Tag Archives: Havana

Big changes in Cuba, but infrastructure needs to catch up

Posted on by
Reply

T0328CUBAKEMPINSKI_JJ_HR.jpg

Kempinski is refurbishing the Hotel Manzana de Gomez in Old Havana. Photo Credit: Johanna Jainchill
 

In advance of President Obama’s historic trip to Havana this week, his administration made perhaps the most significant changes so far to the regulations surrounding Cuba tourism by allowing Americans to visit the island without being a member of a tour group.

On its face, the rules about what U.S. visitors can do in Cuba don’t change: Individuals are only allowed to travel to Cuba for one of 12 reasons, including “people-to-people educational” trips. But on people-to-people trips, they no longer have to travel with a licensed group.

Regular tourism to Cuba is still technically illegal, but the rules are essentially unenforceable. Americans will be able to travel on their own in Cuba by self-certifying via an affidavit that they are conforming to the regulations, which the Department of the Treasury defined as “a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba or promote the Cuban people’s independence from Cuban authorities and that will result in a meaningful interaction between the traveler and individuals in Cuba.”

Ronen Paldi

Ronen Paldi

Tour operators to Cuba said last week that they were not concerned about the effects of the new rule on their business. Even if the embargo were lifted tomorrow, they said, the island is sorely lacking in the infrastructure necessary to accommodate a mass influx of individual travelers. 

“Cuba is facing tremendous challenges,” said Ronen Paldi, the president of Ya’lla Tours USA, which has been operating in Cuba since 2002. “In the last 15 to 16 months, the administration is doing all this easing of the restrictions. But what has not changed is the infrastructure in Cuba. Hotels are full, completely sold out until May 2018. Prices are going up, space is becoming more and more limited.”

Diane Mullahy, the president of Travel Leaders in Framingham, Mass., has been building a Cuba business since regulations first relaxed last year and has had to contend with a lack of rooms and restaurants.

“The problem is travel there has increased 70% since last year, and there are not enough hotels, and each time I go the restaurants are packed,” she said. “It’s just so busy. They have a long way to go.

Diane Mullahy

Diane Mullahy

“I have clients go down, and I tell them anything can happen. You have to be flexible.”

Another major impediment to the ease of traveling individually is that even though the Obama administration last year made it legal for credit-card companies to operate in Cuba, U.S.-issued credit cards are still not usable on the island, and U.S. banks have not enabled ATM withdrawals there, meaning everyone has to go with cash only.

“The problem is that, so far, relatively few U.S. banks have been willing to go through the process of making arrangements with the Cuban government and with Cuban merchants to actually accept U.S. credit cards,” said William LeoGrande, a professor at American University. “The profit margin is small, and they are afraid of large fines from the Department of the Treasury if they inadvertently violate the embargo.”

And while the Obama administration said the change was intended to make educational travel to Cuba more accessible and less expensive for Americans, so far the opposite is true.

“We’ve seen costs increase by 40% and 20%, respectively, over the past year,” said Tom Popper, president of Insight Cuba. “If demand increases, it’s more likely we will see prices increase even more.”

But for some businesses, the relaxed regulations are a boon.

Tom Popper

Tom Popper

Havana-based Cuba Travel Network has specialized in individual travel to Cuba since 2002. Founder and CEO Eddie Lubbers, who is Dutch, said that while his business is predominately non-Americans, that is changing: Americans represented 6% of his business in 2014, a number that shot up to 23% in 2015. With the recent changes, he expects the U.S. portion to grow to as much as 50% of his business.

The company is ideally positioned to take advantage of the recent changes because it enables travelers to book individual components in Cuba, such as hotels, flights and cars online, and also offers individual itineraries that fall into the categories under which people can legally travel.

Lubbers said the U.S. travel agent side of his business is also growing, with agents using Cuba Travel Network to book entire itineraries for small groups or individuals and receiving commission.
“It gives them a perceived expertise in the market,” he said.

While the changes may mean the opening of new businesses geared toward individual Cuba travelers, Paldi is among the long-time operators who noted that having years of relationships and experience in Cuba means more than ever right now, especially with hotel space so limited.

“We can service you [last-minute] because we have access to what’s available and what’s not available,” Paldi said.

Lubbers added that Cuban leaders recently made it clear at events in Europe that they respect companies that have been doing business in Cuba during the last 20 years.

“Agencies will spring up and say, ‘We are going to offer travel to Cuba,’ ” he said. “They may be able to do that from the demand side, but from the supply side it’s more difficult.”

Miami port parcel is ideal for proposed Cuba ferry

Posted on by
Reply

At this point, it is anybody’s guess who will be sailing to Cuba from Miami this year.

The Cuban government has issued no approvals for cruise lines, and several of the companies that have been selling cruises to Cuba have not done anything to reserve berth space at PortMiami, according to a Miami Herald report.

But one piece of nonsense ought to be easy to clear up. A proposal by the city of Miami to build a terminal to accommodate a ferry service to Havana ought to be pursued. Unlike cruises, several ferry licenses have been granted by the Cuban government. Miami is the port that makes the most sense for quick and comfortable ferry service to Cuba.

The hitch? Some Miami-Dade County commissioners want to stick with a 2011 master plan that calls for hotel and office development at the port.

The land to be used for either proposal is at the southeast corner of the port adjacent to the headquarters of Royal Caribbean Cruises Ltd. It is the same parcel that was briefly considered as a stadium site for a professional soccer team dreamed up by star player David Beckham.

That died, due in part to opposition from Royal Caribbean. The ferry terminal is a much better idea on the face of it, and if it proves itself it would at least fit with the port’s purpose.

Some at the county like the idea of developing the real estate because the port is in significant debt and office rents and hotel revenues could improve cash flow.  But there are more convenient places to have an office than at a working port. More importantly, the office and hotel can be built anywhere, while the ferry terminal can’t.

The most fitting application for scarce port real estate is for maritime uses. The county should investigate other ways of restoring the port’s finances to firmer footing.

Cuba cruise operator sees doubling of inquiries since rules relaxed

Posted on by
Reply

The Louis Cristal sailing for Cuba Cruise in Havana.

The No. 1 operator of cruises to Cuba reported last week that phone inquiries had doubled since new U.S. regulations regarding travel to Cuba were issued two weeks ago, and 50% of the calls were coming from U.S. citizens.

Website traffic has tripled, said Dugald Wells, president and CEO of Calgary, Alberta-based Cuba Cruise.

Wells said that immediately following the surprise announcement of a thaw in U.S.-Cuba relations, Cuba Cruise also saw an uptick in bookings from residents of Canada, its top market.

“In some part, we attribute that to people saying, ‘I want to see Cuba before it changes,’” Wells said.

Cuba Cruise is in its second season of sailings around Cuba, using the 35-year-old Louis Cristal, a ship it chartered from Cyprus-based Louis Cruises. The Cristal carries some 960 passengers at double occupancy. It is currently running about 60% capacity, which Wells described as “break-even territory in our second year of operations. Obviously we’d love to sail full.”

(At least one other cruise operator, Star Clippers, offers sailings from Cuba, but a  spokeswoman did not respond to a request for comment.)

Cuba Cruise has a jump on numerous U.S.-based cruise companies that have to varying degrees expressed interest in sailing to Cuba, but until the U.S. government-imposed embargo is lifted, those lines have no immediate plans to start going there.

In a recent forum for travel agents on the Freedom of the Seas, Michael Bayley, president of Royal Caribbean International, said, “Obviously, the latest announcement about the liberalization of relations is of interest to us.”

But speed bumps lie ahead.

Bayley said Royal has a team studying the possibilities, but most of the ports in Cuba are incapable of handling ships of the size of the Freedom of the Seas. The one exception, he said, is Havana, but that port has serious infrastructure issues.

“At the moment, there’s effectively been no change for our industry,” said Bayley who estimated it might be three to five years before major cruise companies go to Cuba.

Operators of smaller ships are somewhat more optimistic. Edie Rodriguez, president of Crystal Cruises, said that if conditions were right, it would be relatively easy to add a port call in Cuba.

Michael Bayley, Royal Caribbean’s president, said that most of the ports in Cuba are incapable of handling ships of the size of the Freedom of the Seas. The one exception, he said, is Havana, but that port has serious infrastructure issues.

“We’re able to switch itineraries very quickly,” Rodriguez said. “We’ll just swap out a port.”

But like other cruise executives, Rodriguez said the Cuban infrastructure was an obstacle. “The roads are so bad you’d have to go very slowly,” she said. “Our guests would not be happy about that.”

Wells agreed that the infrastructure lags. “Cristal is the biggest ship we can safely maneuver into and out of these ports we go to,” he said. “So we’re kind of limited in our future growth by the infrastructure.”

But some facilities are good, including a terminal in Havana that was upgraded for Pullmantur before the Spanish line was acquired by Royal Caribbean Cruises Ltd. and stopped sailing into Cuba.

And all the terminals in Cuba are well located, Wells said.

“These passenger terminals may be dated and frayed, but they’re right in the middle of town,” Wells said. “You walk off the ship and cross the road and you’re in that postcard with the cobblestone streets and the old American cars and the big churches. It’s fantastic.”

Currently, fewer than 5% of the passengers sailing with Cuba Cruise are U.S. citizens. Those who are come through two tour operators, Road Scholar and Insight Cuba, which have Treasury-approved people-to-people programs in one of 12 travel categories, such as education or athletics.

Previously, such trips involved detailed documentation, reporting and approval from Treasury officials. Now, under general licenses, there is less paperwork required.

“It’s much less onerous than it was, but you still need to be part of a group that is under the auspices of a [company] that operates such tours,” Wells said.

Cuba Cruise does offer a way to book directly through its website. However, after booking, travelers must register with the nonprofit Fund for Reconciliation and Development and receive back a participant letter of authorized travel. The cost is $75.

For agent bookings, Cuba Cruise has been paying 12% commission, but it is increasing that to 15% for the balance of its season through mid-March. It pays 8% on shore excursions.

Wells said he expected to be competitive even if Cuba opens to larger cruise companies.

“We’re focused on the destination,” he said. “We’re going into smaller ports. Our entertainment program is 90% Cuban and a couple of Canadian acrobats from Cirque du Soleil. We’re really working hard to present a program that is an authentic, somewhat in-depth exploration of Cuba as a destination.”