As doors open in Cuba, travel companies quickly step in
Monday, March 28, 2016
Travel restrictions are easing in Cuba, and businesses in the travel industry are now beginning to set up shop in the Caribbean country for the first time in more than 50 years. The evidence was clear with the CEOs from Airbnb, Marriott International and Carnival Corp. joining President Barack Obama for his visit to Cuba last week.
Prior to the trip, the Obama administration announced March 15 that it would allow individuals to travel to Cuba without being in a group tour as long as they are traveling with an educational and cultural itinerary. This change has been one of many since the U.S. started re-establishing relations with Cuba over the past two years.
"Today we are building on this progress by facilitating travel for additional Americans looking to engage with Cubans; allowing Cuban citizens to earn a salary in the United States; and expanding access to the U.S. financial system as well as trade and commercial opportunities," Treasury Secretary Jacob J. Lew.
Tourism to Cuba hit a record high last year when 3.5 million people visited the country. In 2016, 1 million visitors have visited so far, up almost 15 percent from last year. The number of Americans traveling to Cuba increased to 77 percent in 2015 and is expected to rise even higher this year.
U.S. travel businesses are seeing the lucrative opportunity Cuba has to offer.
Starwood Hotels and Resorts was one of the first businesses to establish a foothold in Cuba. The company recently became the first U.S. hotel company to sign a deal in the country since 1959.
Starwood will manage and market two properties in Havana and will build a third property in the region.
"We are very excited to be the very first U.S.-based hotel company to enter Cuba," said Starwood CEO Thomas B. Mangas. "We think this is an example of our tremendous ability to build a great hotel business in all countries of the world."
Starwood is not the only hotel business to make waves in Cuba.
Airbnb, which has been doing business in the region since 2015, recently received special permission from the Obama administration to allow visitors from around the world to book stays in private homes throughout the country. Prior to this change, only U.S. travelers were allowed to book its services in Cuba.
According to Airbnb, Cuba has been the company's fastest growing country. Between 10-20 percent of American travelers to Cuba stay at an Airbnb hotel.
"I think what we represent is diplomacy from a person-to-person level," Airbnb CEO Brian Chesky said.
Others in the travel industry are throwing their stake into the Cuba travel gauntlet.
Booking.com, the only online travel agency allowed into Cuba so far, announced they will begin allowing U.S. citizens to book rooms through their website. This deal would also allow U.S. travelers the same opportunity to book rooms through their parent company Priceline.
"With the easing of restrictions, Booking.com jumped at the opportunity to make Cuba instantly bookable for those eligible to travel there, staying true to the essence of what Booking.com delivers to its customers all over the world," Priceline Group spokesperson Leslie Cafferty said.
Cruises are also making landfall in Cuba.
Carnival Corp., parent company to Carnival and Princess, will launch its first cruises from the U.S. to Cuba in May. The cruises will operate bi-weekly by the company's new brand Fathom. Carnival had first announced its intentions to extend outreach to Cuba on the contingency that it would receive approval to operate from the Cuban government.
"We take people to destinations they want to go, and there is a huge demand to see Cuba," Carnival's chief executive Arnold Donald said.
Other major cruise lines such as Royal Caribbean Cruises, Ltd., and Norwegian Cruise Line Holdings are expecting to receive approval from the Cuban government in the upcoming weeks.
While different companies in the hospitality industry are claiming a stake in Cuba, U.S. airline companies are competing with one another to have scheduled flights to Cuba.
Both the U.S. and Cuban governments agreed to have 20 daily flights to Havana and 10 other flights to each of the nine other cities in an effort to restore relations between the two countries.
The U.S. Department of Transportation may begin rewarding scheduled flights as early as this summer so they can begin service by the fall. For the time being, those wanting to fly to Cuba have to charter flights out of the U.S.
According to Hopper, charter flights on average cost $717 when flying out of the country. With the ease of travel restrictions, those prices could drop as much as 50 percent.
As Cuba opens its doors for business to tourists, one thing is for certain: U.S. travel companies are opening the doors to strengthen relations through travel.
"That's why we're encouraging travel, which will build bridges between our people and bring more revenue to those Cuban small businesses," President Barack Obama said in a speech during his visit to Cuba.
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