Cuba’s Leaders See Hotel Expansion Boosting the Economy

By El Toque

Photo: Alejandro Basulto

HAVANA TIMES – Cuba has decided to place its bets on the tourism sector as the “driver of the economy” and plans to double the number of hotels on the island and reach over 155,000 rooms in a decade. It involves an estimated 17.6 billion USD investment, 66% of which will come from government/military capital.

Cuba’s hotel wager is a special multimedia piece which was developed over six months to map Cuba’s hotel sector, identify the key players in this area and describe how the building process in Cuba works, where they have great hopes for growth.

In 30 years, tourism has become the second most important economic activity on the island, and the fastest growing. The government has placed its bets on transforming Cuba into a grand hotel in the future, for whoever can pay the price that is.

Returning to Luxury

Up until October 2019, our team had counted 381 hotels in Cuba with over 72,000 rooms, almost four times what was available when in the early ‘90s Cuba decided to place its bets on tourism to become the savior of the national economy.

The hotel business is shared among four chains: Islazul, Cubanacán, Gran Caribe and Gaviota. The latter, part of a huge military consortium, is the most powerful and the only one outside the Ministry of Tourism’s jurisdiction.

However, Cuban operators haven’t positioned themselves on the global market as heavyweights because they need more than beautiful landscapes in order to do this. Since May 10, 1990, when the first hotel management contract was signed, the number of hotels run by foreign management has only grown. Today, there are 19 foreign companies running 119 hotels nationwide, most of which are between 4 and 5 stars, as well as the 6 luxury hotels.

The hotel business

Furthermore, the Cuban government dreams about completing over 290 building projects by 2030. This building progress is headed by Gaviota, which belongs to the Armed Forces Business Enterprises Group (GAESA). The largest hotel operator in Cuba, it has 31,907 rooms and if it meets its targets for 2030, this number will increase to 92,000. That’s more than the rooms that exist in the Dominican Republic or Puerto Rico, today.

The GAESA’s plan, will cost nearly 11.8 billion USD which will be paid with Cuban cash, because they don’t accept, nor need, foreign funding. The other national companies do depend on foreign investment. Something which hasn’t been attained at the pace they had hoped in recent years.

GAESA’s scheme to build hotels

If we bear in mind the fact that the number of tourists visiting the island has increased every year, the occupancy rate of hotels didn’t exceed 50% in 2018; the US government’s restrictive measures have affected this market (our ideal market) quite significantly; in May 2019, there were 7000 rooms out of use, the same number of all the rooms in Pinar del Rio, Cienfuegos, Santiago de Cuba, Camaguey and Cayo Largo, put together; and there is great competition within the region: Riviera Maya, Punta Cana, Cancun.

Some questions remain unanswered: Will this have all been a wise bet? Who are they building for?

We invite you to take a look at the three reports, two interactive components and a video that was created with the results of this investigation that analyzes the Cuban government’s wager for a luxury future for its hotels, the participation of Cuban and foreign companies in hotel management nationwide and the building process of new hotels. Plus, the interactive components offer us more detailed results about the number of active hotels on the island, their star rating and who manages them, as well as a detailed list about the building projects expressed in the Ministry of Tourism’s 2018-2030 Development Plan.

 



6 thoughts on “Cuba’s Leaders See Hotel Expansion Boosting the Economy

  • Cuba’s continued success in the tourism sector needs to continue in order to enhance its national revenues. What other options does it have? One obstacle the Cuban government needs to concern itself seriously with is climate change. Climate change is only going to get worse in the future. We have seen the destruction it has caused in the Caribbean this past summer in the Bahamas and other devastating cyclones preceding this past year. Puerto Rico another example. Cuba is an island surrounded by ever warming ocean waters that eat away at coastlines. The Cuban authorities need to plan way ahead into the future because the initial outlay to build hotels is expensive and the revenue returns are not realized until way into the future when climate change will be dramatic and most pronounced.

    The situation regarding the United States and its devastating policies towards Cuba, i.e. cancellation of American airlines from flying to Cuba with American tourists is only temporary. Governments come and go and the Cuban government probably sees the present negative situation as temporary. Canada sends literally millions of tourists to the island on an annual basis and this is not going to stop whatever the U.S. government dictates. Europe, China likewise sends a plethora of tourists to Cuba and this trajectory will only continue. So, yes, Cuba needs to continue its foray in attracting foreign tourists to the island to ensure economic success, but with caution.

    Reply
  • Canada does not send millions to Cuba on an annual basis Stephen.
    In 2017 1.1 million Canadian tourists visited the island.
    In 2018, 49,781 Chinese tourists traveled to Cuba according to official data. No plethora there.

    No need for fake news.

    Reply
    • Brad,

      “TORONTO — Cuba welcomed more than 1.1 million Canadian visitors in 2017, marking the seventh year in a row that Cuba has topped the 1 million mark from Canada, says the Cuba Tourist Board.

      Last year was Cuba’s most successful year to date, with 4.7 million foreign visitors arriving on the island in 2017, a 16.2% increase year over year.”

      Absolutely no need for fake news here. The truthful facts speak for themselves.

      Reply
  • We have been going to Cuba for over 20 years now. They are building new hotels, so why can they not get parts, to repair existing hotels. Our bodies are getting older and falling apart, and so are the existing hotels. We visit Playa Costa Verde, and love the staff and local population, but it is badly in need of repair. Last year, so many things were broken, with no parts to repair. The buildings are essentially well built, and quite soundproof, so keeping them repaired, is a lot cheaper than building new ones.

    Reply
  • Cuba needs to maintain the hotels already there before building large numbers of new rooms. Cuba needs to promote production of more of it’s own basic foodstuffs. The Cuban government is making many bad moves. To build more than another 10,000 rooms per year would not be smart. More than that the money would better spent on basic food production and processing. Conversation of some the power generation to natural gas in ares of Cuba near the gas reserves and up grading the nitrogen production plant on the island. To build a free trade zone for manufacturing and food processing. People do not trust the government of Cuba at this point in time. Cuba has relied on foreign gifts.

    Reply
  • The Carrot Held In Front of the Donkey,s as The Masters ride the Backs of The People. A pipe Dream to lift the Hopes of the Next Generation. Fool them Once & Fool them for another 60. Cubans Today Have there Own Direction,s of a Future They are Now Creating, No More Forced Skilled Trades is there Talk, Communist Controls was a Fling of The Past that has Died & Now The Stanch is Having Dirt Shoveled Over It. Hotels Don,t Feed The People, They Only Control The People.

    Reply

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