Trump on Cuba: No change for travelers, some restrictions for U.S. operators

On Friday, U.S. President Donald Trump issued a presidential memorandum on Cuba. The new policy will have mixed effects on the American hospitality and travel sectors. 

On one hand, after careful review of the memorandum, it appears that American policies to allow U.S. travelers to enter Cuba remain virtually unchanged. A few minor requirements are added, more cosmetic than anything else.

Cienfuegos, a city on Cuba’s southern coast, is one of CubaGolf’s key destinations.
Cienfuegos, a city on Cuba’s southern coast, is one of CubaGolf’s key destinations.

American citizens can continue to travel to Cuba, as per the December 17, 2014, directive by then-President Barack Obama. Let’s not forget that as of May 31 of this year, U.S. entries into Cuba grew by a staggering 145% year-over-year. In 2016, 613,000 U.S. citizens traveled to Cuba, out of the total 4 million arrivals of tourists into the country. The U.S. already has become the second feeder market into Cuba after Canada.

On the U.S. operators’ side, the outlook is not so positive, but again, another door is left open by the White House. While on one hand, Trump is banning any kind of business with the Cuban military’s Armed Forces Business Enterprises Group, or GAESA, the memorandum leaves out of these restrictions doing business with the Ministry of Tourism, or MINTUR.

GAESA controls hotel company Gaviota (26,949 rooms), the Gaviota Tours travel agency, the Transgaviota car rental company and now also Habaguanex (607 rooms), the company that manages tourism and leisure activities in old Havana. Gaviota owns, for example, the Four Points property that Starwood has just signed in Miramar (it remains to be seen what happens with this contract).

The opportunity remains to do business with MINTUR, which includes hotel companies such as Cubanacan (14,803 rooms), Gran Caribe (13,014 rooms), Islazul (10,764 rooms), Empresa Campismo, Palco Habana and Las Terrazas. More important, MINTUR manages CubaGolf, the Palmares subsidiary that has the monopoly to develop mixed-use resorts in Cuba and the only company allowed to sell leisure real estate to foreigners today (leasehold at perpetuity).

So, all in all, Trump is restricting business with the largest hotel chain in the country (41% of the room supply) while at the same time leaving a back door open to pursue opportunities by U.S. companies on the remaining 59% of the market, develop and sell real estate, build golf courses and marinas, etc.

Those American groups that are able to read the small print should be able to continue doing business in the island and benefit from the increasing flow of US tourists.