How will travel businesses be affected by new Cuba restrictions?
Thursday, June 13, 2019
The Trump administration has restricted travel to and trade with Cuba, reversing Obama-era policies that opened doors closed during the Cold War. What are the business impacts of the president’s decision?
"Given the recent growth in legal U.S. travel to Cuba," Erika Richter, communications director for the American Society of Travel Advisors, told MultiBriefs in an email, "ASTA is concerned about the potential for disruption from these policy changes, especially as they relate to the operations of our cruise line, airline and hotel partners on the island."
The travel restrictions took effect on June 5. According to the administration, the Cuban government’s foreign policy is to blame.
"Cuba continues to play a destabilizing role in the Western Hemisphere, providing a communist foothold in the region and propping up U.S. adversaries in places like Venezuela and Nicaragua by fomenting instability, undermining the rule of law, and suppressing democratic processes," said Treasury Secretary Steven Mnuchin in a statement.
"This Administration has made a strategic decision to reverse the loosening of sanctions and other restrictions on the Cuban regime. These actions will help to keep U.S. dollars out of the hands of Cuban military, intelligence, and security services."
The impacts of the Trump travel restrictions to the U.S. gross domestic product will be slight, Dean Baker, a senior economist at the Center for Economic and Policy Research in Washington, D.C., told MultiBriefs in an email. "We’re talking a few hundred million dollars," he said. "1% of GDP is $200 billion."
It is unlikely that Trump’s travel ban to Cuba will spark a recession, or economic contraction, e.g., the Great Recession that ended in mid-2009. This is cold comfort to the travel businesses and their employees dealing with reduced travel and revenue to the island nation now. Private-sector payroll have seen a recent downward hiring trend for the travel industry before the Cuba travel restrictions began.
Another source reports that leisure and hospitality firms expect to increase hiring 27 percent in the July to September quarter, according to the ManpowerGroup Employment Outlook Survey.
In terms of consumer choice, should it govern the marketplace of buyers and sellers? Without question, that is ASTA’s view.
"ASTA continues to believe that the American people are the best ambassadors of U.S. values abroad, and should be allowed to freely travel to any destination they wish without restriction from their own government," said Richter. "Rather than shutting the door to this market 90 miles off our shores, we call on policymakers to enact legislation to do away with the statutory Cuba travel ban once and for all. We will continue to advocate toward Cuba travel freedom and look forward to the day it becomes reality."
The American Enterprise Institute declined a request for comment.
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