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.