High-networth tourism hit

| 08/10/2008

(CNS): Part of the Cayman Islands Department of Tourism’s strategy to avoid the worst of the global recession has been to target high net worth individuals, which the minister has described as recession proof.  However, reports from Florida suggest that this may not be the case and experts are warning against putting too much faith in wealthy travellers. According to one sales director of a luxury South Beach resort, he will be cutting rates this winter.

Speaking to the Miami Herald, Jorge Collazo sales director for the Setai predicts a sizable number of guests this winter will balk at the South Beach resort’s $1,100 standard daily rate. After five years of profiting a booming financial sector and housing market, luxury hotels may now face declining fortunes. Their performance during these hard times could show whether the boom years brought too many pricey hotels to South Florida.

”If you look at the Delano and some of the other luxury properties on Miami Beach, their occupancy is lower. It will be interesting to see if they can hold the line” on room rates, said Mark Lunt, a lodging analyst for Ernst & Young in Miami. ”If they can, it tells us Miami has been successful in offering a well-balanced portfolio” of luxury hotels, he said. "It’s really the only sector that saw an increase in supply in rooms over the last 10 years.”

While air arrivals remain steady here in Cayman, with more than three quarters of the islands’ tourists still coming from the United States, a lot less spending on vacations is expected in the coming months. Moreover, with a reduction of more than 40 percent in spending by cruise passengers, according to government statistics, Cayman’s tourism product is already looking shaky. If the main cornerstone of appealing to the rich fails too, Cayman could be in for a serious downturn in fortunes next year.

Speaking at the recent Annual Tourism Conference in his state of the industry address, the Minister for Tourism, Charles Clifford, said he was optimistic about the industry’s future.  

In this time of economic uncertainty in many parts of the world, where the terms ‘takeover bids’, ‘bailouts’ and ‘bankruptcy’ are becoming all too common, it is indeed a considerable testament to all of you, key stakeholders in our tourism sector, that I am able to report that the state of the Cayman Islands tourism industry remains good,” he said.

Acknowledging the challenges ahead, however, he said the Government and private sector have aggressively pursued mitigation strategies to shore up business, which included and targeting high net worth visitors who are less vulnerable to recessionary forces. Whether they are or not remains to be seen.

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