Growth slows in stay-over tourism

While Caribbean stay-over tourism increased more than 7 percent in the first six months of this year, the Cayman Islands saw only a 1.5 percent rise.

While Caribbean stay-over tourism increased more than 7 percent in the first six months of this year, the Cayman Islands has seen only a 1.5 percent rise, according to a new report on regional tourism. That’s down from a more than 10 percent increase in the first half of last year. 

The new report from Integra Realty Resources found that all but one of the Caribbean’s 13 most popular vacation spots witnessed average stay-over growth. Cuba and Barbados grew by more than 14 percent in the first half of the year, and Aruba added more than 18 percent. 

Only Martinique recorded a drop, of about 3 percent. 

IRR Senior Managing Director James Andrews said the brisk growth Cayman has seen in tourists staying over is unsustainable without adding more hotel rooms. 

“Arrivals to Cayman grew 3.5 percent the first half of 2012, about 6.5 percent the first half of 2013, and about 10 percent for the first half of 2014. That level of growth is unsustainable without new hotel rooms, and there has been no new product in Cayman for a number of years,” he said. 

At the Cayman Islands Tourism Association’s annual meeting in April, Tourism Minister Moses Kirkconnell predicted a 5 percent increase in stay-over tourism for the year. He said that adding new hotel rooms should be a priority to keep the sector growing. 

“We have reached the saturation point and are experiencing the first signs of limitations in capacity,” Mr. Kirkconnell said. 

Tourist air arrivals in Cayman hit a record 382,000 last year, according to Department of Tourism statistics. 

Mr. Andrews of the IRR said the 2014 occupancy rate for hotels in Cayman was more than 70 percent, up slightly over the year before. He said the occupancy rate for the Caribbean region last year was 69 percent. 

With the increasing occupancy rate, average daily rates for hotel rooms was up last year by more than 4 percent to about $340, much higher than the regional average of about $195. 

Mr. Andrews said, “Arrivals are dependent upon supply and demand for hotel rooms. Cayman is a mature market at present with no new hotels having come online in the last few years.” 

He said the increasing occupancy and room rates moved “to their logical stabilization at optimal levels.” 

“Once Cayman reached an [average daily rate] of a certain level, occupancy cannot logically grow any higher … consumers will look to other destinations.” 

There are several hotel projects in development, with the Dart-owned Kimpton on Seven Mile Beach the furthest along. The 263-room hotel is slated to open in November 2016, according to Mr. Andrews, and Dart has plans for another hotel to begin construction in 2018. 

There are also proposals for a new hotel in Bodden Town on Beach Bay and a renovation of the old Hyatt property in George Town. The Treasure Island Resort is on the market and could be renovated in coming years. Dart’s Ken Hydes, who is also president of the tourism association, said in April, “We have gone from a situation of trying to get bums in beds to the point where it is about finding the beds to put them in. It is a good position to be in.” 

Mr. Andrews said, “I think that we can stay competitive with the projects that are currently being planned.” He said that with the time it will take for hotels to come online and the proposed airport expansion “there is potentially demand for hotel capacity that is beyond [what] we know about in the planning stage.” 

He noted, “Cayman has certain challenges physically in that there is little land left on Seven Mile Beach and there are very few other beaches on the island that are considered good enough for five-star hotel development. 

“However, we have the reputation for being a safe, high-end destination that is suitable for adults and families alike,” he said. 

Regional hotel rates, according to the IRR report, went up more than 6 percent last year. Mr. Andrews said that the average daily rate for the Caribbean grew “at a relatively consistent rate of between 3.2 percent and 4.6 percent from 2010-2013.” 

Since 2010, occupancy rates went from negative growth to a 7 percent increase in 2012. Occupancy rates for the main 13 tourist destinations in the Caribbean went up about 1.5 percent last year. 

“The market has naturally found balance in pricing and demand,” Mr. Andrews said. 

The Dart-owned Kimpton hotel will add 263 rooms to Seven Mile Beach next year. – Photo: Taneos Ramsay

The Dart-owned Kimpton hotel will add 263 rooms to Seven Mile Beach next year. – Photo: Taneos Ramsay

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  1. Now all we need is an expanded airport to speed them through arrival and departure and SAFETY from CRIME while they are here.

    Speeding departures would be easy. One bottleneck is security. So immediately start accepting USA TSA pre-check cards. This will save all that nonsense taking computers out of hand baggage.

    (By the way, why do we require people take their tablets out as well when this is NOT required in the USA?)

    Then develop a similar pre-check system for our own trusted citizens and residents. Like the USA charge a reasonable fee to apply for this and then speed those people through.

    For arrivals make sure all the immigration desks are manned.

    Crime is another frightening issue. The police just caught someone in the process of burglarizing a home. Well done police..

  2. It is interesting to compare this rather upbeat assessment of the hotel business with the harsh realities.

    You can quote arrival figure and occupancy rates until the cows come home but all the real evidence suggests that many hotels are already not making ends meet. Whether they are even achieving the quoted 70 percent average occupancy is, in my opinion, questionable but the fact is that it is an average and for something like eight months out of each year most of the major hotels struggle to break even.

    Three major Seven-Mile-Beach hotels are currently in receivership and a fourth is up for sale. The 263-room Kimpton is not even a new hotel but simply a slightly larger replacement for the old 233-room Marriott, which changed hands several times before being effectively abandoned by the last owners. None of this, or the number of hotel and resort re-developments that are currently stalled, makes a good case for more hotel building. In fact it suggests quite the opposite.

    I would also question the quoted USD340 a night room rate. If you check online one big name resort is currently struggling to fill rooms at USD150 a night including tax and service charge. There is also nothing smart about being twice as expensive as the competition, this once again is the old DoT myth that being over-priced somehow equates to high-end. In fact I suspect some of the drop off is caused by visitors (I can name four who will not be returning) finding themselves paying top dollar for fairly basic accommodation that would be half the price anywhere else.

    As a sales pitch trying to attract investment to the islands I suppose it is a good report. However, based on the quotes in this story, as a supposedly realistic assessment of the situation it raises more than a few questions for potential developers, many of whom are currently waiting on moves in Cuba.

    Before trying to get more hotels built CIG needs to sort the airport out, properly address the problems of attracting tourists from the UK and Europe and make sure that all the currently derelict or closed for refurbishment accommodation is put back into use.

    There’s nothing worse for the reputation of a resort than a row of closed, derelict or part finished hotels and that is where this could be going if you are not careful.

  3. I hear you Michael.
    Everyone is pretending it doesn’t exist, residents including.
    Waiting for something like yesterday’s explosion in China? Quite possible, taking into account contents of the Dump. Few lightning strikes can ignite it in few places.

  4. The explosion of apocalyptic proportion in China would certainly force you reevaluate your safety if you are near the "famous" Dump, or anywhere in the Grand Cayman. Here is the link to a video showing what garbage dump explosion might look like. It happened in Mexico in 2010
    Compare the risks of this happening with all other issues this country is facing today. You might decide to shift your attention.

  5. @L. Bell, Nobody cares anymore, the dump issue has effectively been deflected and buried for now. We won’t hear anything else about it until the campaign season starts at which point incredible solutions will be presented with promises of financing that will not cost a cent..

    And everyone will fall for it again..