The Bahamas Has Too Many Cruise Ships and Not Enough Hotel High Rollers

The Bahamas, like other Caribbean countries, has millions of tourists visiting the destination on cruise ships, but it’s travelers who stay in hotels and resorts who are the bigger spenders.

The Bahamas is one of the most well-known Caribbean destinations and the 2017 Atlantic hurricane season didn’t have an impact on these islands. The destination is also fresh off a nearly 10 percent year-over-year increase in both U.S. and overseas visitor arrivals in  December.

Resorts such as Atlantis, which was at full occupancy for the Christmas and New Year’s holidays, had its best holiday season in 15 years, said Joy Jibrilu, director-general of the Bahamas Ministry of Tourism.

But the good news isn’t all-encompassing. While the Bahamas’ tourist arrivals have grown nearly 50 percent from 4.1 million in 2000 to more than six million in 2017, visitor spending has dropped 28 percent during the same period. Some 75 percent of visitors to the Bahamas arrive by cruise ship but they only contribute 11 percent to the total spending by foreign visitors, said Dionisio D’Aguilar, Minister of Tourism for the Bahamas.

Cruise ship passengers spend about $300 million in the Bahamas each year compared to non-cruise arrivals, who spend $2.2 billion, said D’Aguilar.

New mega-resorts like Baha Mar, the long-beleaguered resort that opened last year, will help boost more lucrative overnight stays in hotels, said D’Aguilar. Baha Mar has been operating at full capacity since its soft opening in 2017 and is trending well ahead of the grand opening in April, he said.

However, it wasn’t long ago that large resorts in the Bahamas and the Caribbean were starving for guests and revenue.

Jibrilu said the Bahamas didn’t do well after the global recession in 2009 and the hotels that performed the strongest were small, niche, boutique hotels. “I think investors will realize that it’s not always about the big, mega-resorts,” she said. “People will always find a way to have that authentic experience. Our outer islands didn’t suffer during the recession but Nassau and Grand Bahama, where you have the big resorts, they really did.”

D’Aguilar said new resorts like Baha Mar and boutique hotels like Bahama House and Kamalame Cay are fueling demand for more airlift, which is key to boosting overnight hotel stays in an island destination like the Bahamas. Airlines added more capacity to the Bahamas in 2017 from some U.S. cities and the UK and Germany, for example.

“Even if you look at Baha Mar with 2,500 rooms, if they run in their first year with 50 percent occupancy it contributes 250,000 additional stopover visits out of 1.6 million that we traditionally have,” he said.

Jibrilu added that the Bahamas doesn’t have any direct flights from Los Angeles despite the fact that California is its third largest visitor market in the United States, but is working to get a direct flight. “Baha Mar and other properties coming online with Baha Mar would appeal to the LA crowd,” she said.

D’Aguilar also plans to engage Airbnb and other short-term rental accommodations to help grow visitor spending and stays. “There’s also been an explosion in Airbnb and that’s a phenomena that we’re embracing,” he said. “I don’t think our hotels have noticed a significant shift since some travelers have started to explore other islands and stay in these alternative accommodations. Our problem is how to tax it. We’ve signed a memorandum of understanding with Airbnb and now it’s up to the government figure out a way to tax it.”

Cruising Ahead

The Bahamas has no intention of turning its back on the cruise industry while it keeps boutique hotels, for instance, on the front burner. Cruise lines, after all, are at the crux of the destination’s tourism industry and helped put it on the map. Tourism officials want to grow cruise visitor spending.

For the Bahamas to remain competitive, it also needs to make a substantial investment in its port in Nassau, said D’Aguilar. “We’ve recently invested $400 million in a brand new airport and we also need to look at our ports,” he said. “There are 90 new boats under construction across the cruise industry and at least one-third of them are destined to come to the Caribbean. The challenge isn’t to get them there, the challenge is that once they get there to get them to spend and have a good time. We have to figure out how to move them around the island and I don’t think we’ve done a great job of doing that.”

Of course, the Bahamas isn’t the first destination to discover that it pays to woo hotel guests over cruise guests. But the destination’s mindset that the status quo is no longer an option is likely indicative of realities being felt throughout the cruise-reliant Caribbean. Millennials, for example, are becoming a larger part of the market share for many Caribbean countries and they aren’t all looking for the run-of-the-mill cruise experience the region is famous for.