US hoteliers eager to unlock Cuba’s potential
22 DECEMBER 2014 7:37 AM
The re-opening of diplomatic relations between the U.S. and Cuba has American hotel developers eagerly anticipating the opportunity to get a foothold in the island nation.
GLOBAL REPORT—The re-opening of diplomatic relations between the United States and Cuba has hotel executives thinking hard about development efforts in the island nation.
While full-fledged development in Cuba is still likely a long ways off, hotel developers have told Hotel News Now that Cuba is firmly on their radars.
“Cuba was once a compelling Caribbean destination for Americans,” Arne Sorenson, president and CEO of Marriott International, wrote in a statement. “It still is so for travelers from many countries in the Americas and Europe. We expect it will again be a popular destination for American travelers when travel restrictions are lifted. When permitted by our government, we look forward to having hotels there to welcome visitors from around the world.”
Executives at Best Western International, which has a history of being the first to open in previously uncharted countries such as Haiti and Myanmar, see the normalizing of U.S. and Cuban diplomatic relations as “an encouraging first step,” according to a statement from David Kong, president and CEO.
“We are very interested in developing the Best Western brand in Cuba and will be watching with great anticipation as the U.S./Cuban relationship opens up opportunities for tourism and tourism investment from the U.S.,” Kong said.
Best Western was the first U.S. company to open a branded, full-service property in Haiti two years ago with the Best Western Premiere Petionville.
Officials at Hilton Worldwide Holdings shared a similar sentiment.
“We welcome further opportunities to continue our rapid growth and deliver a warm welcome and exceptional experiences to guests in even more parts of the world, including Cuba if an agreement is reached with the U.S.,” according to a statement from Hilton Worldwide. “Our founder Conrad Hilton often spoke of ‘world peace through international trade and travel,’ which remains just as important and core to our business today.”
Ivar Yuste, a partner at Madrid-based consulting firm PHG Hotels & Resorts, has helped manage existing hotel properties in the Cuban cities of Havana and Varadero and also has taken a role in developing a resort in Cayo Coco. American developers will face challenges if and when they come to Cuba, Yuste said via email.
First, the quality of construction of the properties could be an issue. Also, service standards could be uneven, Yuste said.
“You can have your GM and finance manager expatriated from your country, but the rest of the staff is not yours but belongs to the property owner’s payroll,” he said.
It will be paramount that brand officials and developers forge strong relationships with groups already on the ground in Cuba, he said.
“Having a property there is a ‘beauty contest’ because few properties are well maintained and there is huge competition to get in this market simply due to its financial returns,” Yuste wrote. “However, the Cubans like to try new things and I am sure will welcome other brands in these bids. I have no doubt Americans will eventually be successful there in the medium term.”
Embargo still in place
Development from U.S.-based brands is still a way off, however. While the announcement came 17 December that the U.S. and Cuba would reestablish diplomatic relations, a congressionally mandated trade embargo remains a major hurdle.
Some Republican lawmakers will work to keep that embargo, established in 1960, in place, according to media reports.
But President Obama plans to circumvent many of those restrictions (and ease travel in the process) by using broad executive power.
His efforts will expand travel for 12 existing categories of travel to Cuba that are authorized by law. According to the White House, these include:
“(1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.”
Authorized U.S. travelers to Cuba will have an easier time paying their way, as U.S. credit and debit cards will be permitted for use by travelers to Cuba as well.