Higher hotel rates boost government tourism revenue

The premium price tag for Cayman’s hotel rooms has led to government revenues from tourism accommodation taxes and fees in the first six months of 2023 being $3 million higher than the amount projected for the entire year.

Between January and June this year, government earned $28.8 million in those taxes and fees – $12.4 million more than had been predicted for that half-year period. At this rate, revenue for the entire year is expected to exceed 2019’s record-breaking levels, tourism officials say.

Despite fewer stayover visitors than in 2019 – the last pre-pandemic full year of tourism in Cayman – more expensive room rates at hotels and other tourist accommodations have resulted in the higher revenues, Tourism Minister Kenneth Bryan acknowledged in a press release.

The government collects 13% of the room rate of hotels and other tourism accommodations. In 2019, government collected more than $39.6 million in tourist accommodation revenue.

“Tourism performance over the first half of the year has surpassed expectations and underscores the significant rebound in our tourism industry. Revenue collection influenced by the increase in the Average Daily Rate of accommodations over the past year is indicating a strong and sustained interest in the Cayman Islands as a premier travel destination,” Bryan said in the release.

Former Cayman Islands Tourism Association president and Ritz-Carlton general manager Marc Langevin noted in an interview with the Compass earlier this year that, as tourists were returning to Grand Cayman following the pandemic, there had been a 15-20% mark-up in room prices across the hotel industry.

Bryan said 235,370 stayover visitors came to Cayman between January and June, equating to 84% of the number that arrived in the first six months of 2019, a year which broke all previous stayover records for Cayman. Bryan said his ministry had projected that by June, that number would stand at about 70% of the 502,739 stayover guests in 2019, so it is considerably higher than expected.

The minister also noted that the recent tourism success was bolstered by a robust performance in Cayman’s traditional source markets, like the US, Canada and Europe, as well as emerging regions.

The release stated that proactive efforts to improve air connectivity, including adding new and direct flights, “have also paid off significantly”, and had resulted in “increased bookings and enhanced convenience for business and leisure travellers”.

As well as the accommodation taxes and fees, government has also earned $4.4 million in departure taxes from the 738,462 cruise passengers who visited Cayman in the first six months of this year – 6% higher than the mid-year forecast.

The number of cruise visitors between January and June amounted to 73% of the corresponding period in 2019. Officials had anticipated that cruise arrivals this year would be at about 70% of the 2019 figures.

As in previous years, the vast majority – 83.6% – of visitors are coming from the US, while 7.5% come from Canada and 4.4% from Europe.