Topping US$370 per night, hotel-room prices in Cayman are the highest in the Caribbean, growing 4.5 percent since last year, according to U.S.-based property and business valuation agency Integra Realty Resources.

Cayman’s $371.34 region-topping average daily rate was followed by the hurricane-ravaged U.S. Virgin Islands, which charged $369.40 per night, a 10.62 percent increase, and St. Lucia, which charged $361.48 per night, a decline of 14.65 percent, according to IRR’s fourth-quarter report released Tuesday.

The Tuesday report described regional tourist arrivals as “flat” for the year-to-date in 2017, pegging growth at only 0.38 percent.

According to both IRR and the local Department of Tourism, however, Cayman recorded an increase – hovering around 5 percent – in 2017 stay-over arrivals.

IRR said Cayman’s January-August stay-over growth was 4.8 percent, reaching 295,265, while the Department of Tourism’s report – published Oct. 27 – pegged January-September stay-over growth at 5.28 percent, reaching 312,110. According to the department’s statistics, September air arrivals were 16,845.

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In an apparent anomaly, however, IRR reports that despite the increase in stay-over arrivals, local occupancy rates had declined 7.35 percent between January and August.

IRR senior managing director for the Caribbean James Andrews said Cayman visitors increasingly sought hotel alternatives, such as Airbnb, villa rentals, condos on Seven Mile Beach and smaller hotels which rarely report to global hotel market share analyst, Tennessee-based STR, formerly known as Smith Travel Research.

Mr. Andrews was cautious, however, about attributing declining occupancy to soaring room rates.

He said in an email: “It could have to do with both (1) adding Kimpton to the inventory – in other words, we still may have increase in demand but even greater supply – and (2) tourists are staying in the non-reporting alternative accommodations,” which are not included in average daily rate and occupancy figures.

The Kimpton Seafire opened in November 2016, adding 266 rooms, bringing to 4,062 STR’s estimate of local inventory. A decrease in occupancy rates, Mr. Andrews said, “can still mean more occupied rooms.”

“I don’t really blame [room prices] in Cayman specifically because individual hotels monitor their own competitive sets, and do ‘rate management’ techniques to maximize their profitability on any given week,” he said, but held open the possibility that high prices could reduce occupancy, pointing to other regional destinations.

“One can sometimes see when a country notices a drop in occupancy when there have been significant increases in average daily rates or the opposite, such as in the case of St. Lucia.

“However, each hotel manages their rates on a daily basis based on pre-bookings up through a certain number of days in advance, traffic from wholesalers (Expedia, etc.), discounted travel groups, conventions, etc.”

Hotels closely watch their competitors, he said, “and those aren’t necessarily on the same island.”

For example, he said, “the Ritz [in Cayman] needs to stay competitive with the Ritz in St. Thomas, Aruba and comparable 5-star brands in St. Lucia. Likewise, Westin Cayman may be looking at similar 4-star properties on islands with similar market metrics.”

Similarly, St. Lucia’s decline in room rates was accompanied by a 7 percent decline in occupancy, but a region-leading 9.2 percent increase in stay-over arrivals, “so one has to wonder if this is related to a decline in hotel rates over the same period, which were previously well over $400,” IRR said.

Likewise, Aruba saw a steep 6.8 percent decline in stay-over arrivals, and only a 0.47 percent increase in daily rates, but a 9.7 percent growth in occupancy.

Elsewhere, IRR’s fourth-quarter report looked at the effects of category-5 hurricanes Irma and Maria, saying “the region and its hotel sector was significantly impacted.”

Irma hit hard in Barbuda, St. Barth, Anguilla, St. Maarten/St. Martin, St. Thomas and “most of the BVI,” while Maria “bashed Dominica, St. Croix and Puerto Rico,” according to IRR.

Five hotel openings and reopenings are scheduled in Anguilla, with Zemi Beach resort reopening “as soon as there is electric power.”

Three BVI hotels have partially reopened, but others are “closed until further notice.”

In Puerto Rico, “many well-known tourist hotels [are] already open for business or opening in early December,” the report said, while a handful of others will open after the New Year, putting “San Juan’s hotel inventory in relatively good shape.”

Five U.S. Virgin Islands hotels will open starting in March, but three others are “closed indefinitely.”

With at least six hotels closed “until further notice,” St. Maarten/St. Martin “appears to be the hardest hit overall in terms of percentage of rooms out of commission for the long term.”

The Cayman Islands Tourist Association had not responded to queries by press time.

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