Tourism Development in The Bahamas


Exemptions from property
tax and customs duty for
companies investing in
hotel and resort
development have
stimulated renovation and
encouraged the construction
of new hotels for the
first time since 1989.

A Paradise for The Americas

Tourism is big business in The Bahamas and a mainstay of the economy, contributing nearly 40% to the country's total gross domestic product. An estimated US$1.3 billion is spent annually by more than 3.2 million visitors, which supports roughly half of the labour force and produces 70% of the government tax revenue. Both the average length of stay and hotel occupancy rates rose in 1995, and an even stronger performance is expected from the tourism industry for the long term. Based on its growing capacity to create jobs, earn foreign exchange and generate income, tourism is expected to remain the dominant industry of The Bahamas for the foreseeable future.

Due to the proximity of The Bahamas to the eastern United States and Canada, an estimated 80% of all visitors to The Bahamas originate in North America. The Bahamas was ranked as the 8th most popular world vacation destination for Americans in 1994. The Bahamas also welcomes significant numbers of tourists from Western Europe, South America, Japan and South Africa.

The Bahamas maintains one of the fastest growth rates in the region. It is one of the world's most visited cruise ship destinations, receiving some 40% of all cruise visitors to the Caribbean region.


The Bahamas' New Economic Policy

Since 1992, the government has adopted a market-friendly economic policy to facilitate the expansion and diversification of the Bahamian economy and to deepen the economic benefits derived from the tourism industry. While The Bahamas tourism industry is private sector driven, in 1992, some 20% of the hotel room inventory was owned by the government. Hence, privatization has become central to the government's new economic policy.

Most government-owned hotels have been privatized, including the Ambassador Beach Hotel and the Royal Bahamian Hotel on New Providence, the Winding Bay Resort in Eleuthera, and the Lucayan Bay Hotel and Marina, the Lucayan Beach Resort and Casino, and the Grand Bahama Beach Hotel on Grand Bahama Island. These properties were purchased and refurbished by Jamaican, Italian, Danish, Swiss, and other international investors. Government ownership of hotels has been reduced to some 5% of the country's room inventory.

Exemptions from property tax and customs duty for companies investing in hotel and resort development have stimulated renovation and encouraged the construction of new hotels for the first time since 1989.

A dramatic example of the successful and growing Bahamian tourism industry is the redevelopment of the Atlantis Resort on Paradise Island. A consortium of American, British, and South African investors recently acquired ownership of four major hotel properties on Paradise Island. Each of the hotels and the casino are operated by Sun International, one of the world's largest resort and leisure companies. Sun International took advantage of a favourable investment environment and a cooperative government to redesign the Paradise Island resorts. Over US$250 million was invested in the redevelopment of this modern family resort, ecological/aquatic park, and gaming facility. There are also plans to construct an additional 1000 rooms on Paradise Island

The French resort chain Club Mediterranee operates three vacation villages in The Bahamas, including the crown of their entire chain, the Columbus Isles Village on the island of San Salvador. Other major owners and operators of major resorts in The Bahamas include Princess Hotels, Forte/Meridian Hotels, Super Clubs, and Sandals. Major franchise operations represented in The Bahamas include Marriott, Radisson, Clarion Hotels, Holiday Inn, Comfort Suites, and Best Western Hotels.

Major tourism resort development has been concentrated in the two main vacation destinations in The Bahamas: New Providence (Nassau/Paradise Island) and Freeport, Grand Bahama Island. However, low-impact, environmentally-sensitive resorts exist on virtually all of the other 29 inhabited islands of The Bahamas chain, and all present excellent opportunities for tourism development.

Eco-tourism is a focal point for development of the Family Islands, which include all the islands of The Bahamas, except New Providence, the site of the capital city, Nassau, and Grand Bahama Island, home of Freeport. These islands provide a new investment environment for hotel and resort development companies interested in providing nature theme vacation destinations for discerning travellers.

Additional opportunities exist for the development of condominiums and residential single family homes for the expanding second home market. Especially popular locales exist in Grand Bahama, Abaco, Eleuthera, Harbour Island, and Exuma, in addition to New Providence, home of the wealthy second home enclave of the world's rich and famous at Lyford Cay.

A many-pronged programme to improve the infrastructure of the Islands of The Bahamas has been underway for the past three years, including:

  • Development of public parks and green areas;

  • Expenditures of tens of millions of dollars since 1992 to improve major roadways, harbours, and water systems;

  • Upgrading the international airports;

  • Extensive electrification;

  • Redevelopment of Prince George Dock in Nassau to enhance the visitor arrival area and organize easy access to land and sea tours;

  • Providing a modern and dependable communications systems.


Hotel & Tourism Investment Incentives

Freedom from Taxation

The Bahamas is one of the world's most successful tax shelters. Companies that locate in The Bahamas pay no taxes on personal or corporate income, capital gains, dividends, interest, royalties, sales, estate, inheritance or payrolls.


Hotels Encouragement Act

This incentive provides for duty-free entry of approved construction materials, furnishings, and fixtures for hotel development. The Act reduces the demand on cash flow for hoteliers and encourages regular property renovations. Recent amendments to the Act have reduced the number of rooms required for new hotels to access this incentive to five rooms for hotels in the Family Islands. This reduction is expected to stimulate an expansion in small, eco-sensitive hotels and guest houses. Total new construction and renovation programmes approved under this Act exceed US$200 million since January 1993.


Development of the Family Islands/Eco-Tourism Program

The 700 Bahamian islands have retained their unspoiled and incomparable natural beauty. Offering unused beaches, rich tropical scenery and wildlife, and azure seas, eco-friendly hotel development in the Family islands represents one of the most promising sectors for investment.

Abaco, Bimini, Cat Island, Eleuthera, Harbour Island, Exuma, San Salvador, and Long Island are some of the Family Islands which have shown an increase in tourism growth. Most of these islands are pristine, making them ideally suited for eco-hotel investment. The government is providing favourable consideration to investors who establish ventures on these islands that will preserve their fragile ecology. Moreover government is undertaking major infrastructure works on the islands, providing good roads, water and electricity supplies, telecommunications facilities and adequately maintained docks and airports. The Hotel Corporation of The Bahamas has existing conceptual plans for small resort developments for sites in Andros Town, Andros; Winding Bay/Half Sound, Eleuthera; and Mt. Pleasant Point, Exuma.

The Inter-American Development Bank recently announced the availability of funding for establishing environmentally-sensitive hotel and resort ventures in The Bahamas. Such funding no longer requires government guarantees.


Prince George Dock Redevelopment (Nassau)

Designed to upgrade the experience of the cruise ship visitors' welcome to Nassau, Phase I of the redevelopment of the Prince George Dock provides a new call-up system for taxis awaiting cruise passengers, a surrey horse holding area, a hair braiders' facility, and extensive landscaping. The plan includes expanded cultural activities and entertainment on the dock for the enjoyment of short-stay cruise ship visitors. Phase II includes the development of a Visitor's Centre, a hospitality suite, a handicraft market and staging area for cultural presentations.

The redevelopment of the Dock, in the heart of downtown Nassau, is being complimented by a major upgrade of the city centre, including a road, curb and sidewalk repair, the upgrade of all public buildings, and enhanced street lighting and landscaping.

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