TOURISM-CUBA: Economy’s Most Dynamic Sector Offers Something New

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, May 10 2000 (IPS) - Cuba is adding a twist to local tourism in an attempt to establish the industry as the driving force behind its economy, even while the United States-imposed trade blockade discourages greater foreign investment on the island and inhibits the flow of tourist dollars.

At the 21st International Tourism Convention, underway this week in Havana, Cuban authorities announced new tourist opportunities that go beyond the traditional beach resorts, focusing instead on excursions in the areas of ecology, folklore, community and history.

Cuban experts calculate that foreign capital in local tourism, currently at more than one billion dollars, would be much higher without the intervention of the Helms-Burton Act. This 1996 US law allows Washington to sanction companies from third-party countries that engage in business in Cuba involving property confiscated from US citizens following the 1959 Cuban revolution.

Last year, the powerful Spanish corporation, Sol Meliá – based in Mallorca and a pioneering investor in Cuban tourism -, was on the brink of falling under the US law. But instead of planning a pullout from the island, it initiated expansions of its operations there.

Sol Meliá owns 56 hotels and tourist complexes of various types throughout Latin America and the Caribbean – all in the four or five-star category. Thirteen are in Cuba, where Spain is the number-one foreign investor, both in total dollars and in the number of companies.

The US magazine ‘Time’ reported that following its recent merger with the US-based Inmotel company, Sol Meliá plans to open nine new hotels in Cuba, Brazil, Peru and Puerto Rico, while similar investments in 20 more countries are also on the drawing board.

The dynamism of Cuba’s tourism industry, which is responsible for 30 percent of the nation’s gross annual income and averaged a yearly 20 percent increase in foreign visitors from 1990 to 1998, is extremely attractive to foreign investors.

Tourism replaced sugar as the primary source of cash in Cuba last year, bringing in 1.9 billion dollars, but still short of the predicted 2.1 billion. Low efficiency levels meant the country had to spend 70 cents for each tourist dollar earned.

According to official estimates, for every one-cent reduction in such costs, there would be 10 million dollars more in profits.

This income-expense relationship reflects the lack of national integration, disadvantaged by “the inadequate quality and presentation of Cuban-produced items, the lack of delivery systems and high costs,” according to economists.

“Tourism is a major importer, and Cuba should use it to turn around and produce certain goods according to international standards of quality, a process that – to a great extent – requires the input of foreign capital,” an industry expert told IPS.

Last year, the island received 1.65 million visitors and had some 34,000 hotel rooms available for them – 3,693 originating from joint ventures with foreign companies.

Currently there are 30 mixed-capital hotels in operation on the island, for a total of more than 14,000 rooms. Twenty percent of the hotels and 38 percent of the rooms for foreign tourists are under management contracts with foreign partners.

Cuba hopes to push the number of tourists up to two million by the end of this year, and as high as seven million by the end of the decade.

To meet these goals, beginning in 2005 Cuba would have to add another 8,000 to 10,000 more hotel rooms each year, not to mention maintaining the existing ones, said a Cuban tourism official.

Cuba has also made integration with the Caribbean and Central America a priority in order to allow the region’s countries to jointly capture the international tourist market, especially visitors coming from Europe.

Already in 1999, Cuba was the second most popular tourist destination in the Caribbean, after the Dominican Republic. Both nations benefited from Europeans’ growing interest in visiting the region.

The Madrid-based World Tourism Organisation predicts that by 2020, Germany will replace the United States as the principal source of international travellers as Germans will make up 10 percent of all world tourists by then.

Since the 1990s, Germany – whose tourists are known for their long-stays and deep pockets – has been a major client of this Cuban “industry without smokestacks.”

Regional participants at the International Tourism Convention defend the idea of “a united Caribbean for tourism” as a way to promote co-operation and integration, which will ultimately allow the area to take better advantage of its growing popularity among Europeans.

During their recent annual negotiations, Cuba and Guatemala agreed on a tourism development project known as ‘Playa-Maya,’ which will facilitate joint tourism profits from Cuba’s beaches and Guatemala’s Mayan cultural heritage.