With Cayman’s major source of tourism – the United States – still feeling the effects of the Great Recession, a decline in tourism could be expected. Over the past year, many in Cayman’s tourism industry have complained about reduced stay-over and cruise tourism and the effects on local businesses.
But a funny thing happened on the way to the pity party: tourism actually increased in 2010.
The stay-over figures were up 5.66 per cent over 2009 and were better than 2004, 2005 and 2006. The year ended with the second best November in the past eight years and the best December since 2000.
Cruise passenger tourism in 2010, which was supposed to be plummeting, was higher than both 2008 and 2009 and was in the exact middle in terms of numbers over the past 11 years. The November and December figures of cruise passengers were both the highest since 2006.
The bottom line is, despite all the doom and gloom talk, tourism wasn’t so bad in the Cayman Islands in 2010. More importantly, if the late-year trends continue, 2011 is looking even better.
So the question becomes, why are so many local businesses hurting?
Some would argue that there’s simply too many businesses vying for the tourist dollar for Cayman to sustain; that’s certainly true with some businesses.
It’s also true, however, that the tourists that are coming aren’t spending as much as they used to. The cost of credit is higher for most people these days and Americans in particular are leery about amassing debt. That new paradigm is likely to exist for a while and it has already caused many local retailers to add lower cost items to their inventories.
Higher fees are also hurting the bottom lines of businesses, something that was necessary to get the government out of a deficit budget.
However, higher fees, too much competition and less tourist spending are only parts of the problem. The other problem comes from less spending from residents, which is not only a reflection of less discretionary income, but also of a declining population.
Although the reasons for Cayman’s economic woes are many, declining tourism isn’t the reason.