With a hotel room costing on average US$462.74 a night, the hotel industry in Cayman has the highest mean daily rates in the Caribbean.
Valuation firm Integra Realty Resources reported in its Caribbean Hospitality Market Update for the final quarter of 2019 that average daily hotel rates in Cayman increased 24.71% from the previous year.
The 12-month data ending in October 2019, taken from travel research firm STR, excluded the Turks and Caicos Islands, which had only reported rates from a handful of very high-priced hotels making its sample unreliable.
Cayman is leading the Caribbean Islands in average daily rate growth while also experiencing strong increases in arrivals and occupancy, the report found.
Occupancy rates in Cayman jumped 9% to 68.9% and stayover arrivals grew by 10%.
Caribbean-wide, 21 out of 24 destinations reported higher air arrivals which meant stayover arrivals for the first 10 months of 2019 were nearly 6% higher.
Many storm-damaged properties which closed in 2017 have re-opened as hurricane-ravaged destinations saw a considerable rebound in tourist arrivals. Anguilla more than doubled stayover arrivals (111%), followed by St. Maarten (107%), the BVI (77%), the US Virgin Islands (44%) and Puerto Rico (31%).
While average daily occupancy rates in the region were up 5%, conventional hotel rates declined by more than 3% suggesting that tourists are increasingly using vacation rentals marketed on online booking sites such are Airbnb, VRBO and others.
The market update noted, “In our opinion, the flat occupancy figures reflect the continued increase in supply due to new projects as well as the effect of Airbnb and other booking engines featuring private homes, villas and condominiums.”
The growing inventory of hotel room stock with a large pipeline of proposed projects is likely to depress occupancy rates further. As of October 2019, the total number of rooms in inventory in the Caribbean grew by 1.54% to 254,119.
Based on the proposed projects, developers in Cayman plan to add new rooms equivalent to up to 16% of the existing inventory.
The largest new resort projects in the region are slated for Punta Cana in the Dominican Republic and Montego Bay in Jamaica.
IRR said, “The data suggests that some destinations will have to take on creative marketing initiatives in order to increase their stayover arrivals to a sufficient degree in order to maintain a relatively consistent occupancy rate.”
For the time being, however, average daily rates continue to climb along with the growing room stock.
The Caribbean competes well against other regional and international destinations, the report said, as arrivals to the region continue to grow, mainly driven by visitors from North America.