Industry NewsTourism Prices in Cuba Drop for First Time in Years

Tourism Prices in Cuba Drop for First Time in Years

NEW ROCHELLE, N.Y.—Since the détente between the U.S. and Cuba began on December 17, 2014, most travel related costs soared between 100-400 percent due to a massive spike in U.S. and Canadian travelers. Mandated pricing increases from state agencies and hotels, in attempt to cool down overheating demand, has finally waned. For the first time since early 2014, prices issued from state run agencies and hoteliers alike have decreased this spring, summer, and fall. InsightCuba, a single destination tour operator, providing legal travel to Cuba since 2000, responded immediately by passing the savings on to the consumer.

“This is the first time we’ve seen costs come down instead of up, in three years,” says Tom Popper, president of insightCuba. Popper recalls, during a February 2015 tourism meeting in Havana, the Minister of Tourism announced that hotel costs were increasing 100 percent to help deal with overwhelming demand for tourism in Cuba. Since then, costs periodically increased 15-20 percent on top of the initial 100 percent increase throughout 2015 and 2016. Standard room rates, especially in Havana, for some the more desirable hotels jumped from $150/night to $650/night and up.

Early on, some experts in travel signaled that with further changes to U.S. regulations, the opening of the U.S. Embassy in Havana, and commercial flights, that prices would fall. However, with demand outstripping supply with regard to hotel rooms and other aspects of Cuba’s tourism infrastructure, prices naturally rose. “The question was, for how long were prices going to increase or stay at artificially inflated levels. At some point the market would force a correction,” says Popper.

Hotel costs aren’t the first to recognize that a correction in prices may be needed. Taxi fares, which more than doubled in the past two years, have started to come down. But not every segment of the tourism economy in Cuba is responding as quickly. Classic car rides, meals at the more popular paladares (private family run restaurants), and other services have double or tripled in price in just a few months.

Popper cautions, that the Cuba travel market will continue to look for its pricing equilibrium over time and as political events unfold, prices may again go up and down. “While we’re looking at a decrease in costs for this spring, summer and fall, anything can happen for the 2017 and 2018 winter season.”