CJI Market Focus: The Out Islands of The Bahamas
By Joe Pike
Although the coronavirus setback rebuilding efforts by the Out Islands of the Bahamas after the region was damaged by Hurricane Dorian in 2019, Kerry Fountain, executive director of the Bahamas Out Islands Promotion Board, said he doesn’t expect that to discourage hotel investments in the area.
“The smart investor knows about whatever destination they invest in and they know that in any destination something can go wrong,” he told Caribbean Journal Invest (CJI). “You want to invest in California, you have to worry about earthquakes and wildfires. Other places have floods. An investor always evaluates the risk, and risk versus reward. And investing in the Out Islands is a reward.”
In fact, Fountain said this is the best time to invest considering many properties are still rebuilding from Hurricane Dorian, so perhaps a good deal could be found.
The Out Islands to Target
Specifically, Fountain pointed to hotel investment opportunities in Abaco and even some lesser-known Out Islands areas. Some popular areas in Abaco, including Marsh Harbour, Guana Cay, Elbow Cay and Green Turtle Cay are all still rebuilding, said Fountain.
“If I have money, I’m looking at opportunities in Abaco, as well as the other organized islands in the country,” he said. “If you’re looking at Eleuthera, look particularly at Spanish Wells. Everyone knows Harbour Island (located off the coast of North Eleuthera), but Spanish Wells will be the new Harbour Island of Eleuthera.”
Fountain said another hidden gem for development is Long Island, located in Central/South Bahamas. He compared it to Abaco, describing it as “very industrious and very independent.”
But Frank Comito, CEO and director general of the Caribbean Hotel and Tourism Association (CHTA), thinks all of the Out Islands are unknown opportunities for potential Caribbean hotel investors.
“The Out Islands of The Bahamas are largely undiscovered gems, with arguably the clearest waters and most beautiful beaches in the world,” said Comito.
Comito told CJI the region is especially popular amongst second-home owners with fishing serving as one of the area’s top selling points. Fountain pointed out that fly fishing in particular is one of the most popular activities in the Out Islands.
“They have benefited from measured growth, they are strong on small-to-mid-sized boutique hotels, fishing lodges, vacation homes,” said Comito, “and in the Northwestern and Central Bahamas, there are many havens for boating and marina interests.”
As far as hotels, the destination is made primarily of boutiques. In fact, Fountain described a hotel of 50 rooms in the Out Islands as a “big hotel.” Instead, he said the average boutique hotel in the Out Islands are about 10 rooms.
“Talking about boutique hotels is so timely because one of the first things we heard was that, because of this [COVID-19] pandemic, consumers are going to be looking to get away to secluded destinations where they have a lot of elbow room, where people are not on beaches, where they can go to beaches that are not overcrowded,” he said, “and we have boutiques with unspoiled beaches, beaches with hardly anyone on them.”
And Joy Jibrilu, director general of the Bahamas Ministry of Tourism, agrees.
“We expect the appeal of the Out Islands’ seclusion to certainly be a draw for investors,” she told CJI. “The Bahamas’ boutique hotels, many of which are situated on the Out Islands, offer the tranquility and seclusion some might be looking for in their post-coronavirus travels, which will be seen by investors as well.”
The Airbnb Effect
The popularity created by Airbnb and other second-home rentals, which was a huge market prior to the COVID-19 pandemic, has forced a lot of hoteliers to look into ways to compete with that model by advancing the luxury boutique product even further, said Fountain.
“There was popularity for second-home rentals in the Bahamas prior to COVID-19,” he said, “but people who are investing in the Out Islands need to be mindful of that.
“When given the trend created by Airbnb, and other second-home rentals, you’re going to see hoteliers looking for investors who are looking to duplicate what the second-home owners have done, but more under a boutique roof.”
Fountain said you can expect more development of boutique hotels with two or three bedrooms, a full kitchen, a full living area, etc. He said the idea is to not only duplicate the Airbnb model, but to take it to another level. He said boutiques will be created to make them feel like homes, while also offerings all of the services of a luxury hotel.
“Boutique hotels will have owners looking to take [the Airbnb model] a step further,” he said. “They will not just be offering accommodations, but also excursions like fishing or swimming with the pigs, or people-to-people experiences. And this way, the owners make a little extra money in addition to the room revenue, and that is why it is so appealing today to be a boutique hotel owner in the Bahamas in general, but especially the Out Islands.”
And although the Out Islands has some of the best in The Bahamas, boutique hotels aren’t the only reason to invest in the region, said Fountain.
“I would say in terms of investment in the Bahamas, particularly the Out Islands, the appeal for investors is the stability of the government,” he said. “No one will invest in anything where there is not a stable government. In the Bahamas, we have practiced democracy for over 200 years and that is the first thing that should be appealing to investors looking at the Out Islands.”
Fountain also said proximity plays a major factor in the Out Islands’ investment strength, noting that South Florida is about an hour away by plane and only a few hours away by boat.
“If you are buying a second home to buy or looking to buy and rent, you want a place where you feel welcome and safe,” he said. “As far as hotel investment, whether it’s a boutique or hotel, the proximity, the government stability and safety all appeal to investors wanting to build.”
There are several convenient options of getting out to the Out Islands: Delta Air Lines flies from Atlanta directly to Abaco, Eleuthera and Exuma; American Airlines flies to Abaco, Eleuthera and Exuma from Charlotte and Miami; Silver Airways flies to Abaco, Eleuthera, Exuma and Bimini out of Fort Lauderdale.
There are also several small carriers that fly to the Out Islands directly including Makers Air and Tropic Ocean Airways. Both fly out of Fort Lauderdale to islands like Cat Island, the Berry Islands, Andros, Staniel Cay in the Exumas and/or Bimini. Fountain said these are usually nine-seat planes that potential investors or wealthy vacationers have the option of chartering.
The Bahamas Ministry of Tourism & Aviation, along with the Tourism Readiness and Recovery Committee, a group comprised of public and private sector partners, recently announced a collaborative plan for re-opening the country’s borders and tourism sector, as well as the resumption of international commercial travel starting July 1.
“One of the things we always tell potential investors,” said Fountain, “is ‘why you would want to fly beyond us is beyond us.’”