Cayman tourism bounces back – with a premium price tag

Rental cars are selling out, boat trips are being booked weeks in advance and hotel rooms are in demand across the Cayman Islands.

Despite lingering concerns about airlift, Cayman’s tourism businesses are in a very different place to this time a year ago.

There’s one exception. The island is even more expensive than it was pre-pandemic. But business owners across the industry insist guests are happy to pay the new premium for ‘five star service’ and that the island has stumbled into its preferred niche – slightly fewer visitors, spending more dollars.

COVID has left a mark

As spring-break approaches, CITA president Troy Leacock feels confident enough to say the troubles of the pandemic are finally “in the rearview mirror”.

“Things are strong and steady right now, but I think those two lost years will leave a mark on the industry for some time,” he said.

The total loss of revenue, combined with the rising cost of replacement parts for boats and equipment, left business owners reeling, said Leacock, who runs Crazy Crab private boat charters.

He said it would take a while for “the weight on our psyche” to lift. Building back staff has been a necessity, but many businesses are cautious about investing in growth after the sucker punch of the pandemic lockdown.

Leacock believes it could take another year before the confidence is back in the industry. He expects a strong Spring Break and Easter period, with bookings staying solid through the summer months.

Higher prices

Added to that, almost every business is charging more for services.

He acknowledged that prices were significantly higher than pre-pandemic.

“There’s absolutely no question that prices have gone up across the board,” he said.

“That is because our costs have gone up. Fuel has gone up, mechanic fees have gone up, our wages for crew have gone up.

“We have had to bring our prices up.”

Leacock is comfortable with that and believes that guests are too. He said Cayman would be wise to target a higher spending demographic.

“We can charge what we are worth,” he said, “but we have to deliver premium service.”

Guests are ‘glad to be back’

After a fallow period for Cayman tourism, Luciano De Riso, who runs the Wharf and Grand Old House restaurants, said guests were appreciating what the island has to offer more than ever.

“We were closed for two years and people went to Mexico, they went to the Bahamas and the Turks and Caicos,” he said. “Now they are back in Cayman and they remember what they love about it.

“Cayman is safe, it’s friendly, you can walk on the beach for miles, you can go out for a drink or to a restaurant and get five star service. You don’t have to stay on the resort.”

De Riso says the restaurants are seeing bigger spending customers, better tips, and visitors that are generally appreciative of the chance to be back in Cayman.

“The prices are definitely more expensive but I have not heard one person complain about that,” he said.

“People understand we in Cayman and in the service industry have had a hard time but they also appreciate, after lockdown, the chance to go out for a meal and go out for a drink. I think people realised during COVID how important that is.”

There is also a possibility, says De Riso, that the prices at the hotels and at the airlines are dictating that the type of visitor who arrives in Cayman, for now at least, is from a demographic with a decent disposable income.

Fewer rental cars

In the rental car industry, operators believe the rise in prices is a result of “a correction” in the market post COVID.

Gary Todd, operations manager at Budget Cayman Islands, said many of the rental companies had sold off large parts of their fleet as the island locked down.

He said raw material shortages, including a global shortage of semi-conductors and other car parts, combined with supply chain issues to slow the rate at which they could rebuild.

The impact means there are fewer cars in the rental pool and higher demand from returning tourists. That means higher prices.

“We are happy with the season so far and we are building back our fleet slowly,” said Todd.

He added that there were likely too many rental cars in Cayman prior to the pandemic – resulting in artificially low prices, comparable with Miami.

“We are an island,” he said. “We have to bring in all our vehicles, all our spare parts, so it makes sense that we would charge more than Florida.”

Todd, who is also transport director for CITA, added that the next few years would see the industry move toward a sweet spot where supply meets demand, but doesn’t outstrip it.

‘Premium prices, premium product’

Ritz-Carlton general manager Marc Langevin said tourists were returning to a new and improved Grand Cayman.

He said a 15-20% mark-up in room prices across the hotel industry reflected upgrades in service and infrastructure, as well as a global pattern of inflationary pressure.

The Ritz-Carlton is one of several hotels that underwent multi-million dollar renovations during the pandemic.

“People are coming back to an island that has evolved for the better,” he said. “They have missed the chance to visit Cayman and they are happy to be back in a place that they cherish.”

Longer term, Langevin, who is a former CITA president, believes Cayman should position itself as a premium product with premium prices.

“Our destination is expensive but most of our guests see there is value for money in the experience,” he said. “We have to continue that and we have to deliver five-star service at all levels.”

Leacock agrees.

“I think if we look at a plan for the next five years, we should be looking at economic impact as the key factor rather than simply pure numbers of air arrivals and cruise arrivals,” he said.

Airlift concerns

Both Langevin and Jim Mauer, general manager at the Westin on Seven Mile Beach, cite airlift as one remaining challenge. The number of seats coming into Cayman is 10-15% less than the first quarter of last year, Langevin believes.

That’s largely down to challenges in the aviation industry, with airlines taking time to put planes back into action following the impact of the pandemic. Shortages of parts, pilots and other staff have also been a factor.