ECONOMY-CUBA: Tourism Slump Undermines Growth Forecast

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Oct 28 2001 (IPS) - The number of foreign tourists visiting Cuba this year is not keeping up with earlier expectations – a consequence of the tense international climate – and likely will force the government to scale back its economic growth forecast.

Tourism has increased this year, but not at the quick pace that has been recorded since 1990. Experts say this will worsen the island’s economic situation, which is already suffering from problems related to its two main exports: sugar output this year was a relatively low 3.5 million tons, and nickel prices have fallen.

Tourism, Cuba’s leading industry, provides approximately half of the country’s revenues, while sugar, nickel, tobacco, sea products and rum make up 80 percent of its exports.

After several weeks of conjecture and contradictory forecasts, Tourism Minister Ibrahim Ferradaz acknowledged that for the second year in a row Cuba will not meet its goal of two million foreign visitors.

“The tragic events of Sep 11 (in New York and Washington) mean that the objective will not be met,” said Ferradaz, who calculates that the tourism sector will grow five to seven percent, and not the 12.7 percent predicted for this year.

The scaled-back goal indicates that the tourist count for this year will be approximately 1.9 million, which is higher than last year’s 1.8 million, but less than what officials had hoped, he said.

Cuban tourism in 2000 brought in revenues – direct and indirect – totalling nearly two billion dollars.

Ferradaz did not mention what the revenues are expected to be this year, though he stressed that the current international situation – referring to the Sep 11 terror attacks and the subsequent United States-led military strikes against Afghanistan – is an important juncture that coincides with the slow tourist season.

Among the measures the Fidel Castro government has drawn up for handling the decline in tourism are the temporary closing of 20 of the country’s 247 hotels and reducing the operations of other tourism installations.

Cuba’s hotel occupancy rate today runs at 45 to 50 percent, a contraction that particularly has hit Havana and the resort city of Varadero, the two main draws for foreign visitors as they receive 75 percent of the total tourism flow.

Trade union sources report that a series of “labour rationalisation” measures have so far affected 8,000 of the more than 86,000 members of the Hotel and Tourism Workers’ Guild.

According to ‘Trabajadores’ (Workers) weekly, mouthpiece of the Workers’ Union Central of Cuba, personnel who had accumulated vacation time are now taking that time off, while other workers have been sent to vocational retraining programmes.

“My sister works in one of the hotels that were closed. They sent her home, but she is going to take advantage of the time to perfect her English,” said Alberto Meza, a taxi driver who reports that his business also has suffered from the tourism slump.

Some workers have been reassigned to work on repairing infrastructure in the tourism sector, just one of the attempts to limit the number of employees told to stay home. The idle employees are receiving full wages for the first month of the lull, but will receive just 60 percent the second month.

“I haven’t heard of anyone getting laid off. The real benefit of working in tourism is the boost in wages from gratuities, and that is where my sister is really losing out. I hope this doesn’t last long,” said Meza.

Tourism minister Ferradaz predicts that the situation could begin to improve in December, particularly since “Cuba is a country with a high level of security” and does not depend on the United States.

The embargo that Washington has imposed against Cuba since the early 1960s does not only prohibit trade, but also sharply restricts travel by US citizens to the socialist-run island.

In spite of the travel obstacles Washington has erected, 3.5 to 4.0 percent of Cuba’s foreign visitors are from the United States, according to Havana’s figures.

Official reports indicate that more than half the tourists arriving in Cuba are European, though Canada continues to be the number-one source of visitors.

Unofficial sources predict that this slump in the most dynamic sector of the Cuban economy will force a readjustment downwards of expected economic growth for this year, which the government still has posted at 4.5 to 5.0 percent.

Cuba’s gross domestic product (GDP) rose 3.6 percent in the first half of 2001, limited primarily by the drop in sugar production, the island’s second leading source of revenues.

Experts are saying the “seasonal” nature of the Cuban economy means it will be difficult to make up for the year’s first semester slump in the second half of 2001. As such, “there are no great expectations for growth,” said one local economist.

Cuba’s GDP expansion last year reached 5.5 percent, but the government cautioned that the country’s financial situations would continue to be limited as the economy struggles to recover from a decade of hard times.