Baha Mar will change Bahamas tourism landscape
15 OCTOBER 2014 7:17 AM
The Baha Mar resort project will bring about significant changes to the island market, starting with increased airlift.
GLOBAL REPORT—Hoteliers in the Bahamas are keeping a watchful eye on the $3.5-billion Baha Mar resort complex project. The resort, whose project leads recently announced a delay in opening from December to late spring 2015, could bring significant changes to the island market, sources said.
While some hoteliers might be concerned over the influx of supply, others are looking at it as a step in the right direction for the overall market.
“The addition of such a substantial development, (Baha Mar) has been the impetus for government investment of millions of dollars into infrastructural developments necessary to grow the tourism industry in The Bahamas,” said Robert Sands, senior VP of government and external affairs for Baha Mar.
The Baha Mar project put into motion the $410-million investment in the expansion of the Lynden Pindling International Airport, which is set to increase the airlift capacity of that facility to 5.2 million passengers annually, according to Sands.
The government is already working proactively to secure more flights from new points in the United States, said Scott Berman, principal and industry leader, hospitality & leisure, for PricewaterhouseCoopers.
“Bahamas is largely accessed from the east from Boston down to Miami. Very little Chicago, Dallas and (Los Angeles) play. That has to be the next piece,” Berman said.
Additionally, Tourism Economics’ baseline forecast expects international air arrivals will grow to nearly 2 million by 2020, Sands said. Moreover, the increased number of visitors is expected to boost levels of visitor spending not just at Baha Mar, but also in the city of Nassau.
“Baha Mar has a high potential to attract a greater number of tourists from untapped, high-potential markets such as Latin America and China,” Sands said.
Year-to-date June, Grand Bahama air arrivals increased 31.7% when compared to the same time period last year, according to the Bahamas Ministry of Tourism.
Despite the region’s ongoing airlift situation, the market has seen slow but steady improvement in most of the key indicators, said Stuart Bowe, president of the Bahamas Hotel & Tourism Association. “For major Nassau-Paradise Island hotels, August was their best performing August since 2007.”
The Out Islands of The Bahamas reported increases in occupancy, average daily rate and revenue per available room, Bowe said, adding that key markets such as the U.S., Europe, Latin America and Canada have helped drive performance upward. The Out Islands are the islands that make up The Bahamas with the exception of New Providence Island and Grand Bahama Island.
Supply surge issues?
The Baha Mar project is expected to bring 2,200 additional rooms to the market, and Sands is confident there is room in the market for the additional supply.
“If one observes trends in room count over the past decade, the resort is not drastically increasing supply of hotel rooms,” Sands said. “Based on statistics from the Bahamas Ministry of Tourism, the number of available hotel rooms in The Bahamas peaked in 2007 at 16,335 rooms.
“The addition of 2,200 new rooms as a result of Baha Mar will bring the total number of hotel rooms in The Bahamas to over 17,000 rooms, representing an increase of just 700 rooms more than the peak in 2007.”
However, the issue could lie within generating new demand, particularly from untapped international markets.
“Given the Chinese influence in Baha Mar, does it open new markets from Asia? My view is ‘prove it,’ because Asia has never found the Caribbean, for the most part,” Berman said. “If Chinese jets come from Shanghai and Hong Kong, it’s possible.”
“We believe that the additional inventory of rooms and the level of amenities at Baha Mar will attract new and returning international visitors to The Bahamas,” Sands said.
Atlantis’ piece of the puzzle
If Baha Mar does not create enough new demand, there are concerns that a rate war could ensue between Baha Mar and nearby Atlantis, Paradise Island, according to a report from HNN contributor John Buchanan.
In July, the 3,400-room Atlantis announced an agreement to affiliate with Marriott International and become part of its Autograph Collection, giving the property more distribution power via Marriott’s global reservations system and access to 46 million Marriott Rewards customers.
“This agreement to partner with Autograph Collection could arguably be the single most significant tourism stimulus for The Bahamas in this decade,” said George Markantonis, president and managing director of Atlantis, Paradise Island. “This strategic and beneficial partnership will help grow visitation of Marriott International loyalists to the country and open a broader channel for guests to visit Atlantis, Paradise Island, from around the world.”
Berman said Atlantis’ owner Brookfield Asset Management has been very aggressive in making sure they’re well positioned. “Marriott put up quite a bit of money, which is not their normal course.”
This is the Autograph Collection’s first member resort in The Bahamas and will be the largest hotel in its portfolio.
Bahamas after Baha Mar
The government is on its toes with the Baha Mar project, Berman said, specifically what it means for The Bahamas’ future.
“They're under a lot of pressure. They're not sitting back, and they're aggressively making sure they can do everything to make it work,” he said. “My view is that The Bahamas the destination has as much at risk as anybody. If they screw this up, there’s a lot more competition than there was 25 to 30 years ago.
“People have short memories. They will bypass the island.”
The Baha Mar project also is transforming tourism in The Bahamas with its new pre-employment training programs, Sands said. For example, Baha Mar introduced several free programs such as the Leadership Development Institute, which offers not just hospitality and life-skills training but also guarantees a job offer from Baha Mar upon completion.
“One of the most important ways that Baha Mar is transforming tourism in The Bahamas is by demonstrating an unwavering commitment to ‘better than best’ service and changing how we think about service training in the country,” Sands said.