European hoteliers may not bemoan US Cuba policy
European hoteliers may not bemoan US Cuba policy
10 JUNE 2019 7:27 AM

The floodgates were open for less than three years, allowing U.S. hotel companies to get a foot in the door of Cuba’s rich culture, paradisiacal beaches and sense of otherworldliness, but the gap seems to be filled in as the Trump administration gets tough. European hoteliers might not be too worried.

Remember the fanfare that followed former President Barack Obama’s announcement that travel and economic barriers between the United States and Cuba would be no more, or at least dramatically eased?

The major American hotel companies certainly do, as pretty much one day later they all sent their finest executives over to Havana to start signing hotels in ornate Colonial buildings, buoyant with notions of guests eager to discover what to most Americans is a mythical destination.

I wondered if the speed of U.S. development caught European hoteliers by surprise.

European hotel companies have been in Cuba for decades, especially Spain-based Barceló, H10, Meliá and Iberostar. Other firms such as Accor and Kempinski are there, too, with their European guests often starved of sun for much of the year in their home countries.

Donald Trump’s administration has rolled back Obama’s decisions, arguing that tourism dollars directly fund Cuba’s intelligence, military and security industries.

Indeed, it has increased them. The old rule about allowing “group people-to-people educational” visits also is barred under the new legislation, although I think that policy also originated with the Obama government.

The Trump government has been chiseling away at the “new” Cuban rules for the last couple of years, so perhaps little of what happened this week came as a surprise to hoteliers.

The U.S. government’s “List of restricted entities and subentities associated with Cuba,” last updated on 15 November of last year, includes 99 hotels and two hotel groups—Compañía Turística Habaguanex and Grupo de Turismo Gaviota.

It is Cuban law that Cuba must own 51% of any hotel. Hotel companies must enter joint ventures, and it appears that Gaviota is the Cuban government entity that is charged with negotiations with foreign interest.

So hotels such as Accor’s SO/Havana Paseo del Prado, 51% owned by Gaviota, and Meliá Peninsula Varadero, obviously also 51% owned by Gaviota, are off-limits to U.S. travelers and anyone who returns a U.S. tax return regardless of where they dwell.

This will not worry European hoteliers.

From what I understand, the branded hotels on the Caribbean island are enclaves for their respected nationals.

Italian friends of mine talk of the beaches of Cuba’s Cayo Largo, where seemingly the hotels cater almost exclusively to Italians and locals are more likely to speak the language of Rome than their own.

Do not expect European hotel companies to pull back on development in Cuba. Maybe there will be a new race as they look to get further scale where perhaps they were waiting to see what the Trump administration would do, and what the industry’s big boys and girls such as Marriott International and Hilton would do, free as they were for a little while to develop in paradise.

Although it might not remain paradise for many of the hotel workers there and the rest of the labor force.

We know the arguments. Have an economic and travel presence there and be part of the dialogue for change, or be outside and have no say.

Are you listening Brexit politicians back here in the United Kingdom?

What is happening to those hotels in Cuba where U.S. firms did get involved after Obama’s decision three years ago?

The first U.S. joint venture announced was a Four Points by Sheraton, signed in June 2016.

I think it is highly likely that U.S. investment still is not huge in Cuba if only because of the fears that investment and profit cannot easily (if at all) be exited, and the knowledge that the lay of the land of Cuban law can change on a whim.

The increased airlift generated after the Obama decision might also be curtailed, if it has not already.

Still it remains the fact that it is normal people get the rum deal, although perhaps they are too busy being hospitable to Europeans to worry.

This all just feels to me the politics of the 19th century.

The world is so much smaller in the 21st, and talking to your neighbors—who are much closer in so many ways today—just appears to me to the more sensible tactic, although such a policy line might be too simplistic for our politicians.

A cynic also might add that Florida remains a marginal state.

Email Terence Baker or find him on Twitter.

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