CUBA: Cuba Still Attracts Foreign Hospitality Companies

Hotel Melia Cohiba
Cuba’s tourism is bleeding but Melia Hotels and China’s Jin Jiang are pursuing new investments in what seems to be a promising deal.

Tourist arrivals in the first three months of the year fell to roughly 1.4 million compared with 1.5 million in the same period of 2017.

Of that figure, 177,000 people arrived by sea and spent relatively little money onshore, an increase of 38,000 from the previous year, as foreign cruise lines stepped up their visits.

The downward trend continued in April, the sources said, the tail end of the November-to-May high season in Cuba.

Hospitality companies Melia Hotels International and Iberostar Hotels & Resorts, Singapore’s Banyan Tree Holdings Ltd. (BANY.SI) and Apollo Global Management LLC’s (APO.N) Diamond Resorts International Inc. have all announced new projects.

Representatives of the companies often complain about the impossibility of owning their properties outright and the local bureaucracy, but acknowledge they make a profit.

Cuba was, is and will be a key tourism area so it is just a matter of timing, said Eric Peyre, who represents Louvre Hotels SAS, a French subsidiary of China’s state-owned Jin Jiang International Hotels Development Co, one of the world’s largest.

Peyre, who has worked in the Cuban tourism industry for 25 years, said the company just took over one hotel but plans to have 10 within a few years.

Every hospitality company will come to Cuba one day or another and we have decided to enter now, he said.

Over the last two years more than a dozen cruise lines have also arrived, including U.S. leaders Norwegian Cruise Line Holdings Ltd. (NCLH.N), Carnival Corporation (CCL.N) and Royal Caribbean Cruises Ltd. (RCL), which have steadily increased their Cuba stake.

United States cruise lines continue to add sailings and increase the size of vessels on the routes, said John Kavulich, president of the New York based U.S.-Cuba Trade and Economic Council, who follows the sector.

He said the main restraint on growth was port capacity in Cuba.

The fall in tourism revenue this year is hurting Cuba’s Communist-run government, which is struggling with declining export revenues and dwindling support from crisis-hit ally Venezuela.

The Trump administration has made it more difficult for people to travel to Cuba, banned Americans from patronizing military-owned establishments and issued a travel warning that it may be unsafe to visit Cuba.

Havana was particularly hard hit as the number of American tourists dramatically declined, leaving once overflowing hotels and restaurants with plenty of room to spare.

The U.S. trade embargo restricts Americans to cultural, religious and educational tourism or family visits, thus making Havana, and not beach resorts, a top draw for U.S. visitors.

U.S. visitors, not including those of Cuban origin, fell to 98,000 in the first three months of the year versus 160,000 a year earlier. Of those, 25,000 came on cruise ships, twice the number during the same period in 2017, the sources said.

Nevertheless, there are five new five-star hotels under construction in Havana, three of which broke ground recently.

The hotels are all owned by the military-run Gaviota hospitality corporation and will be managed by foreign firms.

The Trump administration has forbidden U.S. citizens from patronizing Gaviota.

Other hotels in the Cuban capital are undergoing renovations. Most are owned by non-military tourism companies, such as the famous sea-front Hotel Habana Riviera built by U.S. mobster Meyer Lansky on the eve of the 1958 Communist revolution.

Everybody is planning long term. That is why the Cuban government is building in Havana and all foreign companies are asking how to be part of this development, Peyre said.

Foreign businessmen and local experts say 2017, with a booming 26 percent growth in arrivals before Hurricane Irma hit in September, was a fluke and so this year’s downturn is not the end of the world.

Despite the hurricane’s impact, arrivals for last year as a whole rose 16 percent.

We are very pleased that we can show the world that for us Cuba is indeed the next big frontier market and a great place to invest, said Sebastiaan Berger, CEO of Ceiba Investments, a Guernsey-incorporated company with close to 20 years experience in Cuba and a $175 million portfolio.

Ceiba announced this month a $150 million project to upgrade four joint-venture hotels and build a fifth with Cuban partner Cubanacan and Melia Hotels International.

The Melia Habana Hotel will add 168 rooms.

Berger, like Peyre, was unperturbed by the Trump administration.

We are a company dedicated to investments in Cuba and have been investing in real estate under Presidents Bush Sr., Bush Jr., Bill Clinton, Barrack Obama and now Trump,he said.


Tourism Observer

MEXICO: Security Beefed Up In Cancun After Killings Scared Tourists Away

Officials in Cancun have increased beach security after an incident in which two people on jet skis reportedly shot at a man on the beach.

The Riviera Maya News reports that, on April 19, two people on jet skis reportedly shot at a man in a beach area in front of a hotel in the destination’s Hotel Zone.

The man was allegedly a drug dealer. The next day, Cancun officials sent additional security personnel to monitor the beach area.

Government Secretary Francisco Lopez Mena said that officials have begun to identify areas where people involved in the drug trade live, and that these people are linked to criminal groups and drug traffic.

The shooting is the latest in a series of violent incidents in Cancun over the past month.

From April 4 – 5, 14 people were killed over the course of 36 hours, with nine killed on April 4 alone, making it the most violent day in Cancun for the past decade.

The crimes are thought to be the result of rising drug violence associated with the opioid epidemic in the United States.

Despite the violence, travel to Cancun has continued to increase, most recently with a major travel surge over the Easter holiday weekend.

During the month of March, arrivals at Cancun International Airport were up 14.5 percent over the previous year, well over half of which were international visitors arriving for a vacation.

Hotels in Cancun and the Riviera Maya averaged a 90 percent occupancy rate over the holiday weekend.

Quintana Roo, which includes Cancun as well as other tourist areas Cozumel, Playa del Carmen, Tulum and the Riviera Maya, remains rated by the State Department as Level 2.

Exercise Increased Caution, due to the risk of violent crime like homicide, kidnapping, carjacking and robbery.

A Level 2 ranking means that travelers should be aware of heightened risks to safety and security within the destination.

That puts it in the same overall ranking as other popular tourist destinations for travelers from the United States, including the United Kingdom, France and Italy.

A new investigation published by the Milwaukee Journal-Sentinel blames travel agents, as well as a number of major tour operators and resort companies, for failing to “share the risks” with clients booking travel to Mexico resorts.

The Journal-Sentinel report shares a number of tragic incidents in which tourists from the United States and Canada blacked out after drinking or were robbed, sexually assaulted or died at all-inclusive luxury resorts and tourist areas in Mexico.

The report argues that travel agents and major tour operators like Apple Vacations should have informed clients of these potential risks under “duty to inform” or “duty to warn” case law, which establishes that purveyors of travel must inform clients about a variety of conditions in travel destinations or potentially be held liable.

If you’re going to an area that is crime infested, the agent needs to say ‘You need to beware,’” Ken Whitman, senior program manager with Aon, an insurance provider for travel-related companies, told the Journal-Sentinel.

Unfortunately, recent coverage has inaccurately characterized the extent of the problem in Mexico, unfairly dramatizing the risks to travelers, and disparaging the many safeguards that the Mexico tourism industry.

Our resort partners and our company have in place to assure traveler safety,” a spokesperson for Apple Vacations said.

At the same time, we believe that any injury is one too many, and we continue to work hard to identify and properly address the limited number of issues that inevitably arise.

Apple Vacations said that it does feature a link on its website to the U.S. State Department’s travel advisories, the standard for informing U.S. travelers about safety concerns in destinations worldwide, and that it encourages travelers to review the travel advisories for the countries that they plan to visit.

It is important to note that the U.S. State Department currently lists the primary tourist areas in Mexico in the same classification as a significant number of countries that are among the most common destinations for American travel, including United Kingdom, Denmark, Belgium and Germany, Apple Vacations said.

We firmly believe a constructive approach is the right way to problem solve in all countries with which we partner and are committed to doing our part as an industry leader to make continued progress on this issue, the company said.

The Milwaukee Journal-Sentinel has been investigating potential safety issues at resorts in Mexico for some time, most famously with last summer’s report containing allegations that resorts in Playa del Carmen and Cancun were serving tainted alcohol.

That report was prompted by an incident in which a 20-year-old woman was found unconscious in a pool at the Iberostar Paraiso del Mar and later died.

Subsequent investigations by an attorney hired by her family and the Milwaukee Journal-Sentinel uncovered reports of other travelers who claimed that they had experienced sickness, blackouts and injuries after drinking at resorts in the area.

The story was picked up by a number of other consumer media outlets, both in print and on television, over the next few months.

Following the reports in consumer media, the Sate Department updated the Safety and Security section of its Mexico country page to alert travelers to the allegations.

The State Department advised travelers to drink in moderation and seek medical attention if they feel ill. That information has since been taken down.

Representatives of major resorts Travel Agent spoke with at the time said that their resorts maintain high levels of food and alcohol safety.

Common safety precautions include purchasing liquor in sealed containers, regular audits of safety and sanitary procedures, and monitoring of staff and public areas through security cameras.

Representatives of Iberostar Hotels & Resorts also said at the time that the company plans to roll out additional security cameras in the building interiors, pool areas and outside bars in the Parais Complex.

A later test by the government of Mexico found no indication of tainted alcohol at the resort that prompted the first Milwaukee Journal-Sentinel story.

Lab tests of alcoholic beverages served at the resort were found to be normal, containing no adulterants, including taurine products that are commonly found in energy drinks.

In terms of official safety information, Mexico is officially rated as Level 2: Exercise Increased Caution, on the State Department’s new four-tier travel advisory system, due to the risk of violent crime like homicide, kidnapping, carjacking and robbery.

A Level 2 ranking means that travelers should be “aware of heightened risks to safety and security within the destination.

That system was launched in January as part of an effort to provide more information regarding potential safety issues in destinations than the previous system of Travel Warnings and Travel Alerts.

It ranges from Level 1: Exercise Normal Precautions, to Level 3: Reconsider Travel and Level 4: Do Not Travel. A bit of context.

At Level 2, Mexico shares the same overall ranking as other popular tourist destinations for travelers from the United States, including the United Kingdom, France and Italy.

Within Mexico, however, there are specific areas that have a more severe travel advisory ranking. The following states have the highest, at Level 4: Do Not Travel: Colima; Guerrero, including Acapulco; Michoacán; Sinaloa; and Tamaulipas.

While U.S. government employees are prohibited from traveling in most areas with a Level 4 advisory, they are permitted to travel in Mazatlan’s Zona Dorada, or historic town center, the city of Los Mochis and Port Topolobampo, as well as direct routes to and from these locations and the airport or cruise ship terminal.

A number of areas also have a ranking of Level 3: Reconsider Travel, which advises travelers to avoid a destination due to serious risks to safety and security.

These include the states of Chihuahua, Coahuila, Durango, Estado de Mexico, Jalisco, Morelos, Nayarit, Nuevo Leon, San Luis Potosi, Sonora and Zacatecas.

As with the areas with Level 4 advisories, there are certain areas within these states where government employees aren’t prohibited from traveling.

These include the tourist areas of Guadalajara, Puerto Vallarta, Chapala and Ajijic, as well as Riviera Nayarit, Santa Maria del Oro and Xalisco.


Tourism Observer