PwC consultants cite ancillary benefits
The prospect of the Cayman Turtle Farm breaking even without cutting jobs and scaling down operations have been dismissed as “unlikely” in a report on the economics of the cash-strapped tourist venue.
But the report says that despite being saddled with debt and plummeting visitor numbers following a multimillion dollar expansion, the venue is central to Cayman’s tourism product.
It concludes government’s controversial subsidy can be justified even if the farm never makes a profit.
Consultants say it creates jobs and draws visitors to nearby attractions like Hell Post office and the Tortuga Rum Cake factory, as well as influences thousands of cruise ship tourists to get off the boat and spend money in Grand Cayman.
The number of visitors to the farm fell from just over 350,000 in 2007 to a little under 230,000 in 2012, according to the economic impact study prepared by PWC for the Turtle Farm.
The report attributes the decline to cash-conscious cruise visitors being turned off by a rise in ticket prices over the time period, partially to fund debt repayments on the expansion and relocation of the facility.
Even if a planned cruise dock in George Town helps bring significant new tourist volumes to the island, the prospect of the farm being able to operate without government support is unlikely, say the consultants.
Despite those concerns, the report paints a rosy picture of the attraction’s impact on the wider economy and employment in Grand Cayman.
It suggests the farm would likely generate a net gain of US$73 million for the economy over the next 15 years when factors, such as the personal spending of its 90 employees, are thrown into the mix.
That figure can be tripled to US$220 million if a new cruise berthing facility is built, according to the report, which also considered the farm’s impact on neighboring tourism venues and taxi operators.
In all, it says the farm impacts 203 jobs, a figure that would increase to more than 600 with a new dock.
Just over one in ten cruise visitors take a trip to the turtle farm and the consultants suggested that the pull of the venue was the main reason that more cruise tourists get off the boat in Grand Cayman than at other locations in the Caribbean.
That’s why they believe the value of the venue will be so much greater if a new dock is built.
The calculations discounted the debt owed on the facility, concluding that the liability would exist regardless of what happened to the farm in the future.
For the purposes of their analysis, PwC consultants considered the government subsidy to be roughly US$4 million-a-year. The actual budgeted figure for the current financial year, including debt repayments, was CI$10.3 million.
The consultants referenced the possibility that a smaller, scaled-down facility could be a more financially viable option but also discounted this for the purposes of their analysis.
Instead, they considered contrasting “counter-factual” scenarios, comparing the farm’s current economic impact and its enhanced impact alongside new cruise berthing facilities to a hypothetical alternative of government stopping the subsidy and the venue winding down operations over a 12-month period.
The report acknowledges that the land and buildings could be sold or put to a different use, but this is not considered in its analysis.
It concludes: “In the context of the redevelopment of the cruise port and a wider strategic tourism plan to maximize Cayman Islands’ offerings to the cruise industry, Cayman Turtle Farm’s long-term positive impacts could be substantial. In this scenario, the rationale for the ongoing subsidy would be clear.”
It recommends that the farm, the Department of Tourism and the cruise lines work together to take advantage of increased passenger volumes from the planned George Town port development to increase sales.
It also suggests a drop in ticket prices would help bring back more cruise visitors, which make up 70 percent of the clientele.
Though broadly endorsing the financial formula of subsidizing the farm for the greater good of the tourism product and the economy as a whole, the report does raise an alternative solution.
It states: “Feedback from the Department of Tourism and independent tour operators indicates that a significant reduction in the scale of Cayman Turtle Farm’s operations would not have a significant detrimental impact on tourism demand for the attraction.”
It suggests that, if significant visitor volume increases cannot be achieved, farm management consider downsizing the operation and reducing staff and overheads.
It suggests further analysis be done before this takes place.
The World Society for the Protection of Animals said it was disappointed that the comparative economics of a smaller eco-friendly turtle research and release program were not considered among the alternatives.
Neil D’Cruze, WSPA’s head of wildlife research and policy, said, “WSPA is unsurprised that a conservation-focused sea turtle facility has the potential to generate revenue via tourism in Cayman. However, it is the farm’s operating methods that remain of critical importance.”
WSPA has been critical of the farm’s conservation merits as well as its practice of selling turtle meat.
Tim Adam, managing director of Cayman Turtle Farm, said the report showed the wider value of the attraction.
“The key numbers show that especially in the scenario of having cruise berthing facilities, there are large economic benefits from the government subsidy to enable Cayman Turtle Farm to continue operating and having the positive net impact on the wider economy and employment in Cayman,” Mr. Adam said.
The PWC report was completed in May of last year and was laid before the Legislative Assembly last week. In a disclaimer note on the first page PWC points out that it has relied on information provided by the farm, by government and independent tour operators and has not performed an audit examination on the information.