Cuba’s plans call for aggressive hotel expansion
 
Cuba’s plans call for aggressive hotel expansion
18 OCTOBER 2016 7:39 AM

The country has a goal to grow its hotel footprint by more than 4,000 rooms per year to meet increasing demand by international tourists. 

GUAYAQUIL, Ecuador—Since efforts began last year to open up diplomatic relations between the United States and Cuba, the rush for U.S.-based companies to gain a hotel foothold in the country has been fierce. At the recent South American Hotel Investment Conference, the vice minister of tourism for Cuba shared some of the latest business opportunities for hospitality companies around the world.

Vice Minister of Tourism Luis Miguel Díaz Sánchez put the republic’s growing tourism demand into context, sharing that in the last year, international visitors to Cuba grew by 500,000 people. Officials expect that number to grow by an additional million over the next two years.

The main feeder markets for tourists right now are Canada, with close to a million visitors per year, followed by Germany, the U.S., France and the United Kingdom.

Díaz Sánchez said “it’s no secret” that the number of tourists coming from the U.S. to Cuba will continue to grow.

“Tourism is increasing from last year by 17% already, but occupancy doesn’t exceed our supply,” he said. “Occupancy is still about 62% of our capacity, and it’s still seasonal. … So it’s a reality, but we are not concerned about it yet.”

To meet that growing demand, the country has set goals for hotel capacity growth, the vice minister said.

“This year we need to start 4,500 hotel rooms,” he said. “That’s our plan for each year—no less than 4,500 rooms per year. We have connected through international airports to more than 60 cities (around the world). Several new U.S. airlines will be (adding) Cuban flights.”

He said the government continues to field increasing requests for contracts for new hotel construction and renovations, many from international brand companies.

“It’s golf courses, theme parks and water parks, as well,” he said. “Between 2016 and 2030, we will be building (more than) 224 hotels.”

Hotel priorities in Cuba
A big part of the hotel growth is tied to tourism goals, which the Cuban government has prioritized, Díaz Sánchez said.

“First of all, we want to raise the quality of our tourism supply,” he said. “If we don’t have better quality and relationships between price and quality, we can’t be competitive. We want to form better products, incorporating companies with international prestige. (We want to) improve commercialization and take advantage of the bounty of our islands and beauty of our places. We’d like to optimize cultural tourism, health tourism, nature tourism.”

With the 2030 mark of 224 new hotels in mind, the government has identified some main tourism markets and tagged them for development. Those markets include cities like Havana, as well as regions that may offer ecotourism and health tourism, for example.

Inside the Four Points Havana deal
While other international hotel brands (like Spain’s Melia Hotels International and Riu Hotels & Resorts) have established a presence in Cuba, U.S.-based companies are still new to the game.

Díaz Sánchez said Cuban officials are in talks with many U.S. hotel companies.

The negotiations process is often different, since the Cuban government controls and owns many aspects of the investment and building processes that involve hotels. For the Four Seasons Havana, which opened in July, then-franchisor Starwood Hotels & Resorts Worldwide worked with Cuban partner Gaviota Hotel Group, which is owned in large part by the Cuban military. The Four Points was converted from the former Hotel Quinta Avenida in Havana’s Miramar neighborhood.

Raniel Leyva Medina, VP of business development for Gaviota Hotel Group, said at SAHIC that the process to convert the property happened fast. “We negotiated the management contract in December of last year, and while that was going on, we were (dealing with) permits and licenses …. In March, we were able to sign the final management contract,” he said.

“It never crossed our minds last year that we would have a contract signed with a (U.S.) company,” Medina added. “I had the opportunity with my team to negotiate said contract, which was similar to any other hotel management contract. I was director of that 180-room hotel, and we have agreed on a schedule for bringing the hotel to the standards of the brand. Now it’s part of Marriott, and we’re already in conversations with them, and I’m sure they want to continue with us there, but we need to recognize Starwood’s work. They were the pioneers of that project.”

In May 2017, SAHIC will host its inaugural hotel investment conference, SAHIC Cuba, in Havana.

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