Tourism industry businesses are feeling the pinch from the global economic downturn and say 2009 will be a tough year.
Even projecting the levels of visitors going forward is impossible because visitors are booking as little as a few days before travelling.
Restaurants are experiencing the downturn, with some suffering as much as a 35 per cent loss of business from last year.
There are an estimated 180 restaurants in the Cayman Islands listed on caymanrestaurants.com.
Some owners and managers are seeing a lack of business from locals, not just tourists.
‘The restaurant industry as a whole is struggling,’ said Director of the Cayman Islands Tourism Association’s Board for the restaurant sector Clifford Woods.
‘In the past the Cayman market has always been fortunate in that when air arrivals went down, cruise arrivals went up. Now cruise arrivals are down and air arrivals are going down and the finance industry is down,’ he said.
‘The pillars of the Cayman economy are finance and tourism and when they are down they affect the people who live here,’ he said.
His Tropical Trader Restaurant Group (Chicken!Chicken!, Cimboco and Breezes by the Bay) has kept a focus on the local market so it is faring better than most, he said.
‘There’s no questions that there’s fewer cruise ships, which impacts Breezes and few air arrivals which impacts Cimboco and Chicken!Chicken!’ he said.
‘But it is our colleagues that rely more heavily on tourism that are really suffering,’ he said.
Mr. Woods said the cost of doing business in Cayman is too high and it is essential to encourage businesses to invest in alternative energy, but that has been discouraged by the net billing CUC deal, he said.
‘The Electricity Regulatory Authority let us down,’ he said. ‘Last summer everyone’s electric bill doubled. They are low now but if they double again next summer businesses will go under.’
At Casanova by the Sea in George Town, where the restaurant gets a mix of locals and tourists, Manager Patrick O’Brien said, ‘It’s not business as usual. Everyone is feeling the pinch.’
He blames the economic crisis.
Casanova’s does have specials in an effort to entice local residents. They include a residents’ daily lunch special and a $25 voucher for every $100 spent on dinners.
At the Wharf Restaurant on West Bay Road, Manager Reno Mancini said he is seeing fewer US stayover visitors because of the economic downturn. ‘People are not travelling as much,’ he said.
Business is down between 30 per cent and 35 per cent on last year, he said.
Although business from locals is not bad, he said that because not as many tourists are coming, there is not as much disposable income available for residents’ spending.
He said February and March will be good months for business.
‘I believe that people will still want to get out of the winter blues and come to the sun,’ he said.
Come April, he said, it might be time to bring in some specials to attract both residents and visitors.
Owner/manager at The Lighthouse at Breakers, Giuseppe Gatta, said business is down about 15 per cent in comparison to last year.
‘There are fewer tourists and even locals are starting to feel the pinch because it’s a trickle down effect,’ he said. ‘We’re trying to control the costs without compromising the quality.’
The Lighthouse offers a special brunch for residents on Sundays and may look at more specials too, Mr. Gatta said.
At Café Med, Manager Luigi Lopez said, ‘It’s going to be a really tough year.’
Business slowed down last September, October and November and while December was good, January has again been very quiet, he said.
While Café Med serves more locals than tourists, he sees that locals are coming, but not as often.
‘They used to come three or four times a week and now they might only come once, maximum twice,’ he said.
Café Med does a Sunday brunch and promotions in an attempt to attract locals.
But at Luca Restaurant on West Bay Road, manager Barnabas Bako said business is going well.
It gets a mixture of tourists and locals.
Some of the larger hotels, watersports operators and restaurants have suffered the loss of group business recently.
Executive Director of the CITA Trina Christian said she doesn’t anticipate group business will pick up until 2010. Ms Christian also said there could be a reduction in group numbers, which links directly to economic woes.
‘Many groups would have come because employees met sales targets and if they don’t meet those targets that could reduce numbers,’ she said.
Cruise tourism is also down, she said. She warned that if cruise related services go out of business the diversity of Cayman’s tourism product will be jeopardised.
Commenting generally on the state of the watersports sector President of CITA and Director for Watersports Steve Broadbelt said the future is difficult to forecast.
‘December ’08 and January ’09 have been very close to December ’07 and January ’08. So looking backwards from today comparatively we’re holding our own, everything is flat,’ he said.
He said the level of business is more difficult to predict because customers are booking at the last minute.
The trend is that people might call mid-week to book and then arrive on the weekend.
‘It can look slow and then all of a sudden you’re full,’ he said. ‘From the watersports and small accommodations side that’s how we’re seeing it.’
The one thing that is advantageous to the tourism industry is that flights are cheaper than ever, he said.
Speaking for the large hotels, Mr. Broadbelt said February looks to be on par with last year.
‘And for April and May there is good group business for some of them,’ he said.
The CITA and the Department of Tourism are looking forward to planning how Cayman can have a successful summer and putting together the Summer Splash family promotion programme.
‘We’ve got some good things up our sleeve with that,’ he said.
Mr. Broadbelt said the tourism industry has to work harder to get the same level of business it has been used to.
‘People may not buy a new house or a new car but we still believe they will go on vacation,’ he said. ‘The thing that we don’t know is how much they’ll spend while they’re here. That’s the big question.’
He said Cayman must keep its market share of visitors and gain where it can.
‘It isn’t business as usual but that means we have to behave differently and work harder,’ he said.
Mr. Broadbelt said that if the hotels are busy, watersports will be busy and as long as the cruise ships are coming, the snorkel trip operators will stay busy.
‘But if we don’t get cruise berthing the snorkel operators will be hit hard,’ he warned.
Operations Manager with Red Sail Sports Rod McDowall said it is not business as usual.
Red Sail does a lot of group business from hotels, which has been down recently.
Red Sail was down between 8 per cent to 10 per cent for December 2008 and down 20 per cent to 25 per cent in January.
The downturn is because of the lack of tourists, which he puts to economic conditions worldwide.
Weather conditions also play a factor.
‘We’re probably the only tourism group that gets knocked around by the weather,’ he said.
Mr. McDowall said Cayman has experienced probably the worst six months of inclement weather between hurricanes and nor’westers.
For Red Sail, the department that was closest to last year’s figures was the dive department but the beach water toys were well down, as was catamaran trips and even sales in the retail stores, which he relates to lower occupancy in hotels.
Mr. McDowall’s gut feeling is that it is going to be an extremely tough year.
He said business will be reasonable through to June but the summer concerns him.
Managing Director of Boatswain’s Beach Joey Ebanks said there has been a fall-off in numbers visiting Boatswain’s Beach since last September.
‘It’s happening across the industry,’ he said.
The beginning of it was in September when bad weather helped contribute to the drop in numbers. But in October the downward trend continued.
Mr. Ebanks said the numbers coming into the Island are still pretty consistent but there has been a drop off in shore excursions and on-island spending, he said.
He said the lack of spending is coming from cruise tourists.
‘The cruise ships are advertising lower rates to fill their ships and hitting a different customer market,’ he said. He anticipates a tough 18 months ahead.
Mr. Briggs, who also owns Rum Point Resort and Sunset House, summed up the overall feeling within the industry.
‘The money you make through the winter months of January, February, March, April and May brings you through to the end of the year so if it’s not a good winter then the fall is going to be very bleak.’
He said it’s impossible to get a feeling for long-range projections because the booking window has now become so short.