Cuba has introduced sweeping reforms designed to boost tourism, measures that tourism stakeholders say are badly needed but unlikely to move the needle while tensions between the country and the U.S. remain high.
According to a statement from the Cuba Tourist Board in Toronto, which represents the country's Ministry of Tourism in Canada, Cuba's government last month implemented reforms that open the tourism sector to more foreign investment and private ownership. The changes greenlight hotels being 100% foreign-owned and allow private businesses to run travel agencies, tour operators and car rental agencies. Previously, the Cuban government was at least partially involved in all such projects.
Other advantages of the reforms are allowing direct supply-chain control, private hotel leasing and enabling private capital to be spent in prime tourism spots like Old Havana, according to the statement.
But even with the announcement, which tour operators lauded as a way to infuse competition and flexibility into the industry, the changes are still years away from meaningfully improving the country's struggling tourism industry, experts said.
Paolo Spadoni, a professor in the Department of Social Sciences at Augusta University in Georgia who last year wrote the book, "The Cuban Tourism Industry: Evolution, Challenges and Prospects," said the reforms point the country's tourism sector in the right direction but come at a fraught time.
"They want to change the model, which is, I think, a good thing to do, but the conditions are not there now to actually reap the benefits," he said, adding that most hotel chains have left. Melia Hotels International, for example, earlier this year terminated management and brand licensing services of 15 hotels and said that many of those hotels were already closed due to energy challenges and reduced demand.
"The likelihood that you can attract a significant amount of investment under the current conditions is low," Spadoni said.
Intense economic pressure from the Trump administration, including an energy embargo, has caused tourism to Cuba to plummet. U.S. arrivals from January to August were 9.9% of the 2019 level for the same months, Spadoni said, and operator Cuba Explorer said its last client visited in March.
The Trump administration also tightened regulations for Americans visiting the country; on Sept. 30, new rules went into effect that restrict educational and professional meetings travel.
Under the rule, tour operators can't introduce new itineraries in Cuba, but a "grandfathering" provision permits previously authorized group people-to-people educational travel to continue, said Terry Dale, president and CEO of the USTOA, which opposes the changes.
"These new regulations are counter to USTOA's core belief in freedom of travel for Americans," Dale said. "The industry will adjust how it does business under the new rules, and we will continue to clarify and comply. However, USTOA will be on the front lines of the industry advocating that the [Cuban Assets Control Regulations] be amended to re-allow group people-to-people educational travel."
In practice, the regulations will have little impact, since most operators work under the Support for the Cuban People category, said Sarah Arizaga, sales manager for Cuban Adventures.
However, even if the rules have very little actual impact, Arizaga said it makes travelers fear that visiting Cuba is illegal. And demand for Cuba is already extremely low, she said, with fewer than 40 people having booked with the operator this year.
Cultural Cuba, a tour operator there, said the changes allow room for innovation among Cubans. Photo Credit: Cultural Cuba
Optimism among operators
Despite the current challenges, tour operators are encouraged by the prospect of private capital investment in Cuba, even welcoming the competition, which they say could infuse modernization and novelty into the sector.
Cuban Adventures' Arizaga said the country has "enormous potential" for foreign involvement in hotels, attractions and tour operators. The introduction of private business to a destination whose tourism sector has largely been state-controlled could mean stronger infrastructure, increased innovation and higher-quality service, she said.
Arizaga is hopeful that the changes could eventually restore Cuba's tourism to what it was during its zenith in 2016 and 2017.
"Operating a legal tourism business in Cuba has been challenging, but these reforms give us hope that the Cuban government will shift to a more business-friendly approach while still protecting its citizens and natural resources from exploitation," she said.
The reforms have been desperately needed for years, Spadoni said, adding that the state-controlled model showed exhaustion even before the pandemic and has only languished since.
David Lee, owner and founder of Cultural Cuba, said the changes would also allow room for innovation among Cubans "to build businesses around what they know and do best: as guides, hosts, restaurateurs and cultural entrepreneurs."
But optimism has been tempered by the ongoing sanctions and questions about how thoughtfully the changes will be implemented.
"The opening is significant, but implementation will determine its success," Lee said. "Businesses need workable licensing, banking and operating arrangements. And for Americans, permission from Cuba does not override U.S. sanctions.
"We see a promising new direction, not an overnight transformation."