The Bahamas’ popular Family Island resort sector is teetering but still fighting for recovery, after reporting steep double-digit drops in both room revenue and nights sold during the first quarter of 2026. That warning comes from Kerry Fountain, executive director of the Bahama Out Island Promotion Board, who is calling on the entire Bahamian tourism industry to urgently modernize its operations to fend off mounting competition from the expanding global cruise sector.
Fountain shared new data with Tribune Business showing that member properties recorded a collective 11% drop in room revenue and an 11% decline in room nights sold over the first three months of 2026. While the June 2025 collapse of Silver Airways eliminated 135,000 annual air seats to the islands, Fountain says that single factor cannot explain the full extent of the decline. A deeper analysis of arrival figures revealed broader, more troubling trends that have been building for decades.
Earlier, at the Bahamas Hotel and Tourism Association’s (BHTA) quarterly meeting, Fountain presented figures showing that visitor declines to Marsh Harbour—one of the Family Islands’ most popular destinations—from Florida’s Fort Lauderdale and West Palm Beach outpaced the drop in available airline seats after Silver Airways exited the market. For example, 2025 saw a 37.3% year-over-year drop in available seats from Fort Lauderdale to Marsh Harbour, but actual visitor numbers fell an even steeper 37.7%, a gap of almost 8,000 lost arrivals. On the West Palm Beach route, seat capacity dropped 15.3% while visitor numbers fell 22.8%, an even wider discrepancy that points to systemic issues beyond lost airlift.
Most strikingly, Fountain’s research shows that the average annual occupancy rate for all Family Island hotels, not just BOIPB members, has stagnated at roughly 41% for 28 years—remaining virtually unchanged from the rate recorded back in 1997. Even in 2024, when the islands saw the highest number of available air seats in a decade, average occupancy across all Out Island hotels hit just 37.6%. When airlift was at its peak, occupancy still hovered around 40%, confirming that structural issues, not just lost flight capacity, are holding the sector back.
To turn the tide, Fountain argues that Bahamian hoteliers must address multiple gaps at once. First, the industry needs to replace the lost Silver Airways capacity connecting Florida to key Family Island destinations including Abaco, Eleuthera, Bimini and Exuma. Beyond that, he says most small, independently owned “mom-and-pop” resorts have failed to update their sales and distribution strategies for the digital age. With artificial intelligence reshaping travel booking and marketing, Fountain warns that properties that do not modernize their digital presence and social media outreach will be left behind, and may be forced to close.
The most critical change, he adds, must be a major upgrade to the overall guest experience to deliver tangible value for money. While The Bahamas positions itself as a luxury destination, it is also one of the most high-priced travel markets in the Caribbean. Fountain notes that modern travelers expect clear value for the premium prices they pay, and the islands cannot compete on price with large cruise lines. Instead, land-based resorts must differentiate themselves by delivering superior service, personalized care and one-of-a-kind on-island experiences that cruise ships cannot match.
The threat of cruise industry expansion is not overstated, Fountain warns. Industry forecasts project that global cruise lines will grow their total fleet capacity by 10% between now and 2028, with many carriers repositioning ships out of the conflict-near Mediterranean to safer Caribbean routes, including the Bahamas. This increase in capacity will drive down cruise prices, making all-inclusive floating cruise vacations—many with private island destinations like MSC’s Ocean Cay off Bimini—even more attractive to price-sensitive travelers. Cruise vessels now offer amenities comparable to large land-based mega-resorts such as Atlantis and Baha Mar, eroding a key competitive advantage of Bahamian land-based properties.
Compounding these concerns, new traffic data underscores the growing dominance of cruise tourism in the Bahamian market already. Nassau Cruise Port reported that first quarter 2026 passenger volumes hit 1.8 million, a 200,000 year-over-year increase from 1.6 million in 2025, with ship calls rising 5.5%. For the first two months of 2026, the Ministry of Tourism confirmed that cruise passengers made up 86% of all arrivals to The Bahamas, totaling 2.13 million of the 2.43 million total visitors, while air arrivals hit just under 300,000. Most importantly, Fountain points out that stopover land-based visitors spend an average of 29 times more per person than cruise passengers—losing even a small share of these high-value travelers to cruises creates a major hit to industry revenue.
After taking a personal four-night familiarization cruise from Miami to see the modern cruise product first-hand, Fountain emphasized that today’s cruise passengers are far more affluent than in decades past, making the competition for high-spending travelers even more intense. “If we don’t get our act together as far as our product is concerned on-island, we’re going to chase more and more of our visitors on these cruise ships,” he said. “If we continue to under-deliver, we are going to lose more and more of our valuable $2,500 per stay stopover visitor spending to cruise visitors that are spending $84 a day.”
BHTA president Jackson Weech acknowledged the severity of the challenge, confirming that reversing the Family Island sector’s decline is one of the association’s top priorities moving forward. He noted that Nassau and Paradise Island saw a robust first quarter in 2026 with healthy occupancy and room rate growth, but many Family Island destinations have not shared in that recovery, with some continuing to report double-digit occupancy declines. Weech pledged that the industry will conduct a deep, targeted review of all barriers to competitiveness to ensure the Bahamian land-based tourism sector can hold its own against expanding cruise operations and their private island and beach club offerings.
Despite the steep challenges, Fountain struck a defiant tone, reaffirming: “While our numbers are down, we’re on the ropes but we’re not out.”