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U.S. financial crisis hammers Caribbean as Cuba tourism industry reaps bonanza
CubaNews / February 2009

By Larry Luxner

In 2008, three killer hurricanes ravaged Cuba in the space of two months. Prices for nickel, the island’s top export, have fallen drastically, while the cost of food imports has skyrocketed.

And the U.S. embargo continues to squeeze the communist regime in Havana, which marked its 50th year in power on Jan. 1, 2009, as President Raúl Castro warned of hard times ahead.

But one thing Cuba doesn’t have to worry about is tourism. Last year, revenue from tourist expenditures came to $2.7 billion — a 13.5% jump from the year before. A record 2.35 million tourists visited Cuba in 2008, up 9.3% from 2007.

One reason Cuba’s doing so well is that its largest source of tourism isn’t the United States but Canada, where the financial crunch hasn’t had much impact yet. Last year, 800,000 Canadians visited Cuba; other big sources of tourism to Cuba are Britain, Italy, Spain and Germany.

In addition, the Russians are beginning to discover Cuba. Last year, the country received more than 40,000 visitors from Russia, up 39% from 2007, according to Carlos Oscar Hernández, the regime’s top tourism rep in Moscow.

“Cuba is in a very, very dire economic situation right now,” said Antonio Zamora, a Miami lawyer who visits Cuba frequently in his capacity as director of the U.S.-Cuba Legal Forum. “They need some sort of boost, and tourism is one place where it’s going to come from.”

According to David Adams, a correspondent for the St. Petersburg Times,“Cuba’s tourism boom is all the more surprising given the impact of the global economic crisis on travel to other Caribbean destinations. That can be partly attributed to the island’s relatively cheap, all-inclusive packages — as low as $550 a week, airfare included.”

Among those interviewed by Adams was a Canadian couple from Saskatchewan who paid $1,078 total for their all-inclusive vacation at the five-star Marina Palace Hotel in Varadero.

Tourism could do even better if President Obama makes good on his campaign promise to relax travel restrictions for Cuban-American exiles hoping to visit their families in Cuba.

In 2007, only 40,500 Americans visited the island — a number that could easily double if and when Obama reverses the onerous restrictions placed on exiles in 2004 by the Bush administration.

“Our philosophy is not to be surprised if it happens, but not to wait for it to happen in order to continue building new hotels,” said Miguel Figueras, a senior Cuban Tourism Ministry adviser.

Cuba recently announced joint ventures with Spain’s Grupo Sol Meliá and other foreign companies that would add 30 new hotels containing 10,000 new rooms, a 20% increase.

And that scares more than a few people in Puerto Rico, who say their island’s tourism sector will be the first to suffer once the U.S. ban against travel to Cuba is lifted for all Americans — not just exiles and their families.

“When we look at the numbers, we know that Cuba and the Dominican Republic tend to attract a specific type of cost-conscious tourist,” said Sandro Murtas, director of the International Trade Center, which is co-sponsored by the U.S. Small Business Association and the Inter-American University of Puerto Rico.

“Both countries are investing in upgrading and creating hotel infrastructure that appeals to more affluent tourists. That’s Puerto Rico’s target market. So if Cuba enters that area, we might have some difficulties.”

In January, CubaNews quoted Puerto Rico Secretary of State Kenneth McClintock as saying that “in tourism, the Cubans have some competitive advantages in terms of lower costs, but we have four- and five-star tourism. That requires a high degree of training and sophistication which has yet to develop in Cuba.” He also said that Puerto Rico has a much better infrastructure for handling cruise ships — and a big geographical advantage.

“In Cuba, you can only do a three-day cruise where you hit a different port every day. If you want to go from Havana to Jamaica to Mexico, you have to spend a day at sea,” he said. “But with Puerto Rico, you can fly into San Juan and take a seven-day cruise with seven ports, or a 4-day cruise with 14 ports — and see a different island every day.”

Meanwhile, Jamaica has signed a memo of understanding with Cuba that provides for joint destination marketing and airlift arrangements between the two islands.

Jamaican Tourism Minister Edmund Bartlett said the accord evolved out of negotiations begun during Prime Minister Bruce Golding’s trip to Cuba in September 2008. He said the deal will facilitate the “marrying” of both countries as destinations of choice for visitors.

“Perhaps 60% of Cuban traffic is out of Europe. For example, about 100,000 Italians go to Cuba every year,” he said. “The Euro-peans have the luxury of vacation time; they get three weeks or more, and could spend some of that time in both Cuba and Jamaica.”

That also appears to be the sentiment in the Dominican Republic, one of the Caribbean’s leading tourist destinations.

“We’re hoping that as Cuba opens up to the U.S. market, we can increase opportunities for multi-destination tourism,” said Eddy Martínez, the Dominican Republic’s secretary of state for investment and ex-ports, and executive director of the Center for Exports and Investment.

“There’s a lot of infrastructure [in Cuba], but I don’t think it’s going to happen overnight,” Martínez said in a phone interview from Santo Domingo. “For one thing, we’ve been competing with Cuba in the European and Canadian all-inclusive markets for years, and it hasn’t really affected the Dominican Republic. With Cuba, there might be a curiosity factor, but we’re confident we can work together to attract visitors — like Chinese and Japanese — who aren’t coming to the region at all.”

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