The Tribune

By ANNELIA NIXON

TRIBUNE Business Reporter

anixon@tribunemedia.net

INFRASTRUCTURE gaps, labour shortages, limited airlift capacity and lengthy development approval processes remain significant challenges that could slow the pace of new tourism investment in The Bahamas, despite a growing pipeline of luxury hotel and residential developments.

Shannon Sampson, Caribbean managing director at HVS, told the Caribbean Hotel Investment Conference & Operations Summit (CHICOS), which is being held at Atlantis, that the region’s growing hospitality development pipeline presents considerable opportunities but also brings challenges that would need to be addressed.

Mr Sampson identified construction logistics, staffing, airlift and infrastructure as major obstacles facing the hospitality sector. He said developing properties on islands presents logistical challenges involving materials and labour, while the significant volume of projects in the pipeline could place further pressure on those resources. 

Staffing is another concern, particularly given the number of employees required for high-touch, ultra high-end properties. Mr Sampson also warned that additional hotel rooms require increased airlift capacity, especially during the high season, to ensure sufficient visitor demand.

Despite these challenges, the outlook for the global hospitality industry remains strong. Isaac Collazo, senior director and head of analytics at STR, said the industry’s current performance is particularly notable given persistent global inflation and geopolitical conflicts.

“The one thing you should know is that the state of the industry is very good right now,” he said.

Mr Collazo said global travel demand was at record levels, with most regions recording strong growth. The Gulf Cooperation Council (GCC) and Mexico were among the few markets experiencing declines in demand, he added.

For The Bahamas, the director of the Bahamas Investment Authority (BIA) said the Government is seeking to capitalise on the favourable investment climate while broadening the country’s appeal beyond traditional tourism developments. 

Phylicia Woods-Hanna described The Bahamas as a premier destination for foreign direct investment (FDI), pointing to efforts to diversify the economy and improve the way investment projects are facilitated. She said the Government is pursuing opportunities in maritime, aviation, manufacturing and financial services, alongside continued investment in tourism.

Mrs Woods-Hanna said the BIA’s strategy is built around three pillars - investment promotion, facilitation and aftercare. The latter involves maintaining relationships with investors after projects have been approved and helping to address obstacles that could affect their operations.

She said the BIA is also working to improve co-ordination among government agencies, strengthen domestic businesses and ensure Bahamian companies are positioned to benefit from foreign investment.

Mrs Woods-Hanna said that around 60 percent of investments identified in the Authority’s recent studies represented reinvestments in The Bahamas, highlighting the importance of maintaining relationships with existing investors. She said the Government is also looking to learn from other Caribbean jurisdictions through study tours and exchanges, including planned discussions with Jamaica’s investment promotion agency, JAMPRO.

“We are not competitors. We’re partners, and we all have different offerings,” she said.

Improved coordination across government agencies will also be necessary to address investor concerns surrounding infrastructure, connectivity and accessibility. Mrs Woods-Hanna added that listening to developers is essential to understanding the obstacles affecting their projects and ensuring investments are both commercially viable and beneficial to Bahamians.

Vaughn Roberts, chief operations officer at Atlantis, identified several potential developments that could create new investment opportunities over the coming years including further expansion by major resort operators. 

He also pointed to opportunities in downtown Nassau, where increasing cruise passenger arrivals and available land could create scope for redevelopment. In particular, Mr Roberts expects to see significant growth in excursions and visitor experiences in Nassau and the Family Islands as cruise passenger numbers increase.

The potential for investment beyond New Providence is also attracting growing attention, particularly in the high-end accommodation market. Sarah Morley, development director at Atabey in Exuma, said The Bahamas offered several advantages to international developers, including its proximity to the US, a stable economic environment, the Bahamian dollar’s peg to the US dollar, an established legal framework and its natural attractions. 

However, Ms Morley identified infrastructure as the most significant requirement for unlocking the Family Islands’ investment potential. She said developers in some of the Family Islands are often required to finance their own wastewater treatment plants, water supplies and electricity systems, creating substantial costs that could make certain projects financially unviable.

Workforce availability is another major obstacle, particularly on less populated islands. With The Bahamas having a population of around 400,000, developers must consider the additional expense of bringing in workers and providing accommodation for them. Ms Morley said access to schools, housing and other essential amenities also influenced whether developers could attract and retain the skilled employees required to operate luxury properties.

She acknowledged ongoing efforts to improve accessibility through airport development across the Family Islands, including Exuma, but said further infrastructure investment would help make those destinations more competitive.

Ms Morley identified the shift towards luxury branded residences in the Family Islands as one of the most significant emerging trends in the Bahamian development market.

“That’s the biggest change I see,” she said, pointing to interest from international hospitality brands including Aman, Rosewood, Bulgari and Ritz-Carlton in developing properties outside Nassau.