Baha Mar, a $3.5 billion seaside gambling resort, will be the largest such development in and around the Caribbean. Given the boost in Cayman’s tourism numbers and demographics of the Islands’ visitors, the giant hotel and casino is not expected to have much of an impact here.
The tourism industry of an island nation near Cuba and only a short flight from the United States is about to make worldwide news with the opening of a $3.5 billion seaside gambling resort that will become the largest such development in and around the Caribbean.
And by the way, the travel and hotel executives and financiers readying their announcement, chilling bottles of celebratory Champagne and preparing to count proceeds from hundreds, even thousands of new paying visitors don’t have anything to do with the Cayman Islands.
They are, in fact, investors in and employees of Baha Mar, a 1,000-acre super-resort on New Providence island in the Bahamas, a warm, sunny stroll from the Commonwealth’s biggest city, Nassau.
The build-out has been somewhat slow going, and, as with many projects in the Caribbean, developers say, the grand opening has been moved back over and over, and deadlines have been reset time and again. But then, the scope of this particular development is vast. Within the coming months, after the construction dust settles and the roar of earth movers fades, the sprawling site will include:
Some 3,000 feet of manicured beach
A convention, arts and entertainment center comprising 200,000 square feet of flexible space, along with a 30,000-square-foot gallery exhibiting the largest collection of Bahamian art in the island chain
The 100,000-square-foot Baha Mar Casino, described as the largest gaming center in the Caribbean
An attached 1,000-room luxury hotel, the Baha Mar, replete with ocean views and spas, and corridors that zip people onto the gaming floor
The Grand Hyatt at Baha Mar, a 700-room resort hotel
An 18-hole, 72-par Jack Nicklaus Signature golf course
The Rosewood 200-room beach-view hotel with 5,000-square-foot ballroom
The SLS Lux 300-room hotel, including private residences and luxury amenities
The Melia Nassau Beach Resort, an existing 694-room hotel that is undergoing renovation
Residential condominiums priced as high as $10 million
An ocean of swimming pools amid a grove of slender palm trees
And 40 restaurants, bars and lounges encompassing shops and kiosks, all filling 74,000 square feet of what the developers call “the Bahamian Riviera.
Beyond its array of architectural, cultural, commercial, culinary and entertainment features, Baha Mar also has an unexpected genesis.
What has been rising over a wedge-shaped plot since 2011 is the first major resort site conceived, largely financed and designed by both private and state investors from China.
Baha Mar could become the very place that connects the rapidly expanding Asian economic behemoth with one of the great outdoor playgrounds of the Western world – the Caribbean.
Over the last couple of years, this sun-kissed basin between Central America and the Atlantic Ocean, from Florida to the Colombian and Venezuelan coasts, has seen leisure travel heat up from the world’s economic chill. Cruises are more numerous, flights more frequent, and hotel occupancy higher than in the previous seven years, studies show. The Cayman Islands have benefited as well.
Not a threat to Cayman tourism
Does the addition of a giant gambling resort near Nassau threaten tourism prosperity in the rest of the Caribbean? Ken Hydes, president of the Cayman Islands Tourism Association, thinks not.
“To tell the truth, I haven’t thought much about this development in the Bahamas,” he said. Hydes and the CITA board are confident the visitor economy in Cayman is on sound footing, without mega-resorts or mega promotion budgets – and without gambling.
In part, that’s because the travelers Cayman has always attracted still seek a Cayman-like experience, not that of Las-Vegas-by-the-sea. CITA and the government’s Tourism Department have focused on marketing to their traditional demographic niche.
That niche is changing, Hydes acknowledges. Just as the Bahamas expects a flood of visitors from the world’s largest emerging nation, China, “We’ve been seeing more Russians and other Eastern Europeans visiting here” as they move up the economic ladder, he said.
“We’re seeing all kinds of change in this industry, but we’re not threatened by it. I’d be more worried about Baha Mar if I were running Atlantis.”
He was referring to the other Bahamas jumbo-resort with a casino, Atlantis on Paradise Island.
With all the developments, “We think the Caribbean is going to benefit from growth in leisure travel in the years to come,” Hydes said.
The Cayman Islands Department of Tourism also welcomes the gambling resort to the region’s tourism mix. Director of Tourism Rosa Harris said the department “has been aware of the Baha Mar project for many years,” adding, “its introduction will no doubt bring new travelers to the Caribbean.”
She expressed similar confidence to Hydes that “we are able to deliver on a brand experience that cannot be duplicated anywhere else in the world. We call it ‘Caymankind.’”
In short, Harris said, Baha Mar is no threat to Cayman’s tourism success, which has increased significantly in recent years.
Technically, the Bahamas archipelago doesn’t rise from the Caribbean Sea. The Commonwealth’s 700-plus islands lie solidly in the Atlantic Ocean. But the demographic mix, economy, culture and political alliances make it a longtime member of the Caribbean community. In fact, its British heritage and principal economic features – dependency on tourism and offshore banking are aspects it has in common with Cayman.
And, in recent history, the visitors who have come to enjoy these two paradises have come from the same places – the U.S., Canada and the U.K., as well as the rest of Western Europe.
Travel industry experts, like those at STR, the Nashville, Tennessee-based global brand benchmarking company focused on hotel and travel brands, hint that Baha Mar might be a giant cross-cultural experiment that could change international leisure travel.
“There is this huge rising middle class in China,” notes Bobby Bowers, senior vic president of operations at STR. “It’s only natural that with the Chinese building this big resort in the Caribbean, they will reach out and try to encourage some of their own people, the ones with more wealth and their relatively new freedom to travel internationally, to vacation in the Caribbean.”
Indeed, a year-old report from Oxford Economics, which studies and consults on travel, said China, chief among some other emerging nations, will become the driving force of the travel industry through the mid-2020s.
Now that an international economic crisis has loosened its grip on leisure spending, some citizens of emerging countries like Brazil, Russia, India, Indonesia and, of course, China, the biggest of them all, will find the means to roam the globe. Plus, as Bowers said, “Along with their increased wealth, middle class people in China finally have more freedom to travel, too.”
Travel agency giant Amadeus, which helped finance the 2014 Oxford Economics study, said China’s global travel could become a full 20 percent of the total by 2023, crowding the industry beyond what we can now imagine.
For Chinese interests to own and run a gambling resort on the scope of Baha Mar would seem to be part and parcel of this international trend in travel – and a good bet for the resort’s owners.
China’s role in Bahamas resort
China flexed its muscles in many ways during the development of the huge Bahamas resort. In negotiations over how the multi-billion-dollar project would proceed, the Chinese government and companies insisted that they would ship more than 4,000 Asian workers to live in barracks near Nassau and toil at the construction site.
China has used this labor model for a range of projects and in other locales, including in Sri Lanka and Angola.
That was a feature the developers wanted in their deal with the Bahamian government, and it was one to which the host nation agreed, despite the Bahamas having an unemployment rate of 15.7 percent at the beginning of 2015. Further, on the more urbanized island of New Providence, where Baha Mar has been under construction, the unemployment rate reached 16 percent this year.
The Tribune newspaper in the Bahamas reported yet worse economic news: “Youths between 15 and 24” – the ages of many of the construction workers on New Providence – “continued to face a considerably higher rate [of unemployment].”
The paper said that recent data put the unemployment rate for young workers at 31 percent. Meanwhile, at the peak of construction, a study showed that 70 percent of the resort’s labor was made up of foreign nationals, most of them the then-4,200 Chinese brought there by the main contractor, China State Construction Engineering Corp.
However, a 2,900-room resort community requires a lot of resident workers year after year, not just the ones who build the structures.
Kimberly Hanson, a spokeswoman for the Dallas, Texas-based Rosewood Hotel Group, which has a small luxury hotel on the Baha Mar property, said, “We expect visitors from all over the world there, but we do expect lots of Chinese visitors.” Thus, the flow of Chinese nationals as guests, lured to the Caribbean by promotional messages, could make it easy to discount the economic contributions of a few thousand construction workers for a couple of years.
Baha Mar executives also think the China connection will aid the resort in its cross-island competition with Atlantis. Just weeks ago, Brookfield Asset Management, with majority ownership of Atlantis, announced the departure of its top executive, George Markantonis. His replacement, Paul Burke, now serves as president and managing director.
In its published statement about the transition, Atlantis said nothing about the towering Baha Mar buildings taking shape just a few miles away. Markantonis, who left for a job in Las Vegas, expressed his “full confidence the property will continue to flourish under Paul’s leadership.” Meanwhile, the new mega-resort was chugging toward its launch.
There remains the issue of when, exactly, Baha Mar will open to guests. In 2014, the promise was that the Rosewood, the Grand Hyatt and the Baha Mar Casino & Hotel would open by December 2014, in time for most of the development to reap a fine harvest from the high-impact winter season. Delays shifted the opening to early March, then to late March and now to early May. Rosewood’s Hanson said that is still the target for launching the resort.
The Grand Hyatt says likewise, and so does Baha Mar management.
But why all the delays? Labor issues surfaced for one thing. In January, a hotel workers union voted to strike over compensation. Restaurant and bar management companies along with financial executives and bureaucrats back in China wanted to reduce their gratuities below the standard 15 percent, negatively effecting their wages. The dispute went on for months.
A group of 60 Chinese workers marched on Nassau’s central business district, protesting that some of them had not been paid in months. Another delay.
Day-to-day decisions that, in the Chinese central-government manner, had to be deferred to functionaries in Beijing caused yet further slowdowns. Pretty soon the bitter cold 2015 winter in much of Canada and the Midwest and Northeast United States gave way to signs of spring, when the get-away-to-the-Caribbean season becomes a memory.
After initial delays, resort executives set March 27 as opening day. On March 25, executives blamed construction managers for more delays. “Subsequently,” they said in a statement, “it has become clear that the contractor has not completed the work with an attention to detail consistent with Baha Mar standards of excellence.” Hence, the latest delay until early May.
Also, resort managers said not all four new hotels are guaranteed to open in May. The Grand Hyatt, they said, may open “shortly thereafter,” and renovations on the fifth hotel will continue for an indeterminate time.
The loss of business of its once-planned first high season will cost the development tens of millions, resort executives say. Plus, the setbacks have won Baha Mar some unkind digs.
A hotel industry blog, “Hotel Chatter,” gave the resort a backhand award for “worst Hotel Hype,” saying its continuing delays seriously undercut the project’s credibility and made it appear bush-league.
But then, common wisdom has it that the Chinese have shown themselves to be patient people. By the end of 2015, another winter will be taking hold, and tourists from cold-climate centers of wealth will be thinking about getting in a round of golf in the Caribbean sunshine or snorkeling and diving in warm waters.
“We think we see diversity in our clientele now,” said Maria Ruiz, a nighttime desk clerk at a tourist hotel in Miami Beach. “We’ve got Brazilians, loads of Latin Americans, Russians, Indians, Japanese, Saudis, Nigerians.
“But in a just a few years, you can bet we’ll be checking in people from absolutely everywhere, Chinese by the thousands, Indonesians, Vietnamese,” she said. “International travel is going to make the world flatter than ever.”
The Cayman Islands will benefit from that flatter world too. Bobby Bowers, with the consulting firm STR, said,
“We track the occupancy of hotels all over the Caribbean – and other places, too,” he said. “[Tourism] was up last year. It’s up this year.
And there’s building going on throughout the region.”
Cayman tourism on the rise
As reported in the Cayman Compass earlier this year, 2014 was a successful year for Cayman Islands tourism and was reflected across the region with almost every island in the Caribbean seeing an increase in visitation in what officials describe as the “best ever year” for the industry. Overall tourism arrival figures for the Caribbean were up just over 5 percent in 2014.
The Cayman Islands, which had a record year, was one of the top performers, seeing gains of just over 10 percent. Further, the Cayman Islands accounted for 1.4 percent of the 26 million visitors to the Caribbean in 2014.
“Last year, we received more visitors than ever before – recording our fifth straight year of growth – and visitors spent more money in the Caribbean than they ever did before,” CTO chairman Richard Sealy said in a state of the industry report. The report indicates that tourists spent US$29.5 billion in the region last year.
Air and cruise arrivals continue to set record levels in Cayman, and the outlook is positive again for this year.
The Caribbean Tourism Organization anticipates tourism growth to continue, forecasting a further 5 percent increase across the region in 2015.
Compass reporter James Whittaker contributed to this article.