The top 16 tourist destinations in the Caribbean increased on average about 2.5 percent so far this year, down from more than 6 percent for each of the past two years.
So far in 2016, Cayman has been almost stagnant with about a third of 1 percent growth, according to data compiled by Integra Realty Resources.
The Dominican Republic continues to be the top spot for tourism in the region, with almost 5 million stay-over tourists between January and October of this year. Four destinations saw shrinking tourism numbers so far this year – Haiti, Trinidad and Tobago, Aruba and Curacao, according to Integra and the Caribbean Tourism Organization. Tourism growth in most jurisdictions has slowed since last year.
The report concludes: “Analyzing the hotel performance metrics and the typical market cycle, one may logically assume that the Caribbean market is past its peak and in (slight) decline mode; however, this conclusion may be short-sighted with arrivals to the region still on the increase.”
Integra notes the Zika virus may have contributed to the slowdown.
Issuing the company’s predictions for the year to come, Integra states, “Assuming Zika infections continue to decline and the issue becomes less newsworthy, we project modest improvement in the overall Caribbean hotel and tourism sector in 2017.”
Integra’s Jim Andrews said he believes there is demand for more new hotels in the Cayman Islands, even after the opening of the new Kimpton Seafire hotel.
In an email, Mr. Andrews wrote, “Given the size and popularity of the Cayman Islands as a clean, safe, upscale destination; the Cayman Islands should logically rank higher than 15th in the Caribbean (excluding Mexico) in terms of stay-over arrivals; and we believe there is room to grow as new hotel room inventory is added.”
Average daily hotel rates and occupancy fell across the region. Average rates dropped by about $9 per night across the region and occupancy fell 3 percent from last year, according to the Integra report. Hotel inventory across the Caribbean increased by about 3.5 percent, which, Integra notes, could have had an impact on occupancy rates.
The report explains: “This moderate decline in average rates and occupancy can be attributed to various factors such as the Zika virus and competition from other travel destinations. It is also possible that an increase in the number of rooms in inventory has also played a factor in terms of supply versus demand.
“It is also possible that some Caribbean tourists are opting for unbranded boutique resorts, condominiums, rental villas, fractional/timeshare units and other alternatives to standard hotels,” the report states, because those accommodations do not report statistics to STR Global, which tracks hotel data.
Mr. Andrews said these kinds of accommodations pose additional challenges. He writes, “These condo resorts are also not marketed as well as branded (and many unbranded) hotels, so their occupancy levels are much lower than hotels and they contribute less productivity to the overall economy (per bedroom) than equivalent in branded hotel rooms would.”
Integra’s data show Cayman has about average demand for hotel rooms, measured as the number of tourist arrivals per room. About 100 tourists arrived over the year so far for each hotel room available in Cayman, according to Integra.
“Based on our conversations with regional and international developers, they view Cayman as one of the lower risk (and most desirable) destinations to plan a project, given the established demand, sound fundamentals, low crime rates, customer satisfaction, appeal to the luxury clientele and appeal to families,” Mr. Andrews said.
“There are limited quality beachfront sites in Cayman on which to plan new hotel projects unless we see a trend of re-development of some of the older condominium developments on Seven Mile Beach. There are very few sites in the Eastern Districts that meet the developer’s criteria for beach quality.”
He said developers will likely move to take over older condo developments to eventually be able to redevelop on the site, similar to what happened with Beach Bay in Bodden Town.
The condo buildings still sit empty at Beach Bay and work has not yet begun on the long-planned hotel there.