The Cayman hotel and tourism industry had an exciting 2018, with several transactions taking place from various high level investment groups. The highest recorded Caribbean hotel transaction to date took place in Cayman in November 2018 when The Westin Casuarina Resort & Spa and Sunshine Suites sold for over US$300m. This transaction built on the momentum set by the sale of The Ritz-Carlton Grand Cayman, as well as the smaller Holiday Inn, over the past 12 months. All these resorts underwent significant property improvements prior to or after their sale.
Words by Fleur Peck of Blue Point Consultants Ltd.
The Cayman hotel and tourism industry had an exciting 2018, with several transactions taking place from various high level investment groups. The highest recorded Caribbean hotel transaction to date took place in Cayman in November 2018 when The Westin Casuarina Resort & Spa and Sunshine Suites sold for over US$300m. This transaction built on the momentum set by the sale of The Ritz-Carlton Grand Cayman, as well as the smaller Holiday Inn, over the past 12 months. All these resorts underwent significant property improvements prior to or after their sale.
According to STR data, the Cayman Islands hotel market experienced the largest rises in the Caribbean region for each of the three key performance metrics in 2018. They reported an impressive 6.4 percent increase in hotel occupancy, a 14.6 percent increase in average daily rates and a 22 percent increase in revenue per available room.
Tourism arrivals reached a peak in 2018 with 463,001, an increase of 10.7% on 2017 numbers. Much of this growth was attributed to a strong US travel market, as well as being a consequence of displacement after damage to other islands from hurricanes Irma and Maria in 2017.
However, with hurricane repairs to many competing hotels well underway, and a number already open for business again, there may be some re-balancing through 2019.
Nonetheless, even after supply in other islands is re-established we expect that many tourists that visited Cayman for the first time in 2018 will return.
The Cayman Islands is unique in that, compared with many other destinations, the majority of its inventory of rooms is in condominiums rather than traditional hotels. The latest recorded data from the Cayman Islands Statistics Office show that there are 2,487 hotel rooms compared with 3,709 rooms in apartments and guesthouses.
Thus, with a relatively limited supply of hotel rooms, demand is high and trading levels are strong.
The strong performance of the hotel market has spurred on several future hotel developments, including a potential Mandarin Oriental, Four Seasons and other unbranded hotels. Hopefully the new airport, due for completion this year, will be able to accommodate the resulting increased influx of visitors.
Although the Caribbean Tourism Organisation has expressed some concern that the outcome of Brexit negotiations, the on-going trade war between the US and China and rising interest rates could lead to a potential downturn in tourism across the region, the Cayman Islands has a few unique aces up its sleeve which may well help safeguard against any such slowdown. Not only do the islands boast excellent infrastructure and a clutch of new hotel developments in the pipeline, but they also organise and host a range of world-class large scale events. From Pirates Week to the Cayman Cookout, Taste of Cayman, Legends Tennis Tournament and the newly inaugurated KAABOO festival, Cayman’s roster of annual events draw tens of thousands of stayover visitors each year and thus well attended events may well help keep arrival numbers buoyant.
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