Cayman’s hotel and accommodation tourism sector is reporting a decent recovery of occupancy, although average daily rate and revenue per available room are both lagging behind the inbound bodies. Nonetheless, it represents a strong response to difficulties experienced during 2009, 2010 and 2011.
Many of the country’s hotels have reported increases for the high season of 2011-2012. The Marriott Grand Cayman Beach Resort, for example, has recorded excellent year-on-year results, said Director of Sales and Marketing Laura Skec.
“For the main months of the high season we were able to keep the flat high occupancy we had in 2010 and 2011 averaging 97 per cent. The success story of the season was April where we were able to increase almost 10 points year over year and drive a 96 per cent occupancy. For our property it was the best season ever, beating pre-recession levels,” she said.
The situation was confirmed by the Westin Casuarina Resort and Spa. General Manager John Wagner said that 2011-12 had outperformed 2010-11 by 7.7 percentage points in terms of occupancy. That was echoed by Peter Hillenbrand of the Southern Cross Club on Little Cayman, who noted that occupancy was up a little with income also up. However, this still represented occupancy levels down by 10 per cent compared to 2008, he said.
Marc Langevin, general manager at The Ritz-Carlton, Grand Cayman, also reported positive news.
“We experienced a successful high season as we managed to improve the strategic placement of groups and leisure guests, allowing us to improve our occupancy by a few points and find opportunities to increase our average daily rate. We are getting closer to achieving revenue performance comparable to prior to the economic crisis,” he said.
Thomas Mason of Comfort Suites said that property had enjoyed an excellent start to 2012, with high occupancy and encouraging modest rate growth.
“The booking patterns are changing with guest taking advantage of excellent added value with longer term booking promotions. The consumer is becoming more educated and is taking advantage of new hand held technologies such as smart phones and tablets to source and compare options.
“This advanced booking pattern and seamless 24 hour access to booking sites has helped build business growth,” he said.
But whilst occupancy is up, average daily rate and therefore revenue per available room are taking more time to stabilise after a period in which many of Cayman’s regional competitors were prone to slashing rates and deep discounting. Wagner noted that average daily rate was lagging, whilst Hillenbrand said that the two financial metrics were ‘better this year but also still off pre-2008 [levels].’
That said, some properties were bucking the trend, as the Marriott’s Skec explained.
“We reached the highest average daily rate and revenue per available room numbers in the history of the hotel with an increase of 10 points respectively across the season,” noted the expert.
Booking window short
Another feature of the recession has been a significantly shortened booking window; that is, the time period between booking and arrival has shrunk. This can make it difficult for resorts to plan effectively on a seasonal basis because figures cannot be solidified until relatively late.
“The booking window continues to be short at an average of a month or month and a half,” said Skec, “Similar to the previous year.”
Hillenbrand and Wagner both felt that it was still very short, especially in the upcoming summer season. However, at Comfort Suites the summer is looking positive, said Mason.
“The hotel appears to be tracking up for both June and July and we remain cautiously optimistic of attaining some growth over 2011.
“It is still tough out there for hotel operators, despite these encouraging statistics and we anticipate even greater effort to restore business levels to 2006 pre-recessionary times,” he said.
Wagner added that the summer at Westin was looking ‘flat or slightly better than the same time in 2011.’ The Marriott, too, reported strong-looking figures with the hotel pacing ahead of 2011 in transient business.
Georgraphically, the United States continues to be the biggest source market, with Canadian visitation on the up. Hillenbrand also said that the British market had strengthened slightly.
“[But] the off-European, non-Brit has disappeared. Central and South America are nonexistent but South Africa and Aussie-land still give us a few a year,” he noted.
Langevin noted that New York continued to represent the largest percentage of business, but gains during the high season from Houston and Dallas had been observed.
“[They] have historically been summer markets, as well as Canada. Summer family travel is pacing strongly with notable rate growth,” he said. The visitor now is looking for added values in general, said the sector. Wagner noted some of the additional incentives that people were now expecting.
“[These include] free Internet, upgrades to ocean view and lower prices,” he mused.
Looking ahead, the incentives and meetings market is a target for Cayman, an initiative that individual hotels have taken on board as policy at various levels. It’s also a market that new Cayman Islands Tourism Association Executive Director Jane van der Bol is keen to develop. One hotel that is doing it well is the Marriott.
“The incentive business continues to come in strong with a booking window of a year and continues to help build a solid base,” noted Skec, highlighting the ability of this element to assist in medium-term planning.
Across the region, positive news has been reported. Smith Travel Research, in a presentation to the Caribbean tourism industry, said that occupancy for the first quarter of 2012 was up to 72 per cent, a three per cent increase on the same period of 2011. Average daily rate had risen by 7 per cent to an average of US$205.04 with revenue per available room up by 10.2 per cent. With demand across the region up by 5.2 per cent and supply up by 0.8 per cent, said President Amanda Hite, this should drive rate rises. She also noted that costs for hotels and inflation had to be taken into account.
Langevin said that positive signs however should not be interpreted as ‘a return to pre-recession business as usual.’
“The cost of utilities, goods and some employee benefits in particular have kept rising and it becomes more challenging to operate with those conditions.
“While we are putting pressure on the rate, our guests’ expectations have increased. They are not ready to compromise the quality of service they value at the resort and have equally high expectations when experiencing the destination,” he counselled.
The recovery in average daily rate, noted Hite, would not be complete for at least another three years.
“The top segment, that is, luxury hotels, has driven rate, but demand growth has been driven by the lower end of the market,” said the analyst.