Will Cuba’s gain cause the region pain

One of the Caribbean tourism industry’s greatestconcerns may be about to materialise: US citizens being allowed to travel toCuba on an individual basis.

At present it is only possible for most USpassport holders to visit Cuba for one of twelve specified purposes through atour operator holding a general licence. However, a new approach beingconsidered by the Obama administration, when taken with two other developments,could all but free US travel to Cuba by the end of this year.

Ever since a closed meeting took place at the White Houseon July 22, at which Cuban Americans, academics, lawyers, and business leaderswho support President Obama’s policy of engagement were present, it has beenclear that the US administration was preparing to easethe procedures that restrict individual travel to Cuba.

More recently, however, US officialshave confirmed that the President is considering an executive order that wouldallow US citizens to book tickets for travel to Cuba by simply attesting on-lineor at an airport, as they buy a ticket, to their compliance with the USTreasury rules on travel to Cuba.

This development coincides with separatenegotiations between the US Federal Aviation Administration and their Cuban counterpartsto develop a new bilateral air services agreement. This is expected to the leadto the resumption of scheduled commercial flights by major US and Cuban carriers,possibly as early as the end of this year.

In addition, in a related development,the US Treasury is considering how to remove remaining impediments to the useof US credit cards in Cuba so as to overcome US banks legal and practical cautionabout acting on previous permissions. Such regulatory changes will also facilitatethe establishment of correspondent banking arrangements in Cuba.

There is also some suggestion that thenew policy may also be extended to licensing individual travel on ferries andcruise ships sailing to Cuba.

Although the US government’s intention isthat people-to-people contact will bring about a change in thinking and attitudesin Cuba, the most likely immediate practical outcome will likely be something justshort of the full liberalisation of all US travel to Cuba.

While the Cuban Government still has to finalisethe arrangements for scheduled flights and cruise ship calls, it is clear thatit will have an interest in agreeing measures that see hotel occupancy andyield increase as pressure grows on the relatively limited number of hotelrooms in Havana and popular destinations. There is also a view that Increased USvisitor arrivals will stimulate investment in the hotel sector by foreigncompanies, and may eventually lead cruise ship companies to consider home portingin Cuba.

Separately, Cuban officials have indicatedthat in order to meet increasing demand government intends encouraging the inclusion of thenon-State sector within its tourism marketing programmes, will promote sailboats arrivals to make use of its newly completedmarinas, and has plans to rapidly diversify and decentralise its tourismproduct.

All of which suggests that from thelatter part of this year on, the Bahamas, Puerto Rico, Jamaica, Cayman, Cancunand the Dominican Republic may begin to feel the impact, and if US cruise visitorregulations are eased, the region may later see ships calls reduced elsewhere.

As the official statistics show, Cubahas already become a hot destination for US citizens. According to Cuban reports, the number of USvisitors there increased by 36 per cent in the first five months of 2015; afigure that excludes the surging numbers of Cuban Americans whom Cuba counts asreturning nationals. More generally Cuba has already become, according to the Caribbean Tourism Organization,the second most popular tourism destination in the region after the DominicanRepublic, with the arrivals gap between the two narrowing.

Cubaitself also believes that that it will become a strong competitor if the USmarket fully opens and that the country most at risk in the region is PuertoRico.

The conundrum now for the rest of theregion is how best to respond in the short and medium term.

At its most obvious this involvesNorthern Caribbean nations actively pursuing with tour operators two centreholidays; finding ways to develop or significantly improve air services betweenHavana and Santiago de Cuba, with Montego Bay, Nassau, Grand Cayman and PuertoPlata; encouraging cross-destination investmentand branding by regional and international hotel groups; and promoting jointventures for the supply of Caribbean goods and services by exploring demandwith the key buying agencies for the big Cuban hotel groups.

It also involves placingmuch greater emphasis in each country on service, quality, cuisine and trainingso as to ensure that the experience in the rest of the region remains one stepahead of Cuba’s largely mid to low-end and weak repeat-business offering, aswell as in continuing to diversify visitor feeder markets as rapidly aspossible.

In the longer term, however, moreattention should be paid to the thought provoking suggestions contained in the recentstrategic paper produced by the Caribbean Hotels and Tourism Association: ‘Cuba:the great disruption for the good of the Caribbean’. This notes that Cuba is using tourism as adevelopment and diversification tool to deliver nearly US$3 billion per annumin future new business from visitor expenditure, and asks how much of this willbe at the rest of the regions expense.

The report, which warrants wider attention,welcomes Cuba as an integral part of the Caribbean and argues for collaborationin every aspect of tourism. It also calls for governments to embrace a newtourism development agenda involving high level discussions with the Cubanauthorities and industry and the creation of a ‘US Caribbean Basin TourismInitiative’ that supports development through tourism of a ‘economicallyviable, safe and stable Caribbean’.

Next year Cuba may have a specialvisitor: PresidentObama. The White House has made clear that subject to certain conditions the USPresident is giving consideration to such a visit. If he does, the signal to US citizens to visitwill be powerful and may start an unstoppable process that results in the restructuringof more than just the Caribbean tourism economy.

David Jessop is a consultant to theCaribbean Council and can be contacted at

david.jessop@caribbean-council.org

Previous columns can be found at www.caribbean-council.org