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

CUBA: Tourists Pay $10 To Sleep In Back Of Taxis, Cuba Can't Cope With Blast Influx Of Tourists

Cuba's tourism industry is under unprecedented strain and struggling to meet demand with record numbers of visitors arriving a year after detente with the United States renewed interest in the Caribbean island.

Its tropical weather, rich musical traditions, famed cigars and classic cars were for decades off limits to most Americans under Cold War-era sanctions, but those restrictions are fading.

Once a rare sight, Americans are now swarming Old Havana's colonial squares and narrow streets along with Europeans and Canadians.

Entrepreneurs and hustlers have responded by upping prices on taxi rides, meals, and trinkets. Cuban women who pose for pictures in colorful dresses and headwraps while chomping cigars are now charging $5 instead of $1.

Cuba received a record 3.52 million visitors last year, up 17.4 percent from 2014. American visits rose 77 percent to 161,000, not counting hundreds of thousands of Cuban-Americans.

Industry experts worry the island will be unable to absorb an even greater expected surge when scheduled U.S. commercial airline and ferry services are due to start this year.

As it is, foreigners face extreme difficulties booking hotels and rental cars, and those who hoped to discover Cuba before the hordes arrive realize they are too late.

"Cuba is over the top with tourists right now. I've seen so many Americans, it's not even funny," said a tourist

A tourist hoped to see Cuba "before it changes" but was disappointed to find long airport lines, ubiquitous hucksters and masses of tourists. She was stranded in Havana when she was unable to get a spot on the bus leaving for the eastern city of Santiago."It was too much to handle, too many other tourists. We stood in line and were sent back and forth to different counters," she said from an Old Havana cafe with her large backpack parked on the floor. "I don't think Cuba is prepared."

The United States and Cuba agreed in December 2014 to end five decades of animosity and have since restored diplomatic ties, igniting international buzz about Cuba.

The opening has benefited Cuba's small private sector, which offers restaurants and rooms for rent in family homes.

But the tourism infrastructure, with just 63,000 hotel rooms nationwide, is still largely a function of the state and has languished under decades of U.S. economic sanctions and underdevelopment.

"From offloading at the airport to restaurant availability, infrastructure is maxed out," said Collin Laverty, founder of Cuba Educational Travel, which organizes tours for legally permitted travel for Americans.

A select number of foreign-run hotels, such as those of Spain's Melia Hotels International SA , fill up fast, leaving many visitors with little option but tired state-run motels or rooms in private homes.

Some have been priced out or bumped from hotels, especially in Havana, where high-end U.S. groups reserve blocks months in advance and pay higher prices.

"It is kind of a slap in the face as it has been the Canadian and European tourists who have helped keep the Cuban economy afloat for the past 25 years," said Keri Montgomery, owner of Vancouver-based Finisterra travel.

The government is seeking more foreign investment and has plans to reach 85,000 hotel rooms nationwide by 2020, but the pace is slow and development has mostly favored beach destinations rather than Cuba's cultural centers.

American tourism is still banned under the U.S. trade embargo but U.S. citizens and residents are allowed to visit under 12 categories including for religious, sporting and educational exchanges.

In one of his first moves after rapprochement, Obama made it easier for those 12 categories of travelers to go to Cuba.

The increased presence of Americans is especially noticeable in Havana, and because there has been little enforcement of the tourism ban, some are also enjoying Cuba's beaches and bars with little effort to disguise their intentions.

The Treasury Department's Office of Foreign Assets Control has not fined any Americans for visiting Cuba since Obama took office in January 2009, its database shows.

Under President George W. Bush, OFAC fined hundreds of individuals for embargo violations, mostly for travel. More than 800 people received penalties including nearly $1.1 million in fines in 2004 and 2005 alone, according to a 2015 report by the Congressional Research Service.

California native Tony Pandola, 33, who has been leading Americans around Cuba for three years, said once-intimate experiences are now plagued by crowds.

"On this really beautiful, quiet farm there were six giant tour buses with their diesel engines running and a couple of minivans and taxis all waiting to have the same experience with the tobacco farmer," he said from Viñales, a picturesque valley west of Havana.

While many budget travelers can usually find accommodations even without booking, some are left stranded.

A cab driver in Viñales said they were offering tourists to sleep in the back of their car for $10.

A tourism worker in his hometown of Viñales since he was a teen, said every room was booked in December.

A lot of tourists have stayed in the park. That had never been seen before, he said.

Havana's international airport lacks sufficient infrastructure such as luggage trucks and passenger stairs to handle the influx, causing bottlenecks.

It's total madness, said an airport staff who works at the terminal receiving U.S. flights. The airport employees are doing everything possible to satisfy visitors, but the equipment is very old and needs to be replaced.

Retired teacher Joanna Sarff finally came to Cuba after dreaming about it for 50 years, so she refused to let the inconveniences spoil her trip, saying she was more focused on plans to dance on the tables at a Buena Vista Social Club concert than the crowds.

For me, this is a great way to experience the culture, the people, the food, the mojitos, and the cigars!"

SPAIN: Sol Antillas Hotel To Transform Magaluf

A hotel where a man fell to his death from a fifth-floor balcony is at the centre of a major transformation of Magaluf.

Benjamin Harper, 28, fell from the Sol Antillas Hotel, 10 minutes from the centre of the Spanish party resort, in 2012.

He was one of three Britons to die falling from a hotel balcony in the Majorcan resort that summer, prompting a campaign to warn about the dangers of a drunken craze known as “balconing”, where revellers jump from balcony to balcony.

As the resort seeks to transform its image from debauched party destination to up-market, family holiday venue, the Sol Antillas has been earmarked as a new landmark for the area.

It is one of 11 hotels in Magaluf slated to undergo renovations by the hotel group, Melia Hotels International, at a cost of €190 million. The group and the government of Calvia, of which Magaluf is a part, hope that the revamp will spark to a revolution in the culture of the resort.

The hotel group, 10 other private companies, the Balearic Government and Calvia public officials were in London this week to launch a five-year plan for Magaluf’s regeneration, which includes:

extending the season to nine months (March to October)
making Magaluf a family destination
enhancing the resort’s sports and event facilities
improving food, drink, retail, leisure and cultural offerings
positioning Magaluf “as a benchmark for the regeneration of a mature destination”

The resort’s reputation has suffered over the last 20 years, as its moniker became “Shagaluf” and it became synonymous with holidaymakers getting drunk and naked in the streets.

Melia Hotel’s CEO Gabriel Escarrer Jaume said he wants the resort to appeal to “modern, affluent travellers”.

“We firmly believe that Magaluf has the beauty and the potential to be a leading holiday destination again,” he said.

Mr Escarrer Jaume said alongside the renovation of the Sol Antillas Hotel, on which work will begin next year, a renovation of Sol Jamaica Hotel will “play a key role in the revitalisation of the Avenida de Magaluf street, which runs parallel to the seafront”.

He said: “We are certain that the regeneration is based on exceeding guest’s expectations, so that they no longer make their holiday choice with only price in mind. This will pave the way for us to welcome families, couples and a more affluent demographic back to Magaluf.

“Meliá Hotels International expects to see Magaluf re-positioned as an upscale holiday resort that boasts cutting-edge hotels, cool beach-clubs, great restaurants and modern shops.”

Magaluf's nightlife culture came under intense scrutiny last summer when a film of an 18-year-old woman performing sex acts during a pub crawl on the Punta Ballena strip went viral.

The incident prompted Calvia’s council to introduce strict regulations for the summer just gone that governed the number and size of pub crawls in the resort, new laws against “balconing”, and implementing fines for drinking or urintating in the streets and public nudity.

Though only enforced this summer, the Mayor of Calvia, Alfonso Rodriguez,said last month that the new regulations had already had a dramatic effect in clamping down on unruly pub crawls, “balconing” and drinking in the street.

His claims are a surprise because a visitor who visited in September and found the resort’s main strip was still packed with drunken revellers.