A recently published Caribbean Market Update, produced by Caribbean-based Integra Realty Resources, has offered good news for the Caribbean economy, noting a general improvement in tourism for the region, as well as a gradual improvement in real estate sales and an increase in foreign investment into our area.
The report also noted that while growth in the Latin America/Caribbean region slowed to 0.9 percent in 2014, the Caribbean had benefited from a strengthening of the U.S. economy and, as a result, the World Bank had predicted a 3.7 percent growth rate for the period 2015-2016 for the Caribbean, which is really good news.
When drilling down the statistics, the report showed that the Cayman Islands in particular showed remarkably strong tourism arrival growth in recent years, on par or up on the average for the Caribbean, at 4.10 percent increase in 2012 (Caribbean average – 4.19 percent), 7.4 percent in 2013 (Caribbean average 1.22 percent), and an impressive 10.84 percent increase in 2014 (Caribbean average up 5.34 percent). Cayman’s figures have slowed this year (January to June) to just 1.43 percent, down on the Caribbean average of 7.12 percent.
I believe the reason for the slowdown this year has everything to do with the fact that we only have so much capacity to accommodate our visitors, and without an increase in inventory, we are unable to provide for any further significant increases in visitor arrivals. We need more hotel rooms and condominium rentals if we are to continue this growth trajectory, so it is good news that the Kimpton hotel will be coming on board at the end of next year, providing a welcome addition to Cayman’s inventory. That said, I believe there is still capacity for even more inventory to develop in the future.
How to achieve growth in Cayman
In order to achieve our maximum growth potential, I believe three critical subjects need to be addressed.
The first is this current mini stock market crash in which we find ourselves (at the time of writing). While I’m not qualified to say whether the recent turmoil on the stock markets will have a great and lasting impact on the global economy, and specifically on the U.S. economy, I can say with authority that the Cayman Islands has set itself apart from other Caribbean jurisdictions and is definitely a very important location for investors looking to relocate offshore. No matter what the fallout may be from this latest stock market volatility, Cayman stands ready and able to receive investors.
Getting the airport up to speed is another vital element in the quest to grow Cayman’s economy. It is absolutely vital that government focuses on allowing the airport expansion to continue to ensure that not only are we able to compete in getting airlines to operate here from further afield, but that we are able to retain the ones we currently have.
A runway that is strong and long enough to meet the demands of today’s air fleet is essential for us on so many levels, whether tourism, financial services, medical tourism, or residential, especially if they can secure long-haul routes.
The pressure is therefore on government to ensure that this project continues to progress, because if we cannot bring visitors to the island, developers will not want to come here to invest in new properties, which would be a great detriment to our economy as the ever-growing need for revenue (room tax) and jobs are essential to Cayman’s growth and future.
The dock is the final topic on which I wish to comment, perhaps because it is certainly the topic of the moment. There have been many creative ideas as to how to solve our dock dilemma, for example a recent story about possibly bringing cable cars to the port, as reported in the Cayman Compass.
For my part, I believe that government has to realize that people today are extremely concerned about the environment, not just for themselves, but for their families and the generations to come. Whatever the decision on the dock, I believe it’s imperative that the environmental footprint of the project be as small as possible, otherwise serious harm could be done to other important industries, such as our dive industry, which is extremely sensitive.
At the end of the day, we ought to examine exactly how much cruise ship passengers contribute to the local economy, and whether it might be better for us to target the quality of cruise ships rather than the quantity.
Is the stress that is put on our infrastructure by growing our cruise product really worth it to our economy? Perhaps we might be better off putting our energies into developing our stay-over visitor product, because these are the visitors who are more able to contribute to the economy over the long term, rather than cruise ship passengers, who spend only a very short time on island, often not contributing anything at all to the economy.