Industry boardrooms all over town are upbeat about tourism, one of the great economic drivers of Cayman’s economy – and good news for tourism is good news for tourists, and good news for everyone else.
Ken Hydes, president of the Cayman Islands Tourism Association, says the mood “has been one of optimism based on the positive trends we are seeing in the industry.”
Hydes is hardly naïve, however, acknowledging that moods and trends and cautious optimism are fragile things: “This … is balanced by a clear understanding that complacency about our product could quickly see this mood change.”
In the meantime, Department of Tourism statisticians are over the moon. Consider the numbers, which clearly demonstrate healthy 2014 growth from 2013.
Monthly air arrivals in 2014 exceeded every corresponding month in 2013. While final figures are not yet available for this year, last year’s 345,385 figure looks set to be easily topped. At the end of October 2014, still part of slow season, DoT had already registered 312,542 airport arrivals.
Likewise, the numbers record a surprising recovery in cruise arrivals after years of steady decline. While cruise ship tourists, pegged at 1.29 million by the end of October, remain significantly below pre-recession levels, 1.9 million in 2006 and 1.7 million in 2007, figures have started to climb.
In 2013, DoT recorded 1.375 million cruise arrivals. While 2014 started slowly, recording 27,000 fewer January arrivals than 2013, a nearly 13 percent decrease, every month in 2014 since then has seen significant growth from last year. July 2014’s nearly 80 percent increase from July 2013 more than offset the January decline.
Hydes attributes the growth to a couple of influences: CITA’s “excellent” relationship with government, open dialogue with tourism officials and “a lot of hard work on behalf of all stakeholders.”
Stakeholders in the multimillion-dollar industry include government’s Cayman Airways and the George Town port; cruise lines, represented by the Florida Caribbean Cruise Association; transport owners and operators – buses, taxis and tours; hotel, bar and restaurant executives; shop owners and recreation outlets, largely watersports.
The order of magnitude is staggering. Although the latest Economic and Statistic Office numbers are from 2012, they indicate that Cayman’s 1.83 million visitors two years ago spent nearly a half-billion dollars – $496 million – more than any year on record.
Surprisingly, Hydes says the lack of cruise-berthing facilities has not limited growth in the sector. While he expects continued progress on cruise berthing, airport expansion and even the George Town Landfill, CITA’s 2014 efforts focused on “maintaining and improving our standards for guest experience amid the increased visitor arrivals.
“Much of our effort involved actively working with the government, particularly the Ministry and Department of Tourism, and other key stakeholders to achieve the desired outcome.
“This will continue,” he says. As a destination, we are doing well in the regional arena, and in my view should not be distracted by other competition, but concentrate on achieving our desired result as the sea-and-sun destination of choice.”
When stay-over tourists arrive, most stay in local hotels, among the most visible symbols of Cayman’s tourist industry. As of the end of August, Cayman boasted 5,232 beds: 2,474 condos, 2,143 hotel rooms and 615 villas.
At the top end of the scale are the 343-room Westin Resort and Spa and the 365-room Ritz-Carlton, Grand Cayman, each looking forward to 2015 as both completed multimillion-dollar renovation projects in 2014.
The former, under General Manager Morty Valldejuli, finished a $12 million expansion: “The sum indicates, in solid bottom-line terms, that the business believes in the future and the potential spur of economic growth,” he says.
“Lots of emphasis was put on our pool and beach experience, the reason most visitors come to Cayman in the first place, from adding more luxury and specialty cabanas, added service, expanded seating at our outdoor restaurant Tortuga Beach Grill and Bar to increase in beach programs/entertainment/sports and fitness/activities,” he says.
As a result, “we were not only able to beat 2013 versus 2014, but [we] exceeded all expectations financially, while improving guest-service indices,” he says.
The Ritz-Carlton, Grand Cayman invested $20 million in its facilities in the last two years, according to Director of Sales and Marketing Jaime Moench.
“We never want to lag behind in meeting spaces, public areas and our waterpark,” she says. “We need to stay a step ahead, since in 2008 and ‘09 there was not a lot of new development. But now that the economy is recovering, new properties are coming on,” a reference to Dart Realty’s new 263-room, twin 10-story towers, $170 million Kimpton hotel, scheduled for completion in August 2016 and ready to accept guests in early 2017.
Hydes says new development also includes improvements to older properties: “In parallel with this [the Kimpton opening] other properties have undertaken massive upgrades that will only add to what the islands have to offer.”
Moench says the biggest challenge The Ritz-Carlton faced in 2014 was “maintaining staffing levels. The ‘rollover’ had a big impact.”
The struggle to attract, cultivate and retain “local talent,” she says, is ongoing, leading to the hotel’s partnership with the hospitality school at the University College of the Cayman Islands. Because The Ritz has built its reputation on luxury service, both recruitment and guest relationships are “critical.”
But, she says, “we are really optimistic for 2015.” Bookings are up and “rates have never been higher,” ranging between $1,040 per night in high season to $500 at other times.
Both Moench and Valldejuli join Hydes, agreeing that bookings, visitor growth and the tourist industry overall look to expanded airport facilities to boost the sector.
“Yes,” the Owen Roberts terminal “needs expansion,” Valldejuli says. In the longer term, the runway, “without a doubt,” needs similar treatment.
“This will open larger markets that could bring direct flights, such as London Heathrow as an example,” he says. Occupancy rates – a sensitive subject among hoteliers – are “closely related to airlift.”
“If the European markets open to direct flights to Cayman, based on airport redevelopment and expansion, we could see [a] lift in occupancy. Otherwise, the economic growth will come via increases in average daily rates,” Valldejuli says.
Hydes agrees, but doesn’t see the need quite as urgently, and believes other infrastructure is equally critical: While growing room stock and renovated properties, he says, “must be matched with airlift,” the airport must carefully navigate the challenges it will face with expansion.
“The capacity for [Owen Roberts Airport] to manage the arrivals and departure experience is being tested. CITA continues to work with all relevant parties to manage the process while the master redevelopment plan continues along its proposed scheduled rollout,” Hydes says.
Growth of air arrivals is not limited by the runway … yet: “Not at this point in time,” Hydes says. “In the future, enabling works will need to be undertaken in advance of that, such as changes in road alignment,” meaning proposals to rebuild central George Town’s street network and an anticipation that developers of the $300 million, 430-acre Ironwood residential and golfing community at Frank Sound “are openly planning for expansion of the East-West highway.”
Meanwhile, Moench says terminal expansion is at the top of the list, but the runway is close behind. She regularly meets arriving guests and “the airport is a struggle. It can take two hours, and when you’re spending $1,500 per night and have to spend two hours, well … you’re not coming back.
“The customs officers, everyone, are perfectly nice, but there is just too much volume,” she says. “We need the expansion. That two hours needs to be changed.”
The runway length limits the size of the aircraft that can use it, meaning larger aircraft on longer-haul flights from, say, Europe or Asia are largely proscribed.
“There is huge demand,” though, Moench says, identifying Russia as a potential – and entirely untapped – market. Russians, she says, “spend a tremendous amount of money,” and would be likely to extend the average five-night stay to seven nights or nine nights – “and this has a knock-on effect on restaurants and recreation.”
Berthing facilities and even the disposal of the George Town Landfill are sufficiently broad issues that they transcend the tourist industry, looming instead as challenges to government and community – underlining the importance of tourism to Cayman’s economy and well-being.
“It’s all connected and they all feed off each-other,” Valldejuli says. “The key for all government agencies is to facilitate and make it easier for all inbound tourists or business travellers to get into our island.
“I believe we are seeing some deregulation on visas and/or work permits. The government has the difficult job to be all things to all people, a very difficult task. As long as the decisions are a win-win for all parties/industries, much can be accomplished, but it takes compromise, understanding and extraordinary determination to get things done,” he says.
Elsewhere, Hydes enumerates a dozen 2015 challenges for CITA: “Both the airport and cruise-berthing projects are advancing as per schedule,” he says, while UCCI’s School of Hospitality Studies is up and running.
The cruise-berth project, he says “is advancing and the next step will be the completion of the [Environmental Impact Assessment], which will be a milestone in the process. CITA will continue to maintain its position that our final support for cruise berthing will be based on the results of the EIA.”
He says “upgrades to current room inventory, the opening of the Kimpton and additional hotels” will offer their own tests, and suggests five “areas of focus” in 2015: stayover, cruise, “embrace Cayman,” the business environment and “the environment” at large.
Under the first, Hydes lists “improved arrival and departure experience,” clearly a reference to airport renovations, customs and immigration efficiencies and transport.
“Control of the product offered to stayover guests” is an allusion to expanded hotel facilities in a range of attractive properties and a welter of variables around transport and booking systems.
Under “cruise,” Hydes proposes a catch-all “enhancement of the overall cruise experience,” indicating more efficient customs procedures, better transport and better management, and “measuring the overall cruise-guest experience and spending.”
Better statistics help make better policy, while the last Economics and Statistics Office data on tourist spending and room availability was in 2012.
Under “embrace Cayman,” Hydes lists two projects: “re-engaging a structured national education program,” an allusion to UCCI’s School of Hospitality Studies; and “a public communication plan for ‘Cayman Kind,’” the Department of Tourism program encouraging community interaction with visitors.
The last two, “business environment” and “environment,” involve official policymaking, civil service efficiency and broad social programs.
“Human capital services,” Hydes says, involves industry recruitment, the role of immigration in boosting tourism, and encompassing employment and work permits. In their turn, those issues encompass Cayman’s National Workforce Development Agency and, finally, legislation for a minimum wage.
Broadly, the category seeks appropriate laws and regulation, Hydes says.
Under “environment,” he looks toward preservation of the very things visitors seek in the Cayman Islands, and hopes government will begin implementing the National Conservation Law, while creating some kind of waste management and recycling program.
The George Town Landfill, he says, “is certainly something high on our agenda and those conversations will continue. The tourism sector understands that it has a key role to play in this, working through solutions for waste management.”
Finally, Hydes reflects on the likely effects on the tourist industry of US President Barack Obama’s Dec. 16 normalization of relations with Cuba. US travellers are likely, at least initially, to flood Havana, Hydes says, but discourages any alarm.
“Cayman has long been aware that this could be an issue at some point,” he says. “The US has not had access to Cuba, and now, when the general public travels there, it is likely to be a curiosity.
“But it’s going to take [Havana] awhile until they can deliver a good tourist experience,” he says, citing a lack of infrastructure such as hotels and amenities; technology such as ready internet connections and telecommunications; efficient transport; and even international-grade banking, credit-card and cash facilities.
He says Cayman may even benefit from the US opening “because of our proximity” to Cuba, observing that Cayman Airways has been flying into the island state for years and that “we have an established relationship.”
Travellers, he suggests, may spend three days in Havana, capping their trip with four more in George Town. “You could do a three-stop cruise-ship tour around Cuba, then come to Cayman the following day,” relaxing into first-world accommodation “and get with modern technology.”
“We should not take a laid-back attitude, though,” he cautions. “We need to follow this carefully and be very cautious, but we should not overthink it.”
Cayman may see an initial dip in arrival numbers, Hydes says, “but they will eventually come back.”
Valldejuli speaks only for the Westin and tentative expansion plans, perhaps in late 2015, “but certainly in 2016” when airport renovations are complete. He may, however, speak for everybody.
“Those plans are under review, he says, but “our company is committed to the Cayman Islands and the future growth of tourism. We are partners with the community, the people, the government, and being great ambassadors of the best island in the Caribbean.”