FRONT PORCH: Masking grand failures: A structural crisis in tourism

A visitor surveying the grand resorts, all-inclusives and boutique properties on Nassau/Paradise Island, the tourism properties on the Family Islands, and the flashy world-class cruise ships in Nassau Harbour, will be impressed by much of the tourism product and infrastructure in The Bahamas.

Since the inception of modern tourism, including the contributions made by Sir Stafford Sands, The Bahamas has been a regional leader in mass tourism. There are a number of things we do better in The Bahamas in tourism.

We have achieved many successes in tourism since majority rule and independence. The Bahamas welcomed one million visitors in 1968 when Sir Lynden Pindling served as Minister of Tourism.

When Sir Arthur Foulkes served as tourism minister, the visitor numbers increased to 1,240,000 in 1969. In 2023, The Bahamas recorded 9.65 million visitor arrivals. Despite this general growth, all is not as rosy as it seems.

According to current Tourism Minister Chester Cooper, tourism accounts for “roughly 60 percent of The Bahamas’ GDP”. In 2023, visitor arrivals grew by 34 percent over 2019, the previous best year, but the economy grew by only 1.1 percent.

How is it possible to have such substantial growth in visitor arrivals and such poor growth of the economy in a country that derives “roughly 60 percent” of its GDP from tourism?

After the reopening and improvements in the global and US economy post-COVID-19, tourism numbers and receipts improved significantly, as they did in most jurisdictions.

Still, we need to be careful how we bandy certain numbers with fanfare. Many of the “record-shattering” visitor arrival numbers are not necessarily showing up in the general economy.

In an address to the Bahamas Hotel Tourism Association Annual General Meeting, last December, Prime Minister Philip Davis noted: “Let’s be candid: The Bahamas is in the tourism industry for economic prosperity and to ensure a tangible return for every Bahamian. It’s not just about visitor numbers; it’s about the bottom line - how much we earn and how these earnings are distributed.”

Why are we not seeing the arrival numbers more broadly reflected in Treasury revenues? Are the earnings being distributed in a broader and more equitable manner?

A good number of taxi drivers, straw vendors, Bay Street merchants, and small businesspersons, retail stores and certain heritage sites beyond Bay Street, like Clifton National Heritage, are not experiencing a greater effect from the supposed boom in visitor arrivals.

A broader national debate was joined during the budget debate on the imperative of deconstructing tourism statistics to understand why our “record-breaking” visitor arrivals are not reflected in economic growth.

A clear explanation for this incongruity between visitor arrivals and economic growth is that our far more valuable but stagnant stopover visitor arrivals are being supplanted by rapidly growing cruise visitor arrivals. What does a closer examination suggest?

According to the Central Bank’s February 2024 Quarterly Statistical Digest, stopover visitors that arrive mostly by air and stay in our hotels, spend an average of $2,642 per visitor while cruise visitors spend an average of $71 per visitor.

According to the same Digest, the record-breaking visitor arrivals for 2023, compared to 2019, the previous best year; the more economically valuable stopover visitors did not grow. The 34 percent growth in arrivals came from the considerably less economically valuable cruise visitor.

If stopover visitors that were once accommodated in our hotels for multi-day stays are now coming to The Bahamas on cruise ships instead, this helps explain why a 34 percent growth in visitor arrivals results in a paltry 1.1 percent growth of the economy.

The case supporting the supplanting of our stopovers by cruise visitors comes initially from the words of a senior cruise executive attending the recent April 2024 Seatrade conference. He explained that cruise lines are not competing with other cruise lines. Instead, he noted, they are competing with land-based properties.

That case was bolstered by a local announcement from the same cruise executive that the new, massive and marvelous $1.35bn Utopia of the Seas, with accommodations for 5,668 passengers, will be dedicated for Bahamas-only cruises.

No cruise company will dedicate such an asset to Bahamas cruises unless those cruises are in high demand and delivering appropriate returns on their investment.

It seems clear that the objective of the cruise lines is to persuade travellers to choose to cruise to The Bahamas instead of choosing to stay in our land-based accommodations.

Another case suggests why an increasing number of travellers are choosing to cruise to The Bahamas instead of flying here.

Ostensibly, stopover visits by Florida residents have not grown for nearly two decades while the growth of Florida residents choosing to cruise to The Bahamas has been substantial.

Florida is the third largest and fastest growing US state by population and the nearest state to The Bahamas. According to the Cruise Line International Association, Florida residents lead all states in taking cruises to The Bahamas.

Florida has perennially been the greatest source of stopover visitors by state since the time when Sir Lynden and Sir Arthur were ministers of tourism. Its growth of stopovers is now stagnant.

If much of the aforementioned pertains and the same patterns continue, the announcement that Team Tourism will deploy the same strategies in arriving at 12 million total visitors for this calendar year is not a reason to do celebratory backflips.

Team Tourism includes the public and private sectors of tourism. It is difficult to believe that the private sector hotels owners and operators are delighted to see substantial growth of cruise passengers and stagnancy with stopover visitors.

It is easier to believe that the hotels are working to change Team Tourism strategies to focus more on growing stopover visitors.

The fast growing cruise arrivals now represent 80 percent of arrivals but only nine percent of visitor expenditure. Stopover visitors, a fast declining share of our arrivals, represent 20 percent of visitor arrivals but account for 91 percent of visitor expenditure.

It is clear that growing our stopover business means significantly more to our economy than growing cruise visitors. This singular recognition should be the major focus of our tourism strategy.

According to information gleaned from the Seatrade Conference, there are scores of new cruise ships on order for delivery by the end of 2028. Not all of these will be deployed in The Bahamas. However, some will.

Why then do we hear little about the number of hotels and hotel rooms under construction in The Bahamas between now and 2028 to compete with the coming cruise onslaught.

Might it be that local and international investors have decided that under the current set of circumstances, hotel investments have a very hard time competing with the volume and high-quality of cruise vacation offerings for The Bahamas? Have they decided to take their capital elsewhere in the region?

While The Bahamas is announcing record-breaking growth in cruise arrivals, data from elsewhere shows other destinations in our region announcing record-breaking growth in stopover arrivals, the target of hotel and resort investors.

Many of today’s cruise companies view their megaship as the main destination. The only missing ingredients are a private beach and the magnificent waters of The Bahamas.

We have those in such abundance that we give them away almost for free. Given the “economic killing” they are making, the cruise lines need to pay a greater amount for doing business in The Bahamas.

A review of the Utopia of the Seas will show that, as announced by the company’s executives, it aims to be a tourism juggernaut, supplanting land-based tourism. These massive ships see themselves as aircraft carriers compared to our hotels, which are more like smaller yachts.

These mega cruise ships provide a substitute for landside accommodations. Their onboard amenities include many restaurants, bars, entertainment centres, spas, exercise facilities, waterslides, multiple pools, a skating rink and more.

When they arrive at their private island in The Bahamas, ziplines and other features are added, with the natural beauty of The Bahamas offering the unequalled beaches and waters of The Bahamas.

The vast majority of the revenue for the supplanted landside items accrue to the cruise company instead of having those revenues distributed across the multiple economically valuable land-based businesses in The Bahamas.

Neither Atlantis nor Baha Mar can compete with this array of amenities at the prices offered by the cruise lines. And according to resort executives, these larger cruise ships are already competing effectively for the most lucrative business of The Bahamas: the land-based group and incentive business.

We must urgently find a way to make our land-based tourism opportunities more attractive to local and foreign investors.

To attain the levels of economic growth The Bahamas requires for quality employment, to boost tax collection, and to pay down our growing debt, we need novel and smart strategies that deliver primarily on the needs of the Bahamas economy and not on the objectives of the cruise companies.

There will be a downgrade in the quality of tourism if we do not arrest and change the current course. The endless giddy and bombastic celebration of the increase in the number of cruise passengers mask worrying structural problems in tourism.

Instead of being defensive about critiques, Tourism Minister Cooper would do the country an extraordinary service if he paid greater heed to the Prime Minister’s clear direction and warning: “It’s not just about visitor numbers; it’s about the bottom line - how much we earn and how these earnings are distributed.” This is a matter of economic survival, equity and social justice.



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