The extent to which Cayman’s recent tourism boom has come at the expense of its hurricane-hit neighbors is spelled out in a new regional hospitality market report.
The Integra Realty report shows how tourism numbers have nosedived in islands impacted by storms in 2017.
The U.S. Virgin Islands, Puerto Rico and Anguilla all suffered a drop of more than 40 percent in stay-over tourism. The British Virgin Islands and Sint Maarten have seen even bigger losses of 60 percent or higher.
Meanwhile the Cayman Islands leads the way for the region in arrival growth, hotel occupancy rates and growth in hotel rates, which hit an average of $422 a night in 2018.
The report notes that the pattern of travel in the Caribbean region over the past year was disrupted by the destructive storms of 2017.
“The year 2018 has indicated a continuing and significant gap between those destinations who were affected by 2017 hurricanes and those that were not,” the report states.
“Although the Caribbean was virtually unscathed by tropical cyclones in 2018, arrivals and hotel performance has been dismal for those destinations that were affected by hurricanes Irma and Maria last year. Meanwhile, the competing destinations that were not affected by those storms have prospered in 2018 with continued growth in arrivals and hotel performance.”
The Cayman Islands has seen a 12.2 percent growth in stay-over tourism this year, the best in the Caribbean. The territory’s hotels are also reporting the highest average daily room rates in the region at $422.70 per night, an increase of 14 percent on last year.
The report highlights the island among a number of destinations, also including St. Lucia and Jamaica, that are investing in significantly increasing the number of rooms in the market. Against that backdrop, it suggests these countries will have to continue to increase arrival numbers to fill those new hotel beds.
Jim Andrews, senior managing director of Integra Realty, which has offices in Grand Cayman, the Virgin Islands, the Bahamas and Puerto Rico, said the picture looked very positive for the Cayman Islands right now.
But he said there was a chance that if the current pipeline of five-star hotels, including a proposed Mandarin Hotel at Beach Bay, the Grand Hyatt and Dart’s purported Four Seasons project on Seven Mile Beach, all got built, Cayman could be oversupplied in the five-star property market and vulnerable to the impact of a recession in the U.S.
“Adding the additional hotels can help to strengthen Cayman’s presence in the market by creating a critical mass, up to a point. Beyond that, and depending on economic conditions in the U.S., the new inventory could dilute the market such that the 4.5 and 5-star properties will have to settle for lower rates or occupancy.
“Right now the economic growth in the U.S. is slowing, but it depends on disposable income as to whether or not we see a direct effect on travel demand to Cayman,” he said.