The Dart group is scaling back operations at The Ritz-Carlton and Kimpton Seafire resorts in a move that will impact hundreds of jobs.
Around 400 employees who had left the island but who received relief pay through the end of May and were being kept on contract, will now be let go.
Dozens of workers still on island will also receive severance packages. Caymanian and expat employees will both be affected because of the type of roles impacted.
Neither hotel is closing completely and both will maintain a core staff to service staycation guests and diners, the company said.
Some of the restaurants are expected to reduce hours, while Avecita at the Seafire resort and Blue at The Ritz-Carlton are already closed.
Managers at both hotels were meeting with staff Thursday morning to relay the news.
Dart CEO Mark VanDevelde said the hotel portfolio had been running operational losses of around $3 million a month since March, even before accounting for relief payments, staff meals and other benefits for impacted employees.
He said that could not continue without any sign of a significant reopening for tourism on the horizon.
VanDevelde said the company had paid its staff throughout the crisis, including making relief payments to non-working employees and funding repatriation flights for foreign staff to return to their home countries.
Deciding to let staff go at this stage is one of the toughest decisions the company had had to make during its history on the island, he said.
But with the COVID-19 numbers escalating again around the globe and Cayman maintaining a 14-day quarantine period for arriving visitors, he said there is no current opportunity for sustainable hotel tourism on the island.
While staycations have been strong, particularly at Seafire, neither resort has achieved more than 20% average occupancy, and room rates have been averaging less than half of what they were a year ago.
“Both hotels have embraced the opportunity to welcome local guests, but the staycation market is simply not sustainable as a business model,” VanDevelde said.
He said the hotels would go into a “limited service mode”.
Exactly what that entails is still being worked out but it is likely to involve reduced hours at some restaurants and potentially closing off blocks of rooms at each resort.
VanDevelde confirmed that employees currently on leave of absence because of COVID would not return to work and that each hotel would reduce staff numbers locally. Anyone affected will get severance packages and, in the case of foreign workers, repatriation flights.
He said Dart had helped its employees as much as possible since the airport closed in March in the hope of “bridging the gap” to a return of tourism in Cayman, but with no certainty about if and when that can happen, he said tough decisions had to be made.
“If we had a fair idea that we could be back to some level of normal in the next six months, we might not have had to make this decision,” VanDevelde said. “The international situation is not helping out right now and everything is getting pushed back.”
He expects Cayman’s tourism product to be focussed on long-stay residents and second-home owners for the short-term future.
If a vaccine comes on the scene or the situation changes more swiftly than imagined, he said the hotels would staff up again.
Long-term outlook more optimistic
Long term, he remains optimistic about the Cayman Islands as a destination and believes the handling of the COVID crisis could actually stand the island in good stead once the immediate impacts of the pandemic subside.
Dart has taken the decision to bring forward renovations to The Ritz-Carlton to January 2021 and the hotel will close for several months in the summer of that year as work progresses with a view to reopening for a more normal high season in October 2021.
Work is already under way on a refurbishment and rebrand of the Comfort Suites and the developer maintains an interest in at least three other hotel projects, including a long-planned five-star project and a smaller eco-friendly resort.
“We are very optimistic about what the Cayman Islands has to offer,” said VanDevelde.
“Everything that made these last three years so successful is still in place. [The question of] when the pandemic ends is an area of significant uncertainty, but when it does end, I think the island will rebound very quickly.”