The Cayman Islands Tourism Association has declared 2017 “The Year for Tourism,” a declaration that comes in the wake of improving economies in Cayman’s North American markets and a long-awaited recovery at home, boosting arrivals, room inventories, new flights by Southwest Airlines, a new Ministry of Tourism outreach to South America, a residential building boom and plans for at least five new hotels.

CITA is excited. Executive Director Tiffany Dixon-Ebanks says November’s launch of Cayman’s newest top-rated hotel is only the start.

“Opportunities stem from the November 2016 opening of the Kimpton Seafire,” she says, the first overseas effort by the San Francisco-based chain.

Dixon-Ebanks said the five-star resort, owned by Dart Enterprises, added “some 266 rooms to the island’s room stock, and reported a 75 percent occupancy rate [during] the first few months of operation.”

Occupancy rates are normally closely guarded, but the Kimpton’s successful launch and the much-anticipated addition of fresh room inventory appeared to galvanize the industry.

“There are also additional properties such as the Margaritaville, which are scheduled to be open, and others on the horizon for the eastern side of Grand Cayman,” Dixon-Ebanks said.

Renovations are under way on the $70 million conversion of the former Treasure Island Resort on West Bay Road into the 285-room Margaritaville Beach Resort Grand Cayman. A March opening has been set for the rebuilt complex, which will include three pools, a swim-up bar, a fitness center, retail shops and function spaces.

Owners Howard Hotel Group announced in October plans for a three-story, 42-room boutique hotel on West Bay Road near Lawrence Boulevard.

Other hotel plans include a second Dart Enterprises five-star project on Seven Mile Beach, scheduled to open in 2018, plus the company’s rebuild of the old Hyatt hotel. Managing Director of Beach Bay Land John Layton has signed an agreement with government for a $250 million, five-star, 10-story development, with 200 rooms and 75 residences, on 16 acres at St. James Point in Bodden Town, scheduled to open in late 2018.

The $365 million, 600-acre Ironwood Development, another mixed-use residential, tourist and recreational project – including a hotel, conference center, Arnold Palmer golf course, beach club, town center and homes for 2,000 – is planned for Frank Sound.

Ground-breaking at Cayman Enterprise City and accommodations at Health City Cayman Islands are also on the docket.

Theresa Leacock-Broderick, CITA vice president and condominiums director, said 2016 changes were “by far positive, from progress on the airport expansion, increased airlift and [a] new fleet for the national airline to new hotel openings, all contributing to future success.”

She added, however, that “One of the challenges for Cayman’s tourism continue to be related to managing growth without compromising our visitors’ experience. We are fortunate to have growing demand, but we have to be mindful of our infrastructure, congestion or unregulated services that could potentially detract from our overall successes.”

Final numbers for 2016 from the Department of Tourism reveal 385,451 air arrivals, a 0.02 percent increase from 2015, and 1.7 million cruise arrivals.

Both the Westin and The Ritz-Carlton, Grand Cayman, the island’s two biggest hotels, indicate solid profitability, but flat occupancy rates.

In its 2016 year-end report, tourism watchdog New York-based Integra Realty Resources says regional hotel performance has declined slightly after “several years” of improvement, but says Cayman was displaced at No. 15 on the list of high-growth destinations by Turks and Caicos, which registered a 19 percent improvement.

At the same time, IRR says, Cuba, newly opened to visitors, reports 11.7 percent growth through August, a “significant improvement,” and “is expected to top 3 million visitors in 2016 for the first time,” although those numbers come from a base both low and difficult-to-measure.

Dixon-Ebanks says Cayman is not competing with Havana – at least not for the foreseeable future: “The Cayman Islands visitor target is for the most part that of the affluent, and focused on a high-quality visitor experience, providing a cosmopolitan atmosphere with access to all the comforts of home.

“With the progress made in both the product offering as well as the new accommodations and developments coming online in 2016 and those to continue in 2017, the destination is poised for continued growth,” she says.

IRR says the Kimpton Seafire added 7 percent to Cayman’s room stock, but notes that 22 hotel projects in the Caribbean will add 4,356 rooms, fewer than 250 of which are “in the pipeline” in Cayman.

In fact, the three largest projects pending in the Caribbean are 2,850 rooms in two Jamaican resorts, and another 512 in the Dominican Republic. Those figures, IRR notes, do not include the stalled 2,173-room Baha Mar mega-hotel in the Bahamas – which may be about the resume.

Nonetheless, Dixon-Ebanks anticipates increases – if modest – in local room stock, saying, “The condo sector is optimistic, and some are putting more stock into short-term rentals. Airbnb and VRBO [Vacation Rentals By Owner] may likely also have an impact on increasing short-term rentals.”

IRR figures support the upbeat mood: “The market for resort condominium projects appears to be relatively stable in established markets such as the Cayman Islands and Turks and Caicos Islands.

“On Grand Cayman’s Seven Mile Beach, volume of sales of oceanfront condominiums has been steady and the average price per square foot is on the increase,” the report says, noting 2014 peak sales of 72 condos at an average price of nearly $850 per square foot, and 2016 sales of just 20 condos, but with an average price of $1,002 per square foot.

“It should be noted that the 60-unit Watercolours project was completed in 2014,” the report says, “which explains the large increase in volume of sales that year. The remaining Watercolours units have continued to sell in the last two years … .”

Morty Valledejuli, general manager at The Westin, says his hotel’s biggest challenge in 2016 was not from competing destinations, but the multimillion-dollar renovations that disrupted daily operations.

“The renovation displaced revenues for five months,” he said, meaning “we had to lead the resort in adversity and think about how to overcome [the] drop in revenues, keep as many associates employed and keep a budgeted and renovation time line on schedule so we could open the hotel on time – during Christmas season.”

That was just the initial phase of a two-part $50 million renovation, he said, which followed a 2013, $10 million re-build that “paid major dividends and added incredible value to the asset.”

The 2016 project – “a full re-imagination of our public spaces and pool deck area” – was finished on Jan. 5.

The $30 million phase 2 – re-building the hotel’s 343 rooms – will start in May, and is expected to be completed in August.

“The Westin will have the newest hotel guest rooms in the market – that makes us the preferred destination in Cayman,” Valldejuli said.

The Cayman market is the highest priced in the Caribbean. IRR pegged 2016 average daily room rates, at US$356, trailed by the U.S. Virgin Islands at $331 and Barbados at $283.

Valldejuli said Westin average daily room rates may rise after August.

“Our rates and that of the market will drive rates up as long as there is demand – as long as flights keep coming and airfares are competitive with other islands – and we continue to have a great property, great service that will add value to that rate.

“Our rates are seasonal – our BAR (Best Available Rates) can start from $589 per night and go up from there pending on room type, view, etc.,” he said. “After the remodel – we’d like to see a 15+ percent in our ADR.”

CITA’s Dixon-Ebanks is  not worried about Cayman’s high average daily rate, saying, “We believe hotels are in tune with supply and demand and will adjust strategies accordingly for success. Currently, persons visiting the Cayman Islands are looking for that incredible experience and individual properties.”

Valldejuli pointed to one “dangerous trend”: “If one of the ‘big four” hotels starts lowering rates to gain occupancy – that creates a bad domino effect that devalues the market. Not a good strategy.”

Ritz-Carlton Director of Sales and Marketing Heidi Nowak, while declining to discuss ADRs or any financials, said the “most immediate threat to our destination is the current state of the airport and its ongoing construction.”

A $55 million expansion of the terminal at Owen Roberts International broke ground in late 2015. Workers have completed a new baggage-claim area and luggage-screening room. New arrival and departure halls, scheduled to open in mid-2018, will boost the facility from 77,000 square feet to 200,000 square feet, improving passenger throughput from 500,000 per year to 2.5 million per year.

Valledejuli looks forward to the opening, saying the terminal “will definitely enhance the customer experience on the arrival/departure side of things – more customs and immigration officers, larger baggage claim and handlers, etc.”

Nowak, of The Ritz-Carlton, says Cayman’s strength as a destination “is driven by flight capacity, frequency, change in seasonality of lift, and originating cities. Any changes to those can impact the hotel both positively and negatively.”

She pointed to “new direct flights last summer, which boosted our level of occupancy, [and] demonstrated that there is room for more arrivals.

“The destination is highly recognized and with additional capacity, [the Ritz is] ready to welcome more guests,” she said.

In early January, Dallas-based Southwest Airlines announced daily service between Fort Lauderdale and Grand Cayman starting June 4, increasing airlift from the U.S., the source of 78 percent, 300,571, of the islands’ visitors in 2016.

Also in early January, Minster of Tourism Moses Kirkconnell and the Department of Tourism renewed efforts to gain traction in Central and South American markets, targeting affluent Brazilians, Argentinians, Colombians and Panamanians.

DoT arrival figures suggest ample room for improvement in those areas. In 2016, there were 743 visitors from Brazil; 711 from Argentina; 182 frp, Panama; and 169 from Colombia. Similarly, Mexico registered 559 visitors and Costa Rica only 198.

Kirkconnell said the latest effort might fill 20 percent more hotel rooms expected in the next two to three years. Bids for the consultancy closed Jan. 13.

CITA said talks are in progress with other carriers, while Cayman Airways announced on Jan. 19 the inauguration of twice weekly flights to Roatan, Honduras.

CITA’s Krug said there are discussions from other carriers involving new routes, and “with a new [airport terminal] that is more than double its current size, passengers will certainly have a much more pleasant experience.

“The ability to handle passengers more efficiently and the prospect of new hotels are both matters that airlines take into consideration when looking at additional airlift.”

The Ritz, says Nowak, is poised to take advantage of the opportunities. In 2015 the Marriott-managed hotel completed a three-year multimillion-dollar “aggressive renovation/rejuvenation program,” which had “strengthened its position in the market to face any upcoming challenges.

The re-build reconfigured the hotel’s fifth floor into meeting rooms, and created an interactive culinary studio, the “Starfish Cay” splash park, expanding outdoor seating and opening a high-end retail shop – while announcing 2016 plans for another $100 million in renovations of 100 suites and residences.

“The way we best meet challenges,” she said, “is truly by delivering the best possible guest experience … Our team is … engaged in adapting to guest needs and, therefore, in applying innovation to our thinking and to all of our processes, so as to ensure we always stay ahead.”

Finally, CITA’s Leacock-Broderick touched on a handful of smaller, if related, issues regarding infrastructure and legislation likely to affect the numbers and enthusiasm of tourists in the immediate future.

“We would like to have greater confidence in a resolution for solid waste management and see workable steps for the revitalization of George Town,” she said.

“Regulations related to the use and management of public beaches and vendors continues significantly to impact the visitor experience as well as those related to taxi, water sports and tour operators.

“In as much as there could be far greater integration and collaboration amongst governmental fractions, we need to be particularly supportive of the development of a National Tourism Plan that has the potential of being instrumental in creating a shared vision and pathway for optimally managing our current position while developing strategically and proactively in a balanced, sustainable manner for the future of Cayman’s tourism,” she said.

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