Severe Crisis in Cuba Doesn’t Stop Tourism Investment
By Francisco Acevedo
HAVANA TIMES – Life in Cuba is becoming more complicated, but according to the most recent data from the National Office of Statistics and Information (ONEI), of the investment made in Cuba from January and September 2024, 10.4% of the national budget was allocated to hotels and restaurants, higher than the 7.2% in 2023 during the same period.
It also doesn’t seem to matter much that Cuba ended 2024 with fewer foreign visitors; in this battle to earn dollars, no resources are spared, even though tourist facilities are almost always below their occupancy capacity.
The 2.2 million international visitors received in 2024 represented the worst figure since 2007, and 10% fewer than the 2023 numbers, which were already low due to the impact of the COVID-19 pandemic, although the rest of the world had fully recovered by 2024.
Of the main countries sending tourists to Cuba, only Mexico and Russia showed modest increases, with Canada still being the leading source of visitors, despite a decrease compared to previous years.
The shortage of dining options, the uneven relationship between quality and price, the energy crisis, the lack of fuel, and the US economic sanctions against Cuba were other key factors that weakened the performance of the tourist industry one of the dictatorship’s main sources of hard currency.
Cuba’s recent return to the US list of State Sponsors of Terrorism, decreed by Donald Trump as soon as he set foot in the White House, affects European Union citizens and others like Japan, as they lose the privilege of the tourism visa exemption to the United States through the ESTA program if they set foot in Cuban territory.
According to the official report released by the island’s authorities in their annual report on the impacts of the embargo, over $5 billion were lost between March 2023 and February 2024.
After six years of construction, earlier this month, the five-star Iberostar Selection La Habana Hotel was inaugurated, with 42 floors and 565 rooms, making it the tallest building in Cuba, although it is not noticeable because several floors are below street level.
The Almest Real Estate Company, part of the Ministry of the Revolutionary Armed Forces (Minfar), was in charge of the project, which, according to specialists, cost around $60 million, although this has not been officially made public.
Popularly known as the K Tower, due to the street where it is located, it is the most modern in the capital, although its potential profitability remains to be seen, while nearby establishments such as the Habana Libre and the Hotel Nacional continue to operate with low occupancy levels.
Everything seems to be heading towards a reconversion to luxury tourism, taking into account the recent five-star and even higher category hotels that have been inaugurated in recent years.
For 2025, it was also reported that 2.8% of the investment budget will be allocated to restore rooms in 25 hotels, while 5.1% will go to 19 hotels of the Gaviota tourism company, also under military control.
In this context, the resumption of US sanctions complicates the possibility of alleviating Cuba’s profound economic and social crisis.
The closure last week of Western Union transfers is another step in this policy aimed at preventing the strengthening of state funds.
The company announced that users with pending payments will receive a refund, although no details have been provided about future options or plans to resume service to the island.
The decision had been expected after Orbit SA was added to the US Department of State’s Restricted Entities List, as that was the channel used to facilitate operations.
In this way, Western Union will close a brief chapter of only nine months since it resumed its money transfer service to Cuba in May of the previous year, after halting it in 2020 during Trump’s first administration.
Although the service was restored two years later with limitations, it was once again cut due to “technical problems,” according to the official statement.
As this has become a recurring situation, Cuban families have turned to alternative routes, such as indirect channels from Europe and other places, through around 150 informal banks or sending currency through travelers. However, this last option is also expected to decline in the near future due to measures from the new US administration.
Families, especially in the United States, had recently boycotted the “official” channels (like via Orbit) because they know that Cuban authorities disguise their presence through third parties to control those funds as they please, without considering the population’s main priorities, such as tourism.
While the embargo serves as a perfect excuse for corruption, bureaucracy, and enrichment oat the top, the strategy for the budget’s destination—especially in tourism—is questionable, while national industries continue to require more investment to modernize, increase production and services, and ultimately lower food prices, which is what most affects the Cuban population.
For the moment, all initiatives like digitalizing payment mechanisms, Monetary Reform, or the Single Investment Window continue to fail, and it remains to be seen whether partial Dollarization will resolve anything, as it is still just beginning, and it will take time to have a clear opinion on this matter.
Joe and John, first off, I want to thank you both for your comments. I appreciate the candid perspectives and the depth of experience you bring to this discussion.
From what my friends who have visited Havana(and other areas) recently, and those who live in and around the city, have told me, the situation is indeed worse than ever. While it has always been the case that many women in Havana viewed foreigners as economic resources, today, it has reached an alarming level. Men, especially foreign men, are no longer just seen as opportunities but as prey. Women compete fiercely for those with money in their pockets, to the point of physically accosting one another. It’s a desperate struggle for survival, and many foreign men have fallen into the trap, handing out cash only to discover they are just one of several men financing the same woman’s lifestyle.
A tragic part of the hardship in Cuba is that people lack even the most basic necessities, including toiletries, which has led to deteriorating hygiene standards. But if we are to judge them too harshly without acknowledging the dire conditions they face, we risk becoming heartless bastards ourselves. The suffering isn’t exclusive to women and the lengths they go to in order to feed themselves and their children – it’s visible in the rising crime rates, mostly perpetrated by men, and in the growing apathy and loss of empathy across Cuban society. I hear it reflected in the words of my Cuban friends: there is exhaustion, hopelessness, and a resignation to a broken system.
And yet, what I find most shocking is that there are still people who stand firm with socialism. They’ve been indoctrinated by the regime to believe that their misery is solely due to American sanctions, as if lifting the embargo would suddenly turn Cuba into a paradise. They refuse to look beyond their narrow ideological box to see the reality: socialist countries, even within Latin America, fail time and time again, while those that have embraced free-market capitalism are on the rise. The unfortunate truth is that decades of Castroist indoctrination have robbed many Cubans of the ability to critically assess their own condition.
John, I’m truly sorry to hear about your troubles, both your failed marriages and the time you spent in prison. That’s a hard road to walk, and I can only imagine the lessons you’ve taken from it. But if there’s any silver lining, perhaps it’s that you now see things more clearly than ever before.
When we look at Cuba today, we have to ask: what values, morals, and ethics still define its people? This was once a prosperous nation, full of talent, pride, and potential. While there are still diamonds amongst the rough, now, it is largely a beaten-down population, struggling under the weight of socialist oppression. It’s a painful reality, but one that must be acknowledged. Not acknowledging it risks being accomplices to the destruction of the people and the country.
Thank you for the article.
James: I really loved your thorough answers. You hit the nail on the best every time with lots of detail.
Once been going to Cuba for about 35 years. I was married 3 times in Cuba. I even did 4 years in prison in Cuba so I am quite familiar with all aspects of Cuba. Leaving my last marriage hurt. I came to the conclusion that I will not ever understand their culture from a relationship/male position perspective and decided a couple of years ago, almost 3, that I will never go back.
It has turned into a shit hole , especially since COVID.
The morals and ethics that were instilled in me by my parents are a big part of the Canadian culture. These characteristics are very weak and temporary at best with the Cuban people. The socialist system causes people to lie, cheat, steal and lack faithfulness and loyalty. How could they not. They couldn’t possibly survive under their socialist system without lying, cheating, stealing and filing around.
I wish them well but I’m tired of the misery in disguise
Excellent article and comments… James the first commenter hit the nail on the head!
Don: Thank you for sharing your thoughts and for what seems to be a genuine support of Cuba; a country that indeed needs all the help it can get. Your passion for the island is evident, and I appreciate your perspective. However, while your admiration for Cuba is commendable, your assessment does not fully reflect the dire reality on the ground.
I have personal friends who live in Cuba, and they have confided in me that the current situation is the worst the country has ever endured. These friends work in the tourism sector, one of the few industries where people can receive extra income through tips from foreign visitors. Yet, despite this advantage, they tell me that they are in “survival mode.” If even those with access to hard currency are struggling, imagine the plight of the average Cuban citizen. There are no real successes – at least not for the people who live there. Romanticizing Cuba’s struggles without acknowledging the true extent of its suffering does not do justice to the Cuban people, who deserve better than mere optimism detached from reality.
You place significant blame on the U.S. embargo, yet this argument is incomplete. Many foreign companies and countries still operate in Cuba, such as the Spanish hotel chains that continue to run major tourist accommodations. These businesses are not subject to U.S. sanctions for their involvement in Cuba, proving that economic activity is possible despite the embargo. Canadians are the single highest vacation source for Cuba but neither the citizens nor the country is sanctioned. The notion that the embargo alone is the root cause of Cuba’s economic failures ignores the inefficiencies and corruption that plague the Cuban government itself. The system under which Cuba operates is one that fundamentally stifles economic growth and development; not because of external pressures, but because of its rigid adherence to an economic model that has demonstrably failed worldwide.
You mention China’s funding of 92 solar farms as a solution to Cuba’s energy crisis and then argue that further international financing is difficult due to American intervention. But if that were the case, how did those 92 solar farms get funded in the first place? The truth is, China financed them as you state. What prevents further investment is not American intervention but Cuba’s lack of economic viability. China, like any rational lender, expects some form of return on its investments. Cuba simply does not have the capacity to repay debts or offer valuable resources in exchange. The only commonality between Cuba and China is ideological, yet even China has embraced a blend of capitalism to drive its own economic success. Cuba, on the other hand, remains trapped in an obsolete system that refuses to adapt.
Furthermore, solar power is not the ideal solution for Cuba’s energy needs. Cuba requires a consistent, reliable power source to sustain industrial growth, not an intermittent one that depends on favorable weather conditions. If Cuba hopes to develop a strong industrial base, it needs dependable energy sources like natural gas, oil, or coal. The goal should not be mere survival; it should be prosperity. A nation cannot build a thriving economy on the back of unreliable power.
You rightly point out that food self-sufficiency should be a primary goal, but let’s not forget that pre-Castro Cuba was entirely self-sufficient and even exported surplus agricultural products, such as sugar, to international markets. Today, Cuba imports sugar – a tragic irony for a nation that was once among the wealthiest in the Americas. What changed? The answer is socialism. The rigid, centrally planned economy has hollowed out Cuba’s agricultural backbone. Suggesting that Cuba’s 12,000 agricultural cooperatives should be given more independence is an admission that elements of capitalism are necessary for progress. But socialism, as practiced in Cuba, does not permit such independence. The state’s suffocating grip on private enterprise has led to agricultural decay, and until Cuba embraces real market reforms – ones that recognize property rights, encourage entrepreneurship, and allow for free market competition – there will be no meaningful change.
The only viable path forward for Cuba is to abandon its failed socialist experiment and embrace a democratic, capitalist free-market economy. This does not mean disregarding social safety nets – many successful capitalist nations have strong welfare systems funded through taxes. But a government should not own businesses or dictate economic outcomes. It should facilitate infrastructure development, ensure fair regulations, and protect individual rights, including the right to private property and wealth creation. Look at countries like El Salvador under Nayib Bukele and Argentina under Javier Milei – leaders who have made bold safety and economic shifts to pull their nations from the brink. Now contrast that with Maduro’s socialism experiment and what’s happened to Venezuela – also previously one of the wealthiest countries in Latin America. Cuba needs radical reform, not empty hopes pinned on a broken system.
Cuba should be the jewel of the Caribbean, a thriving hub of culture, commerce, and opportunity. Instead, it remains a stagnant relic of an ideology that has long been abandoned by most of the world. Cuba is not a victim of American intervention; it is a victim of its own stubborn refusal to adapt. Until the Cuban leadership takes a hard look in the ideological mirror and recognizes the need for change, its people will continue to suffer.
I respect your love for Cuba – I too love Cuba, but loving a country means advocating for real solutions, not just highlighting its charm while ignoring its suffering. Cuba does not need more sympathy; it needs transformation.
Sadly, both your articles — and especially the replies (“Cuba is a depressing hellhole, and getting worse all the time”) — are becoming predictable, worn and increasingly one-sided. I’ve been reading HT for years, and I valued and respected the original intent to provide objective information on a country that has been demonized on the one side and glorified on the other.
What happened? More and more your editiorial content amounts to little more than piling on.
Cuba is a delightful country. I have visited a dozen times over 30 years, twice this year alone. While different, each trip has been enjoyable and fascinating. When we first visited, non-sanctioned trips to Havana were prohibited. (We ended up arranging a private car through a hotel worker, but the whole operation, complete with flashing light signals, felt like a dope deal.) Over the years we have seen the society and economy open up dramatically, and as market reforms take root, I fully anticipate to see the situation stabilize.
But how many times have we read some version of this in your articles recently: “…the embargo serves as a perfect excuse for corruption, bureaucracy, and enrichment oat [sic] the top.” There is undoubtedly some truth here, but you of all journalists know the complexity of of the embargo, which includes restricting ships docking in Cuba from continuing on to American ports, penalizing companies operating in Cuba as well as the US, and the use of asset freezes and prohibitions on other nations providing economic assistance. The level of absurdity of this situation is highlighted in Trump’s return of Cuba to the status of “states that encourage terrorism” — which restricts ability to obtain loans or financing from international financial institutions — while this international bully enthusiastically supports Saudi Arabia, Israel and Russia’s invasion of Ukraine.
Why is it that I have to go to the Economic Times to find out that the first of 92 Chinese-funded solar power parks have been opened, helping to relieve the strain on a creaky power system collapsing because of a shortage of parts, foreign currency to buy them with and additional demand? Solar power is obviously the future for Cuba, but without access to international financing, largely a result of American intervention and pressure, such capital intensive projects are very difficult.
Of course we are all concerned about the food shortages in Cuba, and in my opinion becoming food self-sufficient should be the primary economic goal. With further market reforms, including empowering Cuba’s 12,000 agricultural coooperatives to operate more independently with marketing and transportation arms, I believe this is possible.
But I am wearying of increasingly critical coverage that neither suggests positive ways forward nor celebrates Cuba’s successes.
Cuba, I have been there 6 times I go for the beaches and the safety i do not go for the food although I can’t complain always found something I like. The people are beautiful and helpful. Yes they want tips who wouldn’t I bring medical supplies and toiletries powder milk , cup a soups and noodles. Baby creams and children’s Tylenol. As well as candy and panty hose. I bring few cloths just what I need and leave most for the maids. I as a woman feel safer at a cuban resort than a Mexican or other resorts My sister was sick (cancer) took a turn The cuban Dr. Slept on a chair in our room monitoring her an an Iv drip. Took her by ambulance for a treatment and brought her back feeling much better gave her medication to take found jello to eat (not a thing there) All this care cost 182$ we were expecting a couple thousand as he had done 4 room calls left us a private nurse as well. He could of told us any amount but was honest and would not take a tip! Because he said he was a Doctor! And now with USA wanting to invade Canada I cancelled my trip to Georgia #proudtobecanadian
Who is building the new un used hotels ?
What do the government officials know that the proletariat does not know ?
Why build a big new beautiful hotel, put a fence around it and not use it ?
Who, What, where, when, and Why ?
What about the MSME import / export licensing?
Is that helping the economy and those involved as well as the proletariat ?
Something is going to happen when there is a successful revolt of the proletariat against the Bouzases or the military government in charge.
Despite or because of all the comments above, it is even more important to travel to Cuba if you can do it ethically. We stayed in Havana in January. The casas rented by locals and small restaurants need your dollars; rather than state-run hotels and restaurants. The taxis and bicycle s need just probably just one tourist a day to pay their bills; but there are too many of them and too many classic cars sitting empty.
To enter Old Havana is like to time travel three or four centuries back, but where civilization has been halted by an apocalypse and the inhabitants are approaching a Mad Max life style.
I would make it part of your trip for educational and humanitarian reasons.
Ive been to cuba, twice now, and both times were diffrent pre covid beautiful experiences. Post covid cubans felt predatory, every few steps someone was trying to sell me something. Prices changed pre or post service. Taxi drivers trying to charge more after they drop you off, things going missing. Food was awful. Ill never go back, but i really think that cuba has such a beautiful country and the people are so friendly and kind there just struggling.
Patty:
While you attempt to paint socialism as a thriving and superior economic system, it fundamentally misrepresents both the realities of socialism and the nature of the Nordic economies. The claim that socialism has “lasted longer in Cuba” ignores the fact that Cuba has only survived due to severe political repression, rationing, and foreign aid (primarily from the Soviet Union, then Venezuela, and now limited support from China). Meanwhile, economic liberalism, despite its flaws, has created the most prosperous societies in human history, lifting billions out of poverty.
The Nordic Model is not Socialist and the idea that the Nordic countries – Denmark, Sweden, Norway, and Finland, are socialist is a widespread myth that ignores key facts. These nations operate under a capitalist economic system with strong property rights, free markets, and a high degree of economic freedom. In fact, according to the Heritage Foundation’s Index of Economic Freedom, countries like Denmark and Sweden rank higher in economic freedom than the United States.
What these nations employ is a mixed-market system, where capitalism generates wealth, and some of that wealth is redistributed through high taxation to fund social programs. However, they have very pro-business environments, free trade, and low corporate tax rates (Sweden’s is 20.6%, lower than the U.S. at 21%). They also have no national minimum wage; instead, wages are determined through private negotiations between employers and labor unions. This is hardly “socialism” in the Marxist or Cuban sense.
Furthermore, these countries reformed their economies away from socialist policies in the 1990s after experiencing economic stagnation. Sweden, for example, had experimented with socialist-style policies in the 1970s and 80s, resulting in low growth, high unemployment, and a financial crisis. In response, it privatized industries, reduced welfare benefits, cut taxes, and deregulated its economy – hardly the actions of a socialist nation.
When put into practice Socialism has failed everywhere it’s been tried. You claim that “socialism is doing just fine,” yet every country that has attempted full-fledged socialism has collapsed into economic disaster. Cuba is a failed state where tens of thousands of people, if not more, have fled on rafts because they lack basic necessities. Venezuela, once one of the wealthiest nations in Latin America, embraced socialism and suffered hyperinflation, mass starvation, and total economic collapse. Argentina was similarly following the same course until Javier Milei pulled them back from the edge of being a failed state. The Soviet Union, which followed Marxist-Leninist socialism, collapsed under its own inefficiency and corruption.
China is often cited as a “successful” socialist state, but this is misleading. China abandoned Maoist-style socialism in the late 1970s under Deng Xiaoping and embraced capitalism through market reforms. Today, its economic growth is driven by private enterprise, foreign investment, and global trade, not socialist central planning. If anything, China proves that socialism stifles economic development, as its most successful economic zones (Shenzhen, Shanghai) operate under capitalist frameworks.
State-controlled banking is a fallacy. You argue that China’s “government control of central banking and investment banks” is a model to follow. However, China’s economy is built on a debt bubble fueled by reckless government lending. State-owned banks prioritize politically connected firms over market-driven innovation, leading to massive inefficiencies, ghost cities, and looming financial crises. In contrast, the free-market banking system in the West, while not perfect, allocates capital based on profitability and real demand, ensuring more sustainable economic growth.
On your claim that “neoliberalism never worked” – this is simply false. Countries that embraced free markets and global trade – such as South Korea, Singapore, and post-Soviet Estonia – experienced rapid economic growth and rising living standards. Meanwhile, countries that stuck with state socialism, like North Korea, and Cuba, remain impoverished. The 2008 financial crisis was not a “failure of capitalism” but rather a result of government intervention in the housing market, which created artificial demand and risky lending.
Your comment that the pendulum has swung toward Marxism is simply ridiculously wrong. You suggest that we are moving away from Friedman and Hayek back toward Keynes and Marx. While some Keynesian policies (such as stimulus spending) are occasionally used, Marxism remains an utter failure wherever it is applied. The HISTORICAL RECORD shows that capitalism, not socialism, is what creates wealth, innovation, and prosperity. The Nordic countries are not socialist utopias – they are successful precisely because they harness capitalism to fund their welfare states.
So you misrepresent both the Nordic model and the failures of socialism. The reality is that capitalism remains the only system that has consistently lifted people out of poverty and driven human progress. If socialism were as great as you claim, people would be breaking into socialist countries – not fleeing them in droves.
My family just spent a week in Varadero. It was awesome! The resort had a large selection of fresh food, unlimited drinks and immaculate accommodations. The pools were well kept. The beaches are some of the most beautiful in the world. The people were very friendly, in town and at the resort. They need us to keep coming back.I know they cater to tourists. Resorts don’t experience a shortage of power, like locals.
Socialism has lasted longer in Cuba than economic neoliberalism around the western world which keeled over and died with the banking and financial collapse in 2008. Socialism is doing just fine in the Nordic countries plowing a third of GDPs back into socialism for the people. Even state socialist China is showing the world that government control of central banking and investment banks can work as public utilities to finance infrastructure expansions spurring economic growth rates unprecedented anywhere in the capitalist third world. State socialism is basically what all of the great classical reformers advocated for if we want bustling mixed market economies freed of economic rent and monopolies driving rising standards of living. Neoliberals since Reagan and Thatcher got it backwards. It never worked. The pendulum has swung away from Friedman’s and von Hayek back toward Keynes and Marx.
Cuba is a depressing hellhole, and getting worse all the time. Why would people want to spend their vacations there.
Government officials and their cronies are stealing construction and operations money.
Clearly the collective regime (government and military) don’t care about their own people. While the citizens wait for hours in lines for food, fuel, medicines, and money – and often are left stranded when supplies run out – there’s the government with their military complex, made up of multiple companies, either skimming money off the top of remittances or building supposed “luxury” hotels for no one to patronize. All this while the country sinks into the abyss as a hellhole.
Nothing will change. Sanctions against the country has only shown to enrich the elites. While they funnel everything away from the citizens into their own pockets, they use the sanctions as an excuse as to why everything is hard for the citizens. Sanctions then need to be specifically targeted at the elite government and military cadres. Make them feel some pain for once.
Socialism doesn’t work in practice. There have been around 40 countries that have flirted with socialism and they all failed. Communism is much the same. All other communist countries like China, Russia, and Vietnam have adopted capitalism – and pulled themselves out of the doldrums of despair. China specifically mentions the need to allow corporations to become wealthy first and then they will be forced to help the poor.
While Cuba languishes in it’s antiquated hardline ideology, which almost everyone has abandoned, other nations have seen the light and have risen to such amazing heights. Mexico’s Cancun is one direct comparison made in the article, but then there’s the meteoric rise of Singapore, South Korea, Hong Kong, Taiwan, but also Vietnam, and even some African countries outperform Cuba by leaps and bounds.
Cuba is a failed experiment – Castro fooled them all. And they have been stuck in the past ever since.
Cuba is done for tourists, taxi drivers are often overcharging tourists. I can rent a car in many countries for $25 to $30 US per day and fuel for $1 per liter but in Cuba it is much more expensive. Water is not safe to drink, Police do nothing, blackouts. Cuba is done.