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HomeNewsLocal newsV.I. Tourism Still Glitters, but the Gold Rush is Over

V.I. Tourism Still Glitters, but the Gold Rush is Over

Overnight stays are slightly decreasing, but cruise ship calls to St. Croix’s Frederiksted Pier, like this one, are scheduled to increase significantly in the upcoming tourist season. (Shutterstock image)

The post-pandemic boom in Virgin Islands tourism seems to be vanishing as quickly as it appeared.

No one’s crying doomsday. In fact, the day visitor business is predicted to improve a bit, with cruise passenger calls increasing somewhat over last year’s totals.

But it’s a different story for the overnight and long-term market. A combination of rising airfares and returning competition has some industry experts predicting that the 2023-24 season will fall short of recent happenstance successes.

The sudden skyrocketing of the territory’s charter boat industry is also slowing slightly.

In the St. Thomas-St. John district hotels are reporting a drop in bookings of between five percent to 20 percent, depending on the property, according to Lisa Hamilton, president of the Virgin Islands Hotel and Tourism Association. The drop is more dramatic on St. Croix, where bookings are down from 20 percent to 40 percent, she said.

“I think we’re at a leveling-off period,” Hamilton said.

The U.S. Virgin Islands and Puerto Rico were the first Caribbean destinations to reopen to visitors after the Covid-related shutdowns that began in March of 2020. For a while, they were the only game in the region.

“We had a leg up for several months,” Hamilton said. “Our (revenue) numbers were the highest in the Caribbean . . . (the V.I. position) was unprecedented for a couple of years.”

But other islands reopened one by one, and that advantage gradually shrunk and now has basically disappeared.

Meanwhile, competition within the territory has increased slightly, too, as properties that had to rebuild from the 2017 hurricanes have reopened. At this point, the only major hotel not yet back online — or about to be — is the 300-room Sugar Bay Resort on St. Thomas.

The vast majority of hotels operating in the territory — some 83 percent — are members of the V.I. Hotel and Tourism Association. Among those members, Hamilton listed the number of hotel rooms available for the upcoming season as: 1,723 on St. Thomas (including rooms at Frenchman’s Reef which is expected to be fully reopened in early fall), 1,073 on St. Croix, and 359 on St. John.

Additionally, there are 1,008 timeshare units in the St. Thomas-St. John district, she said. There are none on St. Croix.

The association doesn’t keep track of numbers for Airbnb and other shared economy entities, but Hamilton said she believes that market is softening. The last government figure she saw was about six months ago, and that was 4,600 participating properties.

Tourism Commissioner Joseph Boschulte was not available for comment, but in testimony at the Legislature in June, he also indicated that the territory’s overnight business is leveling off.

For fiscal year 2022 (Oct. 1, 2021, to Sept. 30, 2022), the V.I. government collected an “astounding” $45.6 million in hotel room occupancy taxes, he said, adding that was the “highest ever” amount collected. But for the current fiscal year, which will end Sept. 30, the government projects $40 million.

The unprecedented revenue resulted not just from volume but also from unusually high rates.

According to Boschulte’s testimony, the regional average daily hotel rate was $370.57, while the average in the territory was $649.81.

As the overnight market continues to slide towards pre-pandemic stages, adjustments may be needed.

“People have to reassess their marketing strategies to address the change in demand,” Hamilton said.

In his June testimony, Boschulte stressed the health of the territory’s cruise ship business. Unlike the hotel sector, it is increasing this year over last.

According to the government’s figures, a total of 1.6 million passengers landed at one or the other of St. Thomas’ two ports in FY 2022, and the total for the current year (ending Sept. 30) is expected to be 200,000 higher, he said. Further, “Almost all the major Caribbean cruise lines sailing out of major U.S. ports have resumed docking in St. Thomas, leading to an anticipated increase of nearly 650,000 new passengers in 2024.”

While St. Croix’s numbers continue to lag well below cruise numbers for St. Thomas, the business is growing on the Big Island.

Boschulte testified that 100,000 passengers docked at Frederiksted in FY 2022. He predicted an 80 percent increase in that number for FY 2024.

Information released last week by the V.I. Port Authority supports that assessment. The cruise ship schedule for Frederiksted, St. Croix, for FY 2024 (Oct. 1, 2023-Sept. 30, 2024) lists 74 port calls. The passenger and crew capacity for those calls totals 280,566. While it’s impossible to say whether all will arrive fully loaded, most ships travel at or close to capacity; the average for the Caribbean is 92 percent, according to Boschulte’s testimony.

One tourism segment still benefitting from the pandemic turn-around is the territory’s charter boat industry, although its sudden leap upward is now showing signs of slowing.

“We’re currently seeing a very saturated market,” said Oriel Blake, executive director of the Virgin Islands Professional Charter Association (formerly the V.I. Charteryacht League).

When other Caribbean islands, most notably the nearby British Virgin Islands, closed their ports to charter boats in 2020, the USVI invited the vessels to its shores. The dramatic influx of boats was not appreciated by all residents, but it turned into a revival of the territory’s charter boat industry.

Activity was booming for about two years. It was, Blake said, at “an all-time high.” The VIPCA grew to about 750 members, including 150 vessels. It is planning a V.I. Boating Exposition for January of 2024, with multiple events and a large display of boats for sale by manufacturers.

Then the BVI, which has dominated the nearby marine scene for decades, reopened to charters near the end of 2022, Blake said. In what she called a recognition that the USVI industry is blooming, the BVI has increased the requirements for entering its waters and repeatedly changed its rules, making it more difficult for U.S.-based term charters to operate between the two jurisdictions.

Day charters are not generally affected by the BVI regulations, but they, along with term charters, are now facing a different challenge. Blake said high airfares are causing a lot of would-be visitors to change their plans about flying to the Virgin Islands, and so they are canceling their reservations for boat charters.

Such cancellations have been “substantial” for some charter companies, she said.

Hamilton said hotels are likewise suffering from pricey airfares that dissuade travelers. She cited her own recent experience, flying to a conference in Barbados. The round-trip ticket was almost $2,000. Tickets from areas in the continental U.S. to the Virgin Islands that used to cost roughly $400 to $700 now demand well over $1,000, she said.

“We’re not alone,” she added. Other Caribbean destinations are also feeling the pinch.

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