When Will Cuba Open for Business?

Following President Obama’s December announcement that the United States would reopen long-severed diplomatic relations with Cuba, the hospitality industry is abuzz over the tourism possibilities the island offers. Having been an off-limits destination for 50 years, the Caribbean island has been a forbidden fruit for the better part of most Americans’ lives.

Travel is still limited at this point. The Department of Treasury has mapped out only 12 acceptable reasons to gain access to the island, none of which involve enjoying a sunny, sandy vacation. But with a bipartisan group of senators pushing for a full lift on the travel ban with the Freedom to Travel to Cuba Act of 2015, Americans could fulfill their island-hopping dreams sooner rather than later.

While the promise of free travel to and from Cuba is an exciting possibility for tourists, what does this legislation mean for members of the lodging industry? “The prospect of developing hotels and other hospitality-related resorts like golf courses and clubs in a vast untapped market is something that has the hospitality industry salivating,” says Steven Zelkowitz, Miami attorney and managing shareholder at GrayRobinson, a law firm that represents Marriott, among other brands.

Advertisement

The fact that it is an untapped market, however, is what presents the greatest challenge for both Cuba and those looking to develop there. To sustain hordes of newcomers, the country’s existing infrastructure will need to undergo a major revamp to appeal to American tastes.

“If you consider the need for infrastructure development and getting the area ready for tourism, that’s going to require importing a lot of talent, labor, and product,” says Scott Berman, principal and industry leader at PricewaterhouseCoopers. “Unless you’re going to create campsites or something similar, there’s not a lot of existing inventory to satisfy that demand.”

In addition to modernizing roadways, taxi services, an airport, and the like, the island’s deep-water ports will need to be brought up to standard to import construction goods and, later, entice the cruise ships that launch from destinations such as the not-so-distant Miami.

Scott Smith, senior vice president of PKF Consulting, says once infrastructure modifications are complete, Cuba will be a hot spot worthy of snatching tourists from their usual go-to locations. “Cuba is a beautiful island with beautiful beaches and is home to unique culture, people, and personality,” Smith says. “You can’t find the same experience at other places in the Caribbean. Each island has a different culture.”

In order to reach eventual Cuban paradise, though, hoteliers will need to prepare to face the unknown when trying to break through the red tape of an uncharted territory. “The folks looking to do business there will have to navigate a governmental bureaucracy that they’ve never encountered before,” Zelkowitz says. “It’s not like having a group from Miami going to San Francisco where you sort of know what you’re going to face. This is a totally unknown governmental bureaucracy with already existing players who we’re sort of going to need to get in line behind in order to make this happen for us.”

Until the government’s intentions for travel between the two countries are made clear, it is hard to say what will happen next. But the industry is chomping at the bit to learn the next installment in the Cuban saga. “As soon as there’s a green light from Washington, I think the reaction is going to be immediate,” Zelkowitz says.

1 COMMENT

Comments are closed.