Daily News Photo by SEAN McCOY Charter yachts and cruise ships herald the start of tourist season after a summer of slumping arrivals.

ST. THOMAS - Fewer people visited the territory this summer compared with last year, and the loss of revenues is affecting the local government and the V.I. economy.

According to V.I. Bureau of Economic Research tourism indicators, for the first eight months of the year, 222,506 fewer people traveled to the Virgin Islands - a 12.7 percent loss compared with the same time period the previous year.

Compared with the statistics from 2008, arrivals were down 5.5 percent in May, 10.3 percent in June, 9.2 percent in July and in August they fell by 14.8 percent.

St. Thomas saw a decrease in air traffic each month, but St. Croix saw those numbers climb compared with 2008.

Tourism spokeswoman Allegra Kean-Moorehead said the increase in airlift to St. Croix does not correspond to the island's hotel occupancy rates for the same time period, so the department plans to further research those numbers.

St. Croix also saw an increase in cruise ship passengers across the board. No ships called on the island during the summer months in 2008. This year, St. Croix welcomed 6,661 cruise ship visitors in May, 6,758 in June, 7,043 in July and 6,999 in August.

On St. Thomas, however, the number of cruise passengers dropped this summer. Cruise traffic fell by 14.6 percent in May, 12.1 percent in June, 13.4 percent in July and 26.7 percent in August.

According to the Bureau of Economic Research, hotel occupancy on St. Croix was down for all four summer months. Occupancy was down on St. Thomas and St. John as well.

Lisa Hamilton, president of the USVI Hotel and Tourism Association, said local hotels have managed to keep a large portion of their rooms filled, but at a price. To get the rooms booked, hotels are slashing rates.

She said hotels throughout the Caribbean and even in the U.S. mainland are cutting rates to lure travelers.

At the association's recent small hotels conference, hoteliers from 17 other Caribbean islands and countries reported that they are suffering a 20 to 40 percent loss in revenues, Hamilton said.

According to the bureau's data, the territory's hotel revenues dropped by 11.1 percent in May, 5.2 percent in June, 19.5 percent in July and 25.1 percent in August.

Cutting room rates is dangerous Hamilton said, because it can take years - long after the economy has recovered - to get the rates back up. She said a recent report by U.S. Travel Association projected that room rates will not return to 2007 levels until 2014.

Dropping rates to keep hotels full is problematic because then travelers expect to get a certain value for a certain price - the rates cannot be raised again overnight.

"If you paid $260 per night for the Marriott this year, would you pay $400 next year?" Hamilton asked.

Loss of hotel revenues affects the government of the Virgin Islands as well. The government collects an 8 percent tax on each room night paid for in the territory. That money goes into the Tourism Revolving Fund, which supports the territory's tourism advertising and marketing efforts.

Plummeting revenues mean less taxes collected and less money for the department to promote the territory.

"We're looking at 34 percent less marketing dollars available for 2010," Kean-Moorehead said.

Despite the financial challenge, the department will still work hard to lure guests to the territory, she said. A new marketing plan will be unveiled at the end of this month and includes national advertising, trade shows and sponsorship of local events to attract tourists.

"The down economy in the U.S. has made a big impact in travel to the Virgin Islands, but we're still doing a lot better than the rest of the Caribbean region," Kean-Moorehead said.

She said the department's Sizzlin' Summer Sampler - a promotion that offered a discounted airfare and hotel package with a minimum 4-night stay - definitely helped keep the numbers up for the summer months. Kean-Moorehead said a total of 7,530 packages were sold.

"It translates to an estimated $11 million in revenues to the territory," Kean-Moorehead said. "It helps to mitigate the impact of the economy."

- Contact reporter Aldeth Lewin at 774-8772 ext. 311 or e-mail alewin@dailynews.vi.