MIAMI—Since it began its session on January 3, both houses of the 114th United States Congress have met on a number of issues that affect the hospitality industry—such as the 40-hour bill and the reauthorization of the Terrorism Risk Insurance Act (TRIA)—but there’s one major issue that could open up a whole new market for hoteliers: Cuba.
While Americans old enough to remember the pre-Revolutionary Cuba in the first half of the 20th century can recall a time when U.S. tourists flocked to the island—located only 90 miles off the southern tip of Florida—for most Americans, Cuba has always been a forbidden fruit. But with President Barack Obama’s announcement last month that he intended to normalize U.S. relations with Cuba—including tourism—U.S.-based hotel companies and travelers alike have wondered what this means for the future of Cuban hospitality.
Of course, what the future of relations will look like is still unclear. The embargo on trade with Cuba is still in effect, and Congress hasn’t yet decided if the ban will be lifted. Marriott CEO Arne Sorenson told the Associated Press that the company would take its cues from the U.S. government, but it looked forward to opening hotels in Cuba. Steven Zelkowitz, managing shareholder in GrayRobinson’s Miami office and co-chair of its hospitality industry group, whose firm represents hospitality companies ranging from independent owners to Marriott, noted that this seems to be the sentiment of the industry.
“We still have to wait and see how this opening up of the relationship with Cuba plays out from the government standpoint, and we’re going to have to take our cues from Washington how this is all going to work out for everybody,” he said. “There may be some obstacles but it will happen at some point, and now’s the time… There are some who are poised and ready to go, and have voiced that eagerness, and others who are more cautiously optimistic.”
Certainly, the allure of having a travel destination open up so close to the U.S. is major for those in the industry. “It’s very rare that you get the opportunity from the United States perspective to reach into an untapped market,” said Zelkowitz. “The proximity issue is huge. That’s paramount for U.S. companies. It’s 90 miles away from Miami, a very short flight or boat ride from here and other points in the U.S. as well. It’s just going to make it logistically much more attractive for hotel developers and tourists alike.”
Another opportunity for the industry is the fact that a vast majority of hotels in Cuba are not branded. (There are some Canadian and European-based chains represented in the country, such as Melia Hotels International, which offers a number of hotels, including the Tryp Habana Libre. This hotel was built in 1958 as the Habana Hilton.) However, noted Zelkowitz, this also speaks to one of the major challenges brands would face developing in Cuba—infrastructure.
“It’s an across the board infrastructure issue. For all intents and purposes, development ceased there decades ago. You have antiquated sewer systems, utility systems, roadways,” he said. “The airports and seaports would all need to be upgraded, and then of course the properties themselves. If you have an existing hotel property, do you redevelop it or tear it down and start anew? It’s probably more likely the latter, especially with today’s construction methods and techniques, since they can put up beautiful resorts relatively quickly.” Zelkowitz added that the smart move would be to have the developers aid in upgrading infrastructure like roadways and sewage systems, either financially or with labor and materials.
“This is something that would help Cuba modernize and hopefully, from a political standpoint, it’ll help their people: diplomacy through tourism,” he said. “It’s going to bring Cuba closer to the rest of us just because tourists are going there.”
—Nicole Carlino