Easing of Cuba Travel Ban Raises Questions

U.S. lawmakers recently abandoned attempts to nix travel restrictions to the country, but efforts are sure to return and questions remain

By: R. Scott Macintosh

The prospect of unrestricted travel from the U.S. to Cuba has resurfaced with vigor in recent months, and it seemed like a change of American policy was finally within reach.

U.S. lawmakers had approved measures to strip federal funding used to enforce the 40-year-old travel ban. And a separate bill that would have nixed all travel restrictions to Cuba was on the Senate floor.

The efforts, however, faced a threatened presidential veto and ultimately were abandoned.

Some say, however, that even if legislation eventually does succeed, it remains uncertain whether it would really lead to a boom in tourism that is being predicted by the travel industry.

Since lawmakers began targeting the travel ban in 2000, travel industry organizations have anticipated significant opportunities if the restrictions are lifted.

A pent-up desire to visit a country that has been off-limits for four decades is expected to drive a tremendous influx of travel.

The American Society of Travel Agents estimates Cuba could attract 1 million U.S. visits within a year after travel restrictions are lifted. Another study prepared for the Center for International Policy estimates that at least 2.8 million Americans could travel to Cuba by the third year of the ban being lifted.

A study by the Cuba Policy Foundation determined that travel agents could gain $23.9 million selling Cuba as a destination within five years following an end to the travel ban.

U.S. airlines, cruise ships and tour operators would see more than $500 million in revenues and the creation of more than 3,200 jobs in one year if they were allowed to take American travelers to Cuba, according to the study.

The foundation also predicts the travel industry would reap $1.9 billion in five years if U.S. hotels and hospitality providers were allowed to operate in Cuba.

For an industry that has been struggling with economic recovery since the Sept. 11 terrorist attacks, war in Iraq and the outbreak of SARS , the numbers are enticing.

“Tour operators will be the first to benefit,” said Bob Whitley of the U.S. Tour Operator Association. “They will be the first to negotiate packages.”

While it’s unclear when, if ever, the U.S.-Cuba travel ban might be lifted, an eager industry is getting ready for the eventuality.

This month, ASTA is putting the final touches on a Cuba destination specialist course that will help travel agents sell legal travel to Cuba.

The current embargo technically only prohibits financial transactions in Cuba effectively barring most Americans from traveling there but exceptions still are made for working journalists, relatives of Cuban citizens and groups on humanitarian, educational or cultural exchanges.

A rollout is expected by early December.

Meanwhile, the Association of Travel-Related Industry Professionals was recently formed to serve as an umbrella for travel organizations and businesses with an interest in changing U.S. policy restricting travel to Cuba.

Members of the National Tour Association, the USTOA and ASTA serve on the association’s board of directors, and a number of agencies are also involved.

The organization recently sponsored a seminar in Cancun, Mexico, on the Cuba issue, and led a delegation of travel professionals on a trip to the island.

“All indications from various surveys show there is a substantial amount of pent-up demand to visit Cuba,” said Bradley Belt, the organization’s executive director. “The legitimate issue is that Cuba has been investing in its infrastructure alongside foreign companies. We’re confident that they will be able to handle the expected influx and look forward to doing so.”

But others are more doubtful about expectations.

John Kavulich, president of the U.S.-Cuba Trade Economic Council and an organizer of some of the first fam trips to the island, said Cuba would be unequipped to handle a flood of U.S. tourists.

“They have the courage of their ignorance, some people, by stating that within 12 months from the removal of the restrictions there will be one million visitors to Cuba,” he said. “That is a preposterous conclusion because Cuba does not have the infrastructure to support it. That number was created because it was a good sound bite for the media.”

Kavulich does believe U.S. policy on Cuba travel is destined to change, but he believes that change will come gradually.

There are also other potential complications, he contends, that would make a sudden and dramatic spike in U.S. visits unlikely.

“When the regulations and law do change they will do so incrementally as opposed to all at once,” he said.

“The U.S. government simply saying that U.S. citizens can travel to Cuba does not mean that the Cuban government is going to let everybody go. The Cuban government is going to continue to be highly selective about who they let in, as they are now.”

And there are complexities about exactly what legislation would mean if signed into law.

Preventing the U.S. Treasury Department from enforcing the laws on travel to Cuba would not lift the travel restrictions. So it would technically still be considered illegal to travel there.

Questions would remain about whether Treasury could prosecute people retroactively if funding is later reinstated, or if the president has the ability to switch enforcement to another agency.

If a bill were to pass that allowed carriers and tour operators to take U.S. residents to Cuba, it would also raise complications. While U.S. airlines and cruise lines would undoubtedly benefit from any increase of traffic to Cuba, there are two sides to the coin.

“There are issues of reciprocity,” Kavulich said. “If more U.S. airlines, say, are allowed to go there, Cuba is going to want Cubana airlines to come to U.S.”

The complexities of the Cuba embargo has not stopped travel businesses from looking to the market should U.S. policy change.

In 1998, Radisson Hotel’s president, Peter Blyth, was examining potential resort development at three sites in Cuba. Cuban officials were eager to do business with the company, according to media reports from the time. Five years have now passed and Blyth has since retired.

“The general idea that he was communicating is that we would be very interested in the Cuba market if it was possible to do business there,” said Tom Polski, vice president of public relations for Carlson Hospitality Worldwide, the parent company of Radisson. “We are a growth-oriented company and Cuba would be a good market to be in.”

With its hotel brands, network of travel agents, Cruise Holidays ships, and T.G.I. Friday’s restaurants in the Carlson family, Polski said the company would have a lot to gain if there was a change in policy.

“At some point, we’d be interested in having all of those businesses in the Cuba market,” he said. “But we don’t have anything that detailed at this point. It just gets too speculative because of the law.”

While U.S. companies wait, foreign competitors are investing.

Sol Melia, also a consultant and sponsor of ASTA’s Cuba specialist course, manages 23 properties within Cuba. Its 2001 revenues were $800 million and it now manages close to 33 percent of the hotel rooms in Cuba, according to the U.S.-Cuba Trade Economic Council.

“There has certainly been frustration in many sectors, of which the lodging is one,” said Belt. “No doubt they see Cuba as a very ripe business opportunity. Forty or fifty years ago Cuba was the biggest attraction in the Caribbean and the U.S. had the biggest position there.”

For the first half of 2003, Cuba was the second most visited country in the Caribbean, according to statistics from the Caribbean Tourism Organization.

If restrictions were lifted, Cuba would become the most popular Caribbean destination, according to Hugh Riley, marketing director for the Caribbean Tourism Organization.

“We suspect that people who have never visited the Caribbean will in fact visit Cuba,” he said. “Getting people to visit the Caribbean will be beneficial to the entire region.”

Still some destinations fear that if U.S. citizens flocked to Cuba, the impact would hurt tourism elsewhere in the Caribbean.

“Of course it is a concern for everyone, not only us but all Caribbean destinations,” said Nelly Cruz, a spokesperson for the Puerto Rico Tourism Company.

In part to prepare for Cuba’s eventual opening, Puerto Rico has launched a strategic plan that aims to increase the country’s share of the Caribbean market by 17 percent.

“We have to increase our participation and better our services and update our product,” Cruz said. “We are growing what already exists to prepare if something does happen.”

For those that already do business in the Caribbean and are looking for new opportunities, there may be business risks that come from over-selling Cuba.

“Travel agents need to be careful about cannibalizing existing destinations for the sake of creating a new destination,” Kavulich said. “For some hotels, airlines and cruises, simply adding another destination could create a negative impact in revenues from existing destinations.”