cuba man cigar

There is an Emerging Coolness in Cuba’s Travel Industry

Last month, Gaviota’s 5th Avenue Hotel re-branded to operate under a new US brand, Four Points by Sheraton.

Gaviota – an arm of the Cuban government/military – and the company behind the brand, Starwood Hotels & Resorts Worldwide, signed an agreement in March to operate two hotels in Cuba. The 5th Avenue Hotel is the first of the two and also the first US hotel to operate in Cuba since the 1959 revolution.

Several weeks later, Startup Weekend Havana announced that Cuba’s premier entrepreneurial/tech event will be held at the hotel. Is Cuba’s coolness starting to emerge?

An impressive lineup of celebrities visiting Cuba is calling attention to the uniqueness of the island nation’s qualities.

Gaviota Cuba
Source: Gaviota SA

The communist island nation is struggling with the decline and expected loss of much of the benefits it has received from its economic and ideological relationship with Venezuela. 25 years ago, Cuba almost collapsed when the Soviet Union folded and withdrew all its economic support.

Today, relations are normalizing with the US, and Cuba is taking steps to repair its relationship with its bilateral lenders. Tourism accounts for about 10% of GDP and is a vital source of foreign exchange. Gaviota S.A., led by General Luis Perez Rospide for the Cuban military, is emerging as the most important entity driving growth in the tourism sector.

Cuba’s central planners are undoubtedly looking at the Dominican Republic’s (DR) economy for a roadmap as to the potential for tourism to be a key driver of growth and a lever to transition the economy away from being dominated by the state. The DR enjoys the top spot for tourism in the Caribbean with 5.14 million arrivals in 2014, a 9.6% growth in arrivals from the prior year.

Hotel Saratoga Havana Boutique Hotel
Front Desk, Hotel Saratoga, Havana, Cuba

What’s more compelling is the dynamic link between the DR’s growth in tourists arrivals and GDP growth – a feature that is presently absent in Cuba’s economy.   According to Smith Travel Research, the DR logged 2014 occupancy of 71% for reporting hotels, up 0.56% from the prior year. The reported ADR was $124 (up 10.76%), leading to RevPar of $88.31 (up 11.63%).   The bottom line for the DR economy was 7.5% top line growth in 2014, driven mostly by the hospitality and tourism industry.

Cuba’s communist, single-party government retains almost complete control over the economy. Foreign investors must joint venture with a state-owned entities in order to do business in country. Gaviota has been the partner for most of the country biggest foreign join venture projects involving Meliá Hotels International, Kempinski, Iberostar, Riu, Blau, H10, Blue Diamond, Hotusa and Pestana.

Here is a Cuba Journal interview with the designer of Havana’s finest boutique hotel, Hotel Saratoga.

Gaviota operates numerous businesses in various verticals of the tourism sector including hotels, resorts, marinas, tours, car rentals and travel agencies.gaviota cuba

At its 27th anniversary celebration last year, Gaviota announced more 55 hotels in operation, more than 24,000 rooms, sales greater than $650 million and 24,376 workers.

According to state television reports, Gaviota has plans to nearly double its number of hotel rooms to 50,000 by 2020.

Here is Cuba’s Q1 2016 Hotel Pipeline

There is an Emerging Coolness in Cuba’s Travel Industry was last modified: August 18th, 2016 by Simons Chase