US Hoteliers Play Waiting Game in Cuba

A case can be made that the dearth of activity by US hotel companies in Cuba is opening doors for other, non-US organizations. Spain-based Melia, for instance, now operates some 30 properties across the island; they may be looking to expand. But the real question is why any hotelier, regardless of their home flag, would bother with additional Cuban commitments without the at-hand promise of US tourists?

China, as an exception, may not care. According to the trade press, a Chinese-Cuban joint venture is developing a large hotel-apartment complex and an 18-hole golf course in the Havana suburb of Bellomonte. There may be another Chinese-Cuba deal in the works in the eastern province of Holguin. Those commitments, however, will prove to be precarious, perhaps motivated by political priorities. There are, after all, no non-stop flights from China to Cuba, representing a material hurdle to greater Chinese tourist flows. Never mind the dour growth outlook for the Chinese economy and the attendant impact on personal income.

Our take is that the opportunity for US hotel companies in Cuba is probably not being undermined by Trump administration policies. Rather, the story is merely on hold. US tourists are the best—now aspirational—source of expanding tourist revenue on the island. That source has dried up for everyone, effectively limiting all foreign investment in the hotel sector for the time being.

How fast can US hotel companies prioritize Cuba once US policies change? Presumably the major American names have a finger on the Cuban market so they can move quickly with their investment decisions. Those firms may not be able to act now, but they can certainly talk and plan. No doubt they aim to shorten the lead time required to launch branded properties in Cuba as much as possible.

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Image: Old Havana is a magnet for US tourists. Credit: Rgbspace at Can Stock Photo Inc.