R&R in Turks & Caicos

Just a few feet off the powdery white sand of Grace Bay Beach, the swank set of this island south of the Bahamas has gathered to launch yet another gleaming five-star condo/resort development.

Women in flowing sundresses sip champagne while lounging in white cube-shaped poolside pavilions. Gift bags emblazoned with the resort name — CAYA, a sister property of the posh Grace Bay Club slated to open in 2010 — hold bottles of Grey Goose vodka. Fireworks light up the night sky as Ain't No Stoppin' Us Now booms from the sound system.

For the past decade, little has stopped growth on Providenciales, known as Provo. The most populated of the eight inhabited islands of the Turks & Caicos, Provo has evolved from an under-the-radar diving retreat to a luxury getaway namedropped in celebrity magazines.

All along Grace Bay Beach — a 5-mile stretch of postcard-perfect sand abutting gasp-inducing turquoise water — stroll bikinied tourists moneyed enough to pay $500-$1,000 per-night high-season prices at the resorts that now line the shore. A non-stop flight from several U.S. cities, the island draws those searching for ease with their relaxation: English is the official language, and the currency is the U.S. dollar.

But now, the world economic downturn is threatening the island's gilded outlook. As even the wealthy cut down on vacations, many resorts are being forced to offer extra incentives to lure travelers who frequent upscale Caribbean locales such as St. Bart's and entice return visits from those who have already discovered the 38-square-mile island's laid-back charms.

The Somerset on Grace Bay, a member of Small Luxury Hotels of the World, is offering a fourth night free through April 17, for example, and the Regent Palms, home to a 25,000-foot stand-alone spa, has a 3-4-5 package, where guests receive a free night through April 14.

Even the just-opened Italian Village at Beaches, an all-inclusive resort aimed at families, is slicing rates through Feb. 26: 60% off and two nights free for those who book a week's stay at the luxury addition in the spring and fall season.

Still, don't expect prices to dip too low. While Grand Turk, home of the country's capital Cockburn Town, has chased mass-market tourism by building a Carnival Cruise Line hub, Provo hoteliers intend to keep their rates high enough to preserve their carefully cultivated luxury aura.

"We're having challenges," concedes Caesar Campbell, CEO of the Turks & Caicos Hotel & Tourism Association. During the first week of January, island-wide occupancy was between 40% and 50%, down 10% to 15% from last year, he says. "But we would never adjust our high-end, low-density image."

Opportunities for exploration

Dry, flat and scrubby, Provo shows its beauty through its beaches — Grace Bay was noted as one of the world's best by Condé Nast Traveler— and its clear waters, home to pristine coral reefs. Excellent snorkeling alongside angel fish and tang is available just steps from the beach in Princess Alexandra Marine Park. (Provo's entire shoreline is open to the public.)

For those with visions of being a tropical castaway, Turks & Caicos has plenty of opportunity: The British Overseas Territory comprises nearly 40 isles of various sizes, most uninhabited. Several Provo operators offer half- and full-day fishing and diving excursions, and it would be easy to while away a week lazily exploring outlying islands.

On a typical 80-degree morning, Candice Night, Theresa Pepe and Denise Weston hop on small catamaran for just such a trip. Delroy Bain of Caicos Dream Tours hands out snorkeling gear and promises to take the group to see endangered rock iguanas at nearby Little Water Cay.

But first, there are conches to catch. Turks & Caicos celebrates its native mollusk with a festival every year, and the delicacy graces menus island-wide. Masks in hand, the tourists plunge into the shallow warm water.

Only Weston is successful at finding a live one. "I'm the Queen Conch!" she crows.

The women chose Provo as a girlfriend getaway for its quiet, beach-oriented luxury. Today's agenda: boat trip, then spa. "There's no noise here," Night says. "You can just listen to the waves and water."

Figuring out if the person behind the sunglasses next to you is famous (as opposed to merely rich) is a key Provo activity. Night — the lead singer of the band Blackmore's Night — and her friends discover that actor Peter Michael Goetz is on the trip with his wife, Connie. Cards are discreetly exchanged.

Bain opens the conches, deftly sliding out the meat with a knife. Like many "Belongers" — the term used for the country's 30,000 native residents — Bain has seen Grace Bay Beach grow from its pioneering 1984 resort, Club Med Turkoise, to its current string of hotel-condominiums.

Provo's development has been mostly beneficial for Belongers, he says. The public schools are good, crime is low and unemployment is virtually non-existent, despite the downturn. (He concedes that things aren't as rosy for the Haitian immigrants, many who arrived during the building boom.)

Still, the Belongers have their limits: When a developer wanted to create a Dubai-style artificial island in the middle of a protected area last year, public outcry killed the project. "You don't need to build an island here," Bain says, waving at the atolls dotting the seascape. "We have so many of them already!"

No need to go too far afield

When leaving a canopied daybed sounds like too much work for visitors, Provo's meticulously landscaped resorts provide the ultimate do-nothing escape. Many people spend their vacations enjoying the suite life, venturing off the grounds only to go to other resorts for dinner.

On a recent Friday night at the Grace Bay Club, the Lounge is dominated by guests attending a wedding rehearsal dinner. A few people sip $13 cocktails at the Infiniti bar, a polished granite slab extending 90 feet to Grace Bay Beach. The adults-only Anacaona restaurant is about half full with couples cooing over $35 entrees.

Cross-island, dance music thumps at Nikki Beach Resort, the first hotel built by a Miami company known for its clubs in party spots such as St. Tropez and Marbella. Here, patrons pick pieces of sushi off bikini-clad model Stephanie Cerron during "In the Raw" Friday happy hour.

Even though the bar crowd is sparse, event manager Michael Sin maintains a chatty energy, pouring free drinks and dishing about celeb guests such as Yankee ballplayer Derek Jeter and his girlfriend, actress Minka Kelly.

"We had Denzel Washington here for New Year's," he boasts.

Those in the know say Washington chose to stay instead at the Amanyara, located on Provo's remote western coast. A weekend lunch at the Asian-influenced resort finds a handful of guests luxuriating in temple-like salas around an infinity pool. The Zen architecture extends to the atmosphere: No one seems to speak above a whisper.

Even surroundings this rarified are not immune to current economic conditions. Through August excluding holidays, the resort is offering free meals when guests book for four nights or more. "The recession has reached into all tiers of society," Amanyara general manager John Vasatka says. "Whether you're staying in a two-star or a five-star hotel, what you want is value."

But what does value mean when rates start around $1,000? At Grace Bay Club — where guests are given a cellphone for a concierge at check-in — it means finding out what each visitor wants, whether it's free meals, extra nights, or spa credits, chief operating officer Nikheel Advanti says. The resort also is promising upgrades when possible for bookings before March 15.

Such individual attention will be necessary in the increasingly competitive market. The Gansevoort Hotel group, known for boutique properties in New York and Miami, will manage Wymara, opening in March. While Molasses Reef, a Lehman Brothers-financed project to be managed by the Ritz Carlton, has shut down, a Mandarin Oriental property on nearby Dellis Cay is slated for a mid-2010 opening.

Provo hasn't reached its peak, Grace Bay Club CEO Mark Durliat says. The number of tourists to Turks & Caicos has jumped from 154,961 in 2002 to 264,887 in 2007. And the country is just starting to have name recognition in wealthy markets such as Texas, New York and West Palm Beach, Durliat says.

"It will be a tough 2009, but I'm as bullish as I've ever been," he says. "This is a blip that we'll have to weather."