMA, coming up soon, she said, ‘I think we’ll get a pretty good feel how people in the dive industry feel at that.’
At Lacovia Condominiums, where there are 32 units in short term rental, Manager Rory Mohammed said for Thanksgiving they currently have only five units booked. ‘That’s unheard of for us,’ he said.
While the end of December is booked solid, thanks to Lacovia’s many repeat guests, January is looking sparse, which is not unusual with people back to work and school, he said.
February, March and April he describes as ‘so-so’, being a little down on last year.
There have been some recent cancellations at Lacovia and a concern is that those booked for Christmas and 2009 still have a window of time in which to cancel if economic problems worsen.
‘I think it’s going to get worse before it gets better,’ he said.
At Plantana Condominiums, which has 36 units in the short term rental pool, General Manager Carlene Alexander said, ‘All indications are that it will be a lean winter. It will be a more challenging winter than we’re used to.’
They have had a few cancellations, which is highly unusual, she said, especially for Christmas week.
‘We haven’t had an alarming number, but normally at Christmas we have waiting lists and certainly no cancellations. So now we’re calling people on the waiting lists to fill the cancellations,’ she said.
She believes it will take a couple of years to recover back to the levels of guests seen in 2006 and 2007.
‘Now we have to tighten our belts and just ride it out and see what happens,’ she said.
Wakelyn Rivers of The Avalon, which has 19 units in its short term rental pool, said they have not yet seen many changes or cancellations because of the economic crisis. The main thing she has noticed is that the phones have stopped ringing, indicating a drop in demand for bookings.
Her fear is that those booked could still cancel.