About The Industry

About The Tourism Industry

As the primary engine of growth for the nation?s economy, the tourism industry is a vital, dynamic and evolving industry. With a mature tourism infrastructure supporting approximately 1.5 million stopover visitors and 3.5 million cruise visitors per annum, and a progressive service industry, tourism has become the largest driver of the economic activity in The Bahamas.

Moreover, with recent investments – the Atlantis Phase III, the Baha Mar Development Company in the Cable Beach strip, and any number of projects planned for the Family Islands – the tourism industry is poised for exponential growth and development, creating an untold range of opportunities not only for jobs within and related to the industry, but for entrepreneurial initiatives that will help create sustainable and lasting economic supports for the industry.

Why do visitors choose The Bahamas? In 2003, almost 70 percent of vacationers to Nassau/Paradise Island, Grand Bahama Island and the Family Islands said their decision was based on the warm climate and the beauty and accessibility of our beaches first and foremost, followed by the diversity of hotel facilities.

In 2003, almost 50% of vacationers to The Bahamas booked an air and hotel inclusive package with best vacation value cited as being of increasing importance in the decision-making process.

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What Is Tourism?

Tourism involves the short term movement of people to destinations outside the places where they normally live and work. It also involves the activities of people, referred to as tourists or visitors, during their visit to these destinations and the facilities and services patronized during their stay.

These tourists or visitors spend money earned in their places of residence at their home country. This money, termed foreign exchange in the visited destination, is used for balance of payment in other countries. Foreign exchange enables countries to purchase the goods and services needed to stimulate their economies, thus generating wealth and employment in the destination.

While tourism it is important economically, it is also beneficial socially, politically, culturally and educationally.

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Who Is A Tourist?

Anyone traveling for such purposes as recreation, holiday, health, sports, family reasons, business, on a mission or as a delegate at a conference, staying at least 24 hours and overnight, but not more than one (1) year. It excludes emigrants, diplomats, consular representatives and armed forces personnel. In no instance should the person be earning income in the place visited. (Source: UN/WTO)

There are three classifications of tourists: international, regional and domestic. An International Tourist is one who visits another country outside his own country. A Regional Tourist is one traveling in a defined geographical region that is within the Caribbean. A Domestic Tourist is one traveling within his own country of residence e.g. Bimini, Abaco, etc.

There are four categories of tourist in The Bahamas: Transit, Day, Cruise, and Overnight or Stopover.

Transit Visitors: Persons passing through on their way to another country but having to enter The Bahamas for Immigration purposes.

Day Visitors: Visitors spending less than 24 hours in The Bahamas do not use overnight accommodation.

Cruise Visitors: Those visitors arriving by cruise ship and using the cruise ship for their accommodation. In 2000 these persons spent on average $60.00 per person in the destination and are pursued for the potential of their conversion to stopover visitors.

Stopover Visitors are staying for at least 24 hours and using some form of overnight accommodation, whether hotel, boat or staying with friends and relatives. In 2000, these persons spent an average of $1000.00 per person. Economically, these are the most important visitors to The Bahamas.

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The Importance of Tourism

Just under 50% of all persons in The Bahamas are directly employed in tourism. If you add those who are indirectly employed in tourism, the percentage increases to 70%. In 1993, tourists spent approximately $1.3 billion dollars in the country which contributed to the jobs of over 45,000 persons.

With a total labour force of 164,675, the economy depends heavily on the tourism sector to provide employment. The Bahamas has a very youthful population; 50% are under 20 years old. This means that each year almost 6,000 new entrants are added to the labour force as a result of school-leavers. In 1986, it took the combined expenditures of 30 stopovers to create one full-time job (about $22,000).

However, it took 404 cruise visitors to have the same impact.

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The Advantages of Tourism

Tourism provides foreign exchange (US dollars) which allows the government to pay bills such as:

1) Importation of goods and food

2) Foreign debt.

Foreign exchange also enables:

1) The Bahamas dollar to stay on par with the US dollar.

2) Bahamians to go shopping abroad to buy goods and send their children to school abroad, as long as the US dollar is available and floating easily in the Bahamian economy.

3) Government to pay the thousands of persons employed as public servants their monthly salaries.

4) Government to have money to do road works, school construction and all other infrastructural activity.

Tourism provides jobs for thousands of Bahamians both directly and indirectly. If tourists do not come to The Bahamas, those persons directly involved in tourism, for example, straw vendors, taxi drivers, retail storeowners, etc., would be unable to pay their bills.

If they are unable to make money they could be unable to pay their landlords, their mortgages (the banks), etc. Additionally, persons indirectly involved in tourism, such as landlords, could have trouble obtaining their rents.

Tourism, therefore, plays an extremely important role in ensuring that Bahamians are employed. If tourists do not come to The Bahamas for a period of time, persons employed directly in tourism could begin to lose their jobs and this would be felt in every sector of the economy. For example, some hotel employees were laid off after the September 11th terrorist attacks and some hotels temporarily closed.

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The Nature of Tourism

Tourism is classified as a tertiary industry, one that gives service for a fee. Physical products are produced, stored, later sold and still later consumed. An example is a tin of cream that is tangible, non-perishable, the same from tin to tin and can be separated by its producer (shipped). Not so with services. There are four characteristics of tourism that are in contrast to those of physical products. Tourism has a nature of Intangibility, Perishability, Inseparability, and Heterogeneity. To have a successful tourism product these factors must be managed.

Tourism is Intangible because persons are being sold an experience, something that they cannot see, taste, feel, hear or smell before they purchase. Even the purchase of travel does not transfer ownership of anything. The visitor has a tangible ticket but only the promise of a great experience. Tourism suppliers, such as The Bahamas, require a great deal of money ($62.2 million budget in 2001) and creativity to promote The Islands of The Bahamas as a quality brand product capable of delivering an extraordinary experience; a region within itself with multiple personalities, different from the rest of the Caribbean region.

Tourism is Perishable in that the services cannot be stored for later sale or use. (If Bahamasair flight 202 has a capacity of 60 seats and flies to Ft. Lauderdale with a passenger load of 45, the revenue for those 15 seats is lost forever. If a room is not sold tonight, its revenue cannot be earned another day. Each night, it is expected that all the rooms are sold. It is like yesterday, and you will see a new day tomorrow, but you will never see yesterday again.) This is why the management of the supply of the product based on its demand is important for the success of tourism.

Tourism is Inseparable in that the producer (The Bahamas) and the consumer (visitor) must come together in order for consumption of the tourism products to occur. Production and consumption happen simultaneously. The provider of the tourism service/product and the client both affect the experience outcome.

Tourism is Heterogeneous because there are so many different persons to provide an expected level of quality service to make the overall experience what it should be. This variability of tourism services is so because it depends highly on who provides them, when, where and how they are provided.

This is why The Ministry of Tourism is embarking on a National Awareness Campaign to sensitize Bahamians and Training initiatives to ensure that industry standards are in place. One employee can be cheerful and professional and another can be unpleasant and slow. A tin of cream is called homogeneous because from tin to tin you get the same quality results. Not so with human beings. They have a different mindset, personalities and behaviours. Hence a lot is done in training for quality control.

Before the visitor gets to the hotel he or she passes through airline staff, airport staff, transportation personnel who affect the outcome of the overall experience be it pleasant or unpleasant. The encounters though isolated, still make up their overall impression of The Islands of The Bahamas. Hence their propensity to recommend the islands is diminished when any of the services provided for them is not what they expect.

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A Career in Tourism

As one of the fastest growing economic sectors, not only in the Bahamas, but in the region, there continues to be a need for talented, skilled professionals in a widely diverse number of areas.

In the region, one out of every four individuals is employed in the tourism industry which currently has the potential to expand by some 70 per cent over the next decade, a scenario that is mirrored in the Bahamian community. Regional data shows that by the year 2007, tourism will have added a total of 2.2 million jobs.

Recent statistics for the region, that likely reflect the economic position of the Bahamas, show that over 40 per cent of all capital investment can be attributed to the travel and trade industry and that the Gross Domestic Product of no other region in the world benefits more from tourism than the GDP in the Caribbean.

With such tremendous growth and economic benefit to be gained from an industry entrenched in the Bahamian way of life, and when considering a career in today?s environment, the range and enormous possibilities available tourism, which offers exposure and travel opportunities, cross training experiences and career advancement opportunities, means that students are able to follow their passions, whether in the sciences, literary field or business sector, and be confident that they will be able to use their skills to service the demands of an ever evolving industry, while fulfilling their own passions and meeting their own economic needs.

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The Tourism Report

The experiences and memories resulting from taking part in the tourism activity begins from the time the tourist chooses his vacation destination and ends when he returns to his normal place of residence.?

There are four factors for a successful tourism product. These are:

Accessibility – being able to reach and enter the tourist destination by communication and transportation.

Amenities – These comprise of accommodation, catering, entertainment, transport and communications.

Attractions – These can be either sites (scenic, climatic, historical or gaming) or event attractions such as exhibitions, festivals, and sporting events – both of which arouse the interest, pleasure or admiration of tourists.

Accommodations – One of the three primary tourist services offered by a destination. Others are catering and entertainment.

There are eight sectors of Tourism:
1. Accommodation
2. Food & Beverage
3. Adventure Tourism and Recreation
4. Transportation
5. Attractions
6. Travel Trade
7. Events & Conferences
8. Tourism Services

1. Accommodation is the most vital component of the tourism product and the tourist destination. There are approximately 65 hotels in Nassau, with 8,688 rooms. In The Bahamas there are 270 hotels with 14,797 rooms.

2. Food & Beverage: This is the fastest growing sector in tourism.

3. Adventure Tourism and Recreation: These include golf and tennis, outdoor adventure and recreation; marine facilities and bonefishing lodges.

4. Transportation: This is a major component of tourism and is divided in to three categories: air, ground and water. Airlines are used by many tourists and are national, regional or international. Bahamasair is a national airline; Liat is regional and American Airlines is international. Ground transportation includes taxis, car rentals and tour buses. Water transportation is primarily by cruise lines and ferries. The Bahamas is the leading cruise destination.

5. Attractions are either natural (Preacher caves, blue holes; cultural (Junkanoo), heritage (historical buildings-Pompey Museum, forts, old churches, 66 Steps) leisure (casinos) or man-made (Atlantis Theme park).

6. Travel Trade: An important sector using wholesalers, tour operators and travel agents who package the travel experiences. The packages consist of different elements of the travel such as air and ground transportation, accommodation, meals, entertainment as well as other activities.

7. Events and Conferences: This sector is a major reason for travel and is classified in the three groups, special events, meeting and convention and trade shows.

8. Tourism Services: The Ministry of Tourism works with strategic partners to organize the tourism industry. It deals with marketing services, research and information management, resource development. Services are provided by proprietors, government agencies, quasi-government agencies and non-governmental agencies (NGOs).

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How the Tourism Economy Works

The main income in the Bahamian economy is the money spent by tourists during their visit to the Bahamas. Each tourist that arrives in the Bahamas spends money that contributes to different sectors of the economy.

A tourist is defined as “any person who travels to a country other than that in which he or she resides but outside their usual environment for a period not exceeding 12 months and whose main purpose of visit is other than the exercise of an activity remunerated from within the country visited.”

When a tourist spends money on transportation, food, room and tourist activities such as water sports, shopping, island tours etc., all of their expenditures are deposited in the bank account called the Bahamas Treasury.

A certain percentage of tourist spending also contributes to government taxes as well. For example, when a tourist pays for his or her hotel room it includes what is called hotel tax As well as when a tourist is returning back home and pays a departure tax at the airport. These taxes are also deposited into the Bahamas Treasury.

Both Government taxes and tourism industry accounts’ income are spent on imports such as food, hospital equipment and repairing roads, etc. A part of this income goes to the Bahamian people’s account (Treasury) and to other businesses such as restaurants, shops and bars. From this account government pays its bills and the salaries of its public sector employees.

The basic tourist dollar flows in a cycle, for example, from a tourist to a cab driver who then takes the dollar to purchase lunch at a restaurant, which, in turn, contributes to the salaries of the restaurant employees. The same tourist will also pay for a hotel room which, as taxes, is deposited into the Treasury. In this way tourist dollar flows in a cycle through out the economy.

GROSS DOMESTIC PRODUCT

The Bahamas is largely an import service economy; its economy is almost entirely dependent on tourism and financial services to generate foreign exchange earnings. Tourism alone provides an estimated 60% of the gross domestic product (GDP) and employs about half the Bahamian work force.

1. 60% of GDP is Tourism
2. 20% of GDP is Financial Services (Banking etc.)
3. 10 % of GDP is Agriculture, Fishing etc.
4. 10 % of GDP is Manufacturing and others.

GDP is defined as the total value of all goods and services produced within that territory during a specified period.

GDP = Consumption + Governments + Investements + Exports – Imports

GDP = C+ G+ I + NX

C is private consumption (or Consumer expenditures) in the economy. This is sometimes clarified as: consumer expenditures on final goods and services.

I is defined as business investments in infrastructure, or any other spending intended to generate a subsequent return through business activities.

G is the sum of all government expenditures.

NX are “net exports” in the economy (gross exports – gross imports). GDP captures the amount a country produces, including goods and services produced for overseas consumption, therefore exports are added. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.

If any of the Variables C, G, I or NX increase then GDP will increase. There is a direct equation between GDP and these variables.

Example:

If you have a house and use it as your own personal home then it would be defined as consumption. If you sell the house to government then it is used as an office for public corporation this will be defined as government expenditure. If someone decides to build a hotel in the Bahamas (such as Atlantis) then this will be called an investment. If we sell salt, straw bags or alcohol that is manufactured in the Bahamas to Europe this will be defined as net exports. If we order furniture for hotels, houses and offices this will be defined as imports.

This is a list of Islands stating their Gross Domestic Product (nominal) per capita, (the value of all final goods and services produced within a nation in a given year, divided by the average population for the same year).

CSME – Caribbean Single Market Economy

What is required in establishing CSME:

The right to set up business in any Caricom country. (Caricom country consists of any country in the Caribbean single market economy)

• Free Movement of Services
• Free movement of selected skilled labor
• Free movement of capital
• Removal of exchange controls
• Integration Capital markets

Employment will have an impact by the condition, “Free movement of selected skilled labor.” This means that the pool of applicants applying for each and every job will increase. The increasing number of applicants will increase the competition in the applicant pool making it much harder to get a job. This means that in the future if CSME will happen it will be much harder to get a job than it is now in the present. The goal for a student is to learn how to be competitive in an international pool, not just The Bahamas.

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