Average daily rates for Cayman’s hotels, significantly higher than most in the Caribbean, continue to rise, while average occupancy declines. But the premium price more than makes up for selling fewer nights.
According to a new report from Integra Realty Resources, revenue is increasing for all of Cayman’s hotels.
The average rate for a hotel room in Cayman last year was about US$365, compared to the Caribbean average of $226. Regionally, occupancy rates increased from about 67.8 percent to a little more than 69 percent, according to the report, but Cayman’s occupancy rate dropped by 2.5 points to 68 percent.
Revenue per room, however, went up in Cayman by about 3 percent in the past year to more than US$245. The revenue increases in Cayman are about half of the regional 6 percent average revenue increase in the past year, according to data collected by Integra.
Integra’s Jim Andrews said in an email, “Room revenues for those hotels will be about 3 percent higher than the prior year with the higher [average daily rates] and lower occupancy in 2015; and there will be some savings on the expenses since some costs are tied to occupied room nights.”
Mr. Andrews said he expects hotel rates will continue to climb, even when new rooms become available when the Kimpton Seafire resort opens this fall.
“Adding new product helps to promote the destination and add to the critical mass,” he said. “Hotels are competing against similar product on other islands just as much as they are with properties in Cayman.
“There still may be a ceiling where [average daily rates] can go before it significantly affects occupancy. At this level I would suspect that hotels will be testing that by managing their rates closely and experimenting with raising them for future months where the occupancy already looks good.”
Cayman has not performed as well regionally regarding number of tourists. The Caribbean region had a 7 percent uptick in visitors last year, but the increase in the Cayman Islands was less than 1 percent.
Recently, Tourism Minister Moses Kirkconnell said the near-flat growth in stay-over arrivals was expected because the country has not added new hotel rooms in recent years. The minister said, “We have no more rooms, our rooms are full, so we’re going to be flat now until November when the Kimpton opens. It is not a fair assessment to look at Cayman and say because we didn’t have 6 percent growth that we’re not doing well.
You need to look at the whole package and say ‘room rates are up, they’re doing extremely well.’”