Thursday, June 25, 2009Economic Crisis Affects Cayman

by Steven Knipp, Cayman Net NewsStore Closures In Cayman Reflect State Of Economy

With the recent closure of Colombian Emeralds International’s duty free store and other establishments in the Cayman Islands, other prominent businesses in the capital George Town would not speculate on their future.

Amidst the global economic crisis, eyebrows have been raised locally especially after the demise of the long-established store and stiff competitor to many duty establishments.

Several jewellery vendors said, “Come back tomorrow, we are far too busy now.” However, in between serving tourists asking to see some brand name timepieces, several salesmen, who didn’t want to give their names, fleetingly whispered:

“Business is slower than last year, and we’re hoping that it does not drop more. But who knows?”

Harry Chandi, of Magnum Jewellers, said however that his business was “okay” but admitted that it was not up to last year’s level.

“The problem is a decline in cruise tourism and the waterfront is suffering. In all my 25 years in business, I have never seen so much [retail] space available. If you want to rent kiosks right now in Royal Watler, they are available. And that’s a prime location, and that tells you in stark terms how bad it is. I think there are two or three kiosks that are empty. You go down to Goring Avenue, the Silver Slipper just closed,” said Robert Hamaty, founder and President of the Tortuga Rum Company, a leading local manufacturer and exporter.

“If you look at Shedden Road, there is a plaza at the back of the old Barclays Bank (now FirstCaribbean Bank); the owner is trying to lease it. In the present economic situation, the rents are unsustainable. Landlords need to look at discounts. The government, before the recent elections, gave a 15 percent discount at Royal Watler (Cruise Terminal) but the rent is still high. Because when the rents were initially set they were set at a terribly false rate. The rate was not properly researched,” he said.

“Two things have caused the current situation, the cruise lines were enjoying consistent growth and so everybody expanded. In recent times, the Kirk family built the Bayshore Mall, the Island Companies bought West Wind Building. In days gone by, things everywhere were running well and there was not that much competition. But the situation is not the same now.”

The problem of unsustainable rent is not confined to just George Town, said Mr Hamaty, who is also a landlord.

“I do not have a place in George Town, but I have other locations and I have given discounts. I’ve had to make concessions because of the hard times. And of those who are now giving such concessions, they’re doing so for a period of nine months to a year, to see what happens with the economy. If the economy quickly recovers, obviously the owners will want back their original rents. But at the present moment, there is no getting around it, these are rough times. People don’t want to talk about it, publicly, but these are the facts, without a doubt,” he said.

“It’s a matter of working with your tenants. Because when the lease comes up for renewal, he will renew it, he will take up the option. Times are rough now and we are in for a rough summer.”

Asked to predict this year’s summer retail season, he said: “It’s hard to put a thermometer on this type of thing. But I can tell that a majority of businesses in George Town, if you go around and ask them, will tell you that they are 30 percent down. And that is a significant reduction in business.

“You must remember that many of these businesses survive not only on the cruise ship trade, but on island visitors and on island residents. And the current economic situation has affected all sectors of the business. This is not just a normally slow summer; this could be a tsunami summer.

“Sure we are going through a crisis now; sure we will all emerge on the other end -- it can’t last forever. But in the meantime we have to take some sensible steps.”

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