R 031754Z JUN 09
FM AMEMBASSY NASSAU
TO SECSTATE WASHDC 6422

UNCLAS NASSAU 000353 
 
 
STATE FOR WHA/CAR 
 
REF:  (A) NASSAU 0316 
 
E.O. 12958:  N/A 
TAGS: EFIN ECON BF
SUBJECT:  BAHAMIAN TOURISM LOSING ITS COMPETITIVE EDGE 
 
¶1.  (SBU)SUMMARY:   CEO and Chairman of BahaMar Resort, Starkis 
Izmirlian, told Chamber of Commerce officials that The Bahamas is in 
jeopardy of losing its competitive edge in tourism if steps are not 
taken to improve the educational system and infrastructure. 
Izmirlian noted that the tourism arrivals to The Bahamas for 2008 
were down while arrivals to competitive destinations increased.  He 
said that for the BahaMar project to succeed, action must be taken 
to make the Bahamian tourism product more competitive.  Izmirlian 
also discuss the need for significant Chinese labor, if BahaMar is 
successful in securing Chinese funding.   END SUMMARY. 
 
------------------------------------ 
TOURISM ARRIVALS CONTINUE TO DECLINE 
------------------------------------ 
 
¶2.  (SBU) Sarkis Izmirlian, CEO and Chairman of Baha Mar, told 
Chamber of Commerce officials at its Annual General Meeting on May 
27 that while tourist arrivals to The Bahamas declined by 4.3 per 
cent in 2008, arrivals to Cancun were up by 7 per cent, Cuba up by 9 
per cent, Jamaica by 4 per cent, and Aruba by 10.  These sobering 
statistics prevailed despite the Bahamas' proximity to the U.S., and 
confirmed that the tourism industry needs immediate attention.  He 
noted that the closure of the Four Seasons Emerald Bay Resort in 
Exuma was the only hotel in the globally branded chain to close. 
(See Reftel A)  Additionally, he said the government of Qatar chose 
to invest in a $75 million dollar 250-room hotel in Cuba rather than 
the BahaMar project. 
 
------------------ 
TELL IT LIKE IT IS 
------------------ 
 
¶3.  (SBU)Izmirlian bluntly told the group about the many problems 
within in the tourism sector and emphasized that The Bahamas' 
education system and deteriorating physical infra-structure 
desperately needed upgrading and government-owned utilities 
privatized.   He also said the 15 per cent mandatory gratuity was 
hurting the industry because it provided compensation for poor 
service. Other issues facing the destination included the high cost 
of travel and accommodations, lack of tourist attractions, and the 
poor state of downtown Nassau - the city's major tourist 
thoroughfare.  Izmirlian suggested that a public/private sector, 
blue-ribbon partnership be formed to address these problems. 
 
-------------------------------------------- 
BAHAMAR - SIGNIFICANT CHINESE LABOR REQUIRED 
-------------------------------------------- 
 
¶4.  (SBU)Sarkis Izmirlian did not address the status of the BahaMar 
project in his presentation, but responded to audience questions on 
the subject.  He said that they are still in negotiations with the 
Chinese and the Chinese Export/Import bank was continuing its due 
diligence.  Izmirlian said that he expects the project to 
materialize despite its long delay and investor search. 
 
¶5.  (SBU) At a private press interview Izmirlian said that if Bahama 
Mar secured Chinese investment it would require "significant Chinese 
labor."  He said that if the deal with the Chinese Import Export 
Bank for a multi-billion dollar loan and the Chinese State 
Construction company for $100 million is secured, their Chinese 
partners would expect to bring in their own workers.  It is also 
expected according to Izmirlian that Bahamian contractors would have 
an opportunity to participate in the project as well.  However, the 
Bahamian government would likely have a difficult time striking a 
balance between the number of Chinese workers required for this 
project and employing the large number of local construction workers 
who are unemployed as a result of the downturn in the construction 
sector. 
 
¶6.  (SBU) COMMENT:  Sarkis Izmirlian's blunt public remarks 
highlighted what many think has impeded the growth of the tourism 
sector, specifically the high cost of operating in The Bahamas, poor 
infrastructure, lack of tourist related activities, and across the 
board gratuities.  Tourism officials have long relied on the 
proximity of the Bahamas to the U.S. to maintain a steady stream of 
tourist arrivals.  The worldwide economic downturn, low cost 
alternate destinations, and the expectation that travel to Cuba will 
eventually open has forced the government and private sector address 
these problems.  The question remains if their efforts will be too 
little too late. END COMMENT.