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Tough Call: Why Cuba Poses A Tourism Threat

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Larry Smith

By LARRY SMITH

BACK in 2006, most analysts believed little would change in the immediate aftermath of Fidel Castro’s departure as Cuba’s pre-eminent leader.

At the time, Castro had just stepped down as president due to failing health, ceding power temporarily to his younger brother, Raul, the armed forces chief. Two years later, he made his resignation permanent.

Two years after that, I visited Havana and had this to say: “As the largest island in the Caribbean, Cuba has mountain ranges, fertile plains and valleys and a 2,300-mile coastline with deep harbours, coral islands and miles of beaches. Cuba also offers a proud history and culture blending Spanish and African influences.”

And Havana - with a population of more than two million - is the Caribbean’s major metropolis, as well as Cuba’s greatest attraction. In 2010, Cuba already received a million more stopover visitors than the Bahamas. It now has over 60,000 hotel rooms (compared to under 15,000 here) and thousands more are said to be on the way.

At the time of my Havana visit, the competitive threat to Bahamian tourism from the inevitable opening of Cuba to the closed United States travel market was still years in the future. But those portentous changes are now much closer to reality.

Fidel Castro took control of Cuba in 1959 after an armed revolt against a military dictatorship. One of his first acts was to shut down casinos, brothels and hotels, many of which were owned by American organised crime figures. When foreign businesses were nationalised, the US imposed trade restrictions. And in 1962, the embargo was formalised, preventing most Americans from visiting an island which is less than 100 miles from Florida. Those international tourists who did come were segregated from the general population.

Cuba settled into a defiant role as a member of the communist bloc. But after the collapse of the Soviet Union in the early 1990s, Castro allowed limited reforms to encourage tourism and earn hard currency. The Clinton administration eased travel restrictions, but they were reinforced by the Bush administration in the 2000s.

In 2010, Raul Castro embarked on a long-term reform of the country’s political and economic system. And analysts say Cuba looks much different today than it did in 2006, when Fidel stepped down.

An article in the US magazine, Foreign Affairs, says: “the emerging Cuba might best be characterised as a public-private hybrid in which multiple forms of production, property ownership and investment, in addition to a slimmer welfare state and greater personal freedom, will co-exist with military-run state companies in strategic sectors of the economy and continued one-party rule.”

Since the election of Barack Obama and the start of Raul’s reform process, relations between Cuba and the US have improved. A few months after he assumed office in 2009, Obama began rolling back the Bush-era sanctions. And last December, he opened up travel to Cuba as much as his executive authority would allow. Today, travel service providers can arrange trips to Cuba for US citizens without a government licence - but only if the travel conforms with restrictions in current law. General tourism remains banned under the embargo.

A bipartisan group of legislators is pushing for passage of a Freedom to Travel to Cuba Act in the US Congress, but the law is stuck in committee and not expected to be enacted. A full lifting of the embargo will probably have to wait until after the 2017 presidential election.

The American Society of Travel Agents strongly supports normalisation of relations with Cuba, estimating that at least two million more Americans would visit the island by 2017 if restrictions were lifted. Last year, about half a million US residents visited Cuba, mostly Cuban-Americans visiting family.

The key point for us to keep in mind is that, even in its present run-down condition, Cuba manages to earn some $2.5 billion a year from three million visitors, and it is seeking to double those numbers. Despite an inefficient, government-operated and expensive product, the island has a lot to offer. It is a competitive threat that we should not ignore.

Former Bahamas tourism minister Vincent Vanderpool-Wallace, who is now a private consultant and board member of the Caribbean Hotel and Tourism Association (CHTA), recently helped draft a position paper for the organisation on Cuba’s competitive threat. The CHTA is a regional federation of 32 national hotel associations with more than 600 member hotels and over 300 allied members. According to its president, Emil Lee, of St Maarten, the organisation is not opposed to the lifting of the US embargo, because it would “eliminate a significant barrier to regional co-operation.”

But in its position paper the CHTA warned that the opening of Cuba to the huge US travel market would be “the biggest and most disruptive pebble to be dropped into the Caribbean pool in 50 years.” In fact, most analysts conclude that the impact on Caribbean tourism will be “unprecedented”.

The CHTA document also sounded a hopeful note that “the coming Cuban disruption just might be the tonic (we) need to build the kind of strategic approaches to tourism development that will yield sustainable results”.

As far as The Bahamas is concerned, the impact will be four-fold.

First, Cuba will siphon off visitors who have up to now travelled impulsively to The Bahamas from Florida. This market has traditionally provided over 20 per cent of Bahamian visitor arrivals.

Second, the opening of Cuba can be expected to have an immediate impact on the cruise industry, which has been lobbying Caribbean destinations like The Bahamas to develop new products and experiences beyond the traditional sun, sand, sea and t-shirts. “The likelihood that cruise lines will drop some existing ports to accommodate Cuba visits is real and the proximity of Cuba to the US … can easily impact itineraries to near markets such as The Bahamas,” the CHTA document says.

Third, the airline industry’s willingness to absorb low fares and passenger volumes in order to build routes and market share in Cuba could be disastrous for the region, the CHTA warned, “especially if it also results in US carriers shifting aircraft to new Cuba routes upon the lifting of the embargo.”

And finally, the opening of Cuba will also impact the investment outlook for the region. It is likely to have a chilling effect on investment flows as investors take a wait-and-see position on the opportunities that Cuba may present. But much will depend on the enabling policies of the Cuban government in attracting US capital.

“The fact that Cuba saw over $800m in hotel-related investments in 2013 is a sobering thought,” the CHTA position paper said. “The Caribbean and its industry will find itself not only competing for American tourists but also for investment dollars.”

According to CHTA chief executive Frank Comito (a former director of the Bahamas Hotel and Tourism Association), “If we continue to operate business as usual, and we all draw from the same pie and Cuba is in the equation ... there will be serious economic and employment consequences.”

So what does the CHTA recommend? Principally, it urges the creation of a Caribbean Basin Tourism Initiative to help boost investment in regional tourism development. The initiative would promote policy and technical support for the region, in partnership with private sector entities.

“We’ve developed a draft framework for a regional public-private sector tourism action agenda which would embody some of these elements, but that is still being vetted,” Comito told me. “We’ve advanced the Caribbean Basin Initiative concept as a starting point for collaboration to define together what the actual elements would be.”

Among the items that will be reviewed are the removal of visa and travel barriers within the region, the reduction of high air travel-related taxes and fees, speeding up visitor clearance and processing times and supporting a more co-operative approach among industry stakeholders.

And the CHTA says “we need to look at those factors which have contributed to Cuba’s success – product diversity, infusing culture and history into the visitor experience, investments in education and training, competitive pricing, and lower operating costs. We need policies and practices which drive business, and do not drive away business.

“The CHTA believes that by working together, heads of government with heads of industry, hundreds of thousands of tourism-related jobs and hundreds of tourism-related businesses can be created. The indirect impact which tourism has on our broader economies cannot be understated.”

It was more than a quarter of a century ago when the Berlin Wall came down, in one of the most disruptive events of our lifetime for many countries. Some improvements happened immediately, but others took time, effort and resources to become evident. “We can only hope that the fall of the US embargo and the consequential great Cuban disruption will be as good for the countries of the Caribbean,” the CHTA position paper said.

What do you think? Send comments to lsmith@tribunemedia.net.

Comments

banker 4 years, 6 months ago

As of today, Wednesday July 1, it was announced that diplomatic relations with Cuba and America are resuming on July 20. http://www.reuters.com/article/2015/0...">http://www.reuters.com/article/2015/0... The title of the Reuters article is: U.S., Cuba tear down that wall.

The lifting of the economic embargo, currently resisted by Republicans will happen soon. And you are right, it will be an economic tsunami for the Bahamas. When you couple it to the Baha Mar fiasco, well there will be widespread poverty and in increase in crime here.

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B_I_D___ 4 years, 6 months ago

You keep your blinders on there birdie...seems to be a trend amongst the yella bellies...

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duppyVAT 4 years, 6 months ago

We do not have to be a casualty .......... we can ride the wave and sell 2 for 1 packages with the Cubans ................ Cuba and The Bahamas may have had geo-political differences in the past, but there has always been an interesting socio-economic and cultural link between the two countries ............. we should be smart and go back to the pre-WW2 era relations

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concernedcitizen 4 years, 6 months ago

And when Cuba has everything we have ,beaches ,sun ,and much more including better service .Whats in it for Cuba to do two for one w/ us ,just to be nice ,,you know business does not work like that .I had some wealthy people from Denmark that were in Cuba and came here ,Exuma ,for a week .Four of them cut short there week and went back to Cuba ,they could not believe how bad our service was ,how a bar tender could be in the weeds with 50 guest at the bar ,how a waitress could not get a table of 6 orders right ,,One lady and i got along and she stayed ,but see said Cuba has the same beaches ,better night life ,culture ,history ,,,

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banker 4 years, 6 months ago

It won't work that way. 20% of all visitors are impulse. An impulse trip won't involve getting on a plane twice with all of the hassle and airports and baggage and such. An impulse trip is one destination for a short duration. We will lose those.

Piggybacking never works. There is so much to see in Cuba that you don't want to waste time in Nassau with nothing to see. They have so much more, from a major metropolis, to the music, to the vintage cars, and you can go to the mountains, or freshwater bass fishing, or pheasant hunting. You can take a coffee tour, an architecture tour, a church tour or a cigar factory tour. You can take a liquor tour, and buy genuine, not made in China souvenirs. There is a vast cultural tapestry to explore. Hispanic culture is rich in music, food, dance, costumes and ephemera. Nassau is so Americanized, that it is like a visiting a dirty Miami parking lot that isn't safe.

There is no way that we can ride this wave. We have nothing unique to offer the tourists any more, and that is why the majority do not even get off the cruise ship when it docks here. There is a distinct possibility that the cruise ships will bypass Nassau all together. We try to milk them dry in landing fees, and Cuba won't. We are in serious trouble.

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a2z 4 years, 6 months ago

CUBA is the future. THE BAHAMAS is the past. Cycle of life.

Christie will never get it - he's still trying to sign HoAs with FDIs of large-scale hotels and 2nd homes.

I swear, if these people get back in government in 2017, I'm seeking political asylum in a country that has a clue.

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duppyVAT 4 years, 6 months ago

................. and that country should be Cuba................ we must admit that Cuba was the place to go to enjoy a tropical vacation up to the 1950s ...

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avidreader 4 years, 6 months ago

At the risk of revealing my age I must relate visiting Havana in December of 1958 at the age of nine with my parents and brother aboard a cruise ship called the "Evangeline" (which was subsequently renamed the "Yarmouth Castle" which burned and sank just off of Great Stirrup Cay in the northern Berry Islands in November of 1965). In those days Batista's soldiers were all over the place and we were warned not to travel eastward from Havana. I did not visit Cuba again until 1993 while they were in the "Special Period" and the newspaper "Garnma" printed the "horario de apagones", the schedule of power cuts for Havana. Recall what the late Norman Solomon said about erecting a statue of Fidel Castro in Rawson Square because of what he did (inadvertently) to boost Bahamas tourism. It just so happened that the late Sir Stafford Sands saw a way to capitalize upon the change in diplomatic relations between two nearby countries. However, today this country has a far greater population to maintain in the manner to which it has become accustomed since 1961.

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banker 4 years, 6 months ago

Interested about your observations of what you saw in 1993 and how you would rate it.

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avidreader 4 years, 6 months ago

In reply to "banker's" inquiry: In those days the tourist business was somewhat disorganized but it was possible to go on a city tour to see, among many interesting sights (and sites) the former Bacardi headquarters building, the "Casa de Cafe" with innumerable varieties of coffee, the Viceroy's Palace,the National Cathedral, the Automobile Museum, Morro Castle, the Cabana Fortress where Che Guevara ruled and ordered executions, the Museo de la Revolucion which was formerly the Presidential Palace where you could visit Batista's office and view the secret stairway behind the false bookcase used to allow for a quick escape from demonstrating students who actually stormed the building in the early 1950s leaving bullet holes in the walls of the main stairway landing, the buildings behind the palace where the yacht "Granma" was on display behind green tinted glass surrounded by the remains of tanks, trucks, jeeps, the remains of the U2 spy plane in which Colonel Anderson was shot down in 1960, etc. Havana was almost a ghost city at night except for certain types of dubious activities around the hotel front entrances and along the waterfront Malecon. Anyone who visited the Havana Zoo remembers the pitiful sight of the one-eyed bear standing up on his hind legs and looking longingly at the few visitors. I think that he was hungry as were any number of other two-legged creatures in the city, if you know what I mean. The atmosphere was so strange that upon my return to Nassau it took me about two days to adjust to a completely different environment. I have been back there a few more times some years ago but I did not see great changes. Let us hope that things have improved for the common people who tried to be very friendly under difficult circumstances. I speak fluent Spanish so I was able to go places and see things that I suspect that I was not really supposed to see and hear. They have a great future in the event that the economy opens up and sheds many restrictions.

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DEDDIE 4 years, 6 months ago

I just had a meeting today with a fairly wealthy businessman and he laments the fact that he ever consider doing business here. He said that the red tape and immigration policy is maddening.Cuba came up in our conversation and he said that once the embargo is lifted the Bahamas will experience a serious drop off in investments. He indicated there are only a limited amount of investment dollars to go around and the bulk of it will head towards Cuba.

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birdiestrachan 4 years, 6 months ago

Does any one know what happened to persons who had investment in Cuba. when Castro took over the Country.?? Does Cuba have elections? And will Castro allow outsiders to come into Cuba to invest. Maybe but it will be on their terms. as for immigration will Castro be giving out work permits, when so many Cubans are in need of work.?

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concernedcitizen 4 years, 6 months ago

@Birdie There are many hotels in Cuba built by foreign firms ,Ibostar ,There are 3 sandals , The Chinese have invested over 800 million in the last year and are starting direct flights .London Regional just started a 500 million development and are selling lots and condos w/ free and clear titles ,,Your xenophobia and religious simplicity that somehow a sky god has blessed the Bahamas is amusing but not factual in the least

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SP 4 years, 6 months ago

Cuba Moving "Surgically At Lightning Speed" - "PLP STILL DOING" The Cha-Cha-Cha

http://www.digitaljournal.com/pr/2601244">http://www.digitaljournal.com/pr/2601244

CUBA was number one in regional tourism when Bahamas was a fishing village....And they will be number one again.... As successive governments, especially this PLP group of clowns fail to realize it is "A COUNTRY" they are supposed to be building.....Not a "FAMILY, LOVERS & FRIENDS" private enterprise!

PLP & FNM HAS NEVER, AND WILL NEVER move this country forward!

The greatest impediment to developing our country is the PLP and FNM governance of exclusion, deep corruption, greed and absolute political stupidity.

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avidreader 4 years, 6 months ago

In reply to "Birdie" I can only lament the fact that you are asking questions the answers to which would be revealed by any careful reading of the more recent history of Cuba whether official or unofficial in English or in Spanish. You would find a plethora of information relating to the love-hate relationship between Cuba and the United States especially after the Spanish-American War of 1898 when the U.S. freed Cuba (as well as Puerto Rico and the Philippine Islands) from Spanish colonial domination only to place those territories under U.S. domination for a considerable period of time. You would discover that Cuba had to enact the Law of National Labour early in the 20th century in order to protect jobs for Cubans from Haitian immigrants in the eastern provinces, especially Oriente. You would discover the long and bitter wrangling between successive U.S. administrations and the Cuban government under the Castro brothers that led to the very dangerous Cuban Missile Crisis of October 1962 and the long shadow cast by the intriguing assassination of John F. Kennedy in Dallas on November 22, 1963. As was quoted wonderfully some years ago: The only thing new under the sun is the history that you don't know. Happy reading "Birdie".

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Well_mudda_take_sic 4 years, 6 months ago

Sorry "Avidreader, but poor "Birdie" received a D- education under the PLP government and is therefore not open to being enlightened in any meaningful way!

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avidreader 4 years, 6 months ago

An interesting reply to my earlier comment but let us be fair and not lay the blame for the weak educational system at the feet of only one administration. The weakness to which you refer is of long standing duration and, consequently, very difficult to correct. This weakness radiates at least in part from the appointment of poorly qualified persons to decision-making positions in the Ministry of Education as well as from the wider culture of glorification of non-academic pursuits at the expense of efforts to make significant changes to the national curricula in an effort to broaden the outlook of each and every student. Of course, I will be the first to admit that not every student can be brilliant but every student can be exposed to a more rounded and encompassing educational experience. As someone once said, if you think education is expensive, try ignorance.

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avidreader 4 years, 6 months ago

In response to "Ikalikl" above, I can guarantee that the PLP did not "throw out" all foreign teachers after 1967. There were many foreign teachers employed by the Ministry of Education after that date with a gradual change taking place that saw more Jamaican and Guyanese nationals being employed than European, British, etc. Even today a large percentage of teachers, especially in the high schools, are foreign nationals. In fact there are a number of Cuban nationals on loan from Havana teaching Physics, Chemistry, etc. in Nassau and in certain Family Islands. It is true that the original Government High School was not maintained at the same high standard, a development that caused considerable regret among GHS alumni who saw the GCE system of examinations discarded and the watered down standards of the BJC and the very weak BGCSE apparently intended to create the impression that students were actually accomplishing something during their school years.

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Well_mudda_take_sic 4 years, 6 months ago

Amen! And let's not forget the role light skinned Sean McWeeney played in his last year or so at Queen's College High School in getting all the white highly qualified and devoted British teachers kicked out of our country. This was his way of saying thank you to them for the excellent education they give him! What a joke!! The suffering he and his brother Paul McWeeney (disgraced ex-managing director of Bank of The Bahamas) have caused many poor Bahamians is unspeakably horrid!

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duppyVAT 4 years, 6 months ago

LKALIKL ........... you talking good ..........education is the root problem and SLOP deliberately engineered this public education system ........ while the elite who can pay (10%) go to quality private schools ...........its a social crime meant to maintain the pre-1967 status quo based on social status

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OMG 4 years, 6 months ago

As a retired expat teacher who has taught in the Bahamian system for many years it has to be obvious to any intelligent person that there exists a totally dysfunctional educational system. The director is on another planet and lies constantly, the Minister is not interested in making any positive changes and after 25 + years the MOE is still incapable of producing a BGCSE without help from Cambridge in the UK. Furthermore the Minister and his close nit colleagues continue to play with Bahamian children's education by employing Cuban teachers who for the most part cannot be understood by students. Technical education--what a joke when little technology ever trickles down to the family islands .Additionally whilst there are some dedicated young Bahamian teachers many are undisciplined, absent often and work simply for a paycheck. Lets be real , this country is very expensive and the Ministers misguide the public into thinking this is the "best little country in the world" when there are so many other destinations which are cheaper and have more to offer. Examples of the bull---t given to the public are such outrageous statements as "the world famous straw market" or "Kalik a world famous beer" . And why are we paying $53 for a case of this "award winning beer" when it is produced here. Bahamian business philosophy is make as much as you can in the shortest period of time and to hell with value for money.

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ohdrap4 4 years, 6 months ago

after 25 + years the MOE is still incapable of producing a BGCSE without help from Cambridge in the UK

Why, may I ask, do they not have a xerox machine?

the questions are recycled over and over and the exam gets easier and easier.

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