The Bahamas - Services
Tourism dominates the Bahamian economy. In 1999, 3.65 million people visited the islands, with 2.2 million of them arriving by cruise ship. Revenue from tourism made up 60 percent of the nation's GDP. The average tourist spent US$958 while vacationing in the Bahamas, and tourist spending overall amounted to US$1.5 billion. In 2000, there were about 81,700 people employed in the tourist industry. Most visitors are from the United States (83 percent in 1999). However, in recent years the number of European tourists has increased by 9 percent.
The largest resort in the island is the 2,340 room mega-resort Atlantis, which is owned by Sun International. It employs 5,500 people and is the second largest employer in the nation after the government. Other major resorts in the islands include Club Med (popular with the French), Sandals (attracting the British), and Holiday Inn. The Grand Bahama Development Company plans to spend US$50 million upgrading airport and cruise ship facilities to accommodate an additional 555,000 visitors per year.
Although the majority of the tourist industry in the Bahamas has been driven by private enterprise, the Bahamian government did own 20 percent of the hotel accommodations in 1992. Privatization programs since that time have reduced the government holdings to 5 percent.
All major cruise lines operate services to the Bahamas. To extend the stay of passengers, the government has enacted legislation that allows ships to open their casinos and stores only if they remain in port for more than 18 hours.
Thanks to the tourist trade, retail companies prosper in the Bahamas. There is a strong preference for recognizable name-brand products, and major American brands do well in the islands. However, the government requires that retail and wholesale businesses be Bahamian-owned.
In 1995, the government changed laws to allow betting on sporting events. Gambling is permitted on events both in the Bahamas and elsewhere in the world. The same law also lowered the taxes on winnings in casinos that are smaller than 10,000 square feet, which has resulted in the proliferation of sports bars and small casinos.
The financial services sector is the second chief component of the Bahamian economy. In 1998, this sector added US$300 million to the economy and employed 4,000 people, accounting for some 15 percent of the GDP. Government legislation has also encouraged the formation of international companies known as shell corporations, which are established to hide or protect their assets from national taxes at home by incorporating themselves in a foreign nation. As a result there are over 100,000 such corporations. Although many of these firms employ Bahamians, they add little to the nation's economy since they essentially act as conduits for transferring money.