Currently enjoying a boom, the Cuban leisure and travel industry is concerned both with achieving a change in the national energy system and extending the use of new technologies, and promoting tourism specialization through events and incentives, tours and circuits, diving and nautical activities, as well as health products, nature, and culture. As such, foreign investment is being promoted in Havana, Cienfuegos, Camagüey, Holguín, and Las Tunas.
According to José Daniel Alonso, director general of Development, Investment and Business at the Ministry of Tourism (Mintur), the current Portfolio of Foreign Investment Opportunities (110 projects) proposes 19 hotel developments in the form of joint ventures, 75 hotel administration and marketing contracts in new and existing facilities, and two marina services management and marketing contracts.
At the end of March 2017, according to the official, there were 82 management contracts with 19 foreign hotel chains from eight different countries operating in Cuba. These contracts cover 41,079 rooms, representing 61.6% of the country’s total accommodation capacity, 87% of which are located in four and five-star facilities.
Alonso added that plans are to build 224 new hotel facilities and 32 expansions of existing installations by 2030, as well as 24 golf courses with 11 associated hotels, and to complete 23 nautical and marina projects, and 47 projects linked to leisure, recreation, and adventure tourism.
Aware of the fact that attracting foreign capital in this sector is a key element to boost the Cuban economy, Granma International spoke to representatives of the most important national hotel chains and those international chains operating successful joint ventures in the country, to learn about the prospects of the island’s tourism industry.
An element that distinguishes the Gaviota Tourism Group from the rest of Cuba’s hotel chains is that it only allows foreign participation through hotel management and marketing contracts. In other words, it does not require external financing.
In the words of Víctor González, vice president of Business for the Group, which has seen the greatest growth of the Cuban tourist industry, Gaviota is based on a successful model that has allowed for annual growth of between 9 and 12%.
The chain, which today has 83 hotels and villas, representing more than a third of the country’s hotel accommodation, has handed over the management of over 83% of its nearly 29,000 rooms to 14 international companies, including H10 Hotels, Meliá Hotels International, IBEROSTAR Hotels & Resorts, Warwick Hotels & Resorts, Blue Diamond Hotels & Resorts, Pestana Hotel Group and Valentin Hotels.
From the perspective of Gaviota executives, the recent opening of the Gran Hotel Manzana Kempinski is the clearest example of the Group’s strategy to promote luxury hotels. Regarding the new Havana hotel, González noted, “We attempted to build a high standard facility, as Kempinski and the Cuban market required.”
With the recent unveiling of the IBEROSTAR Bella Vista in Varadero, the Gran Hotel Manzana Kempinski, and two more hotels due to open this 2017, Gaviota will have a total of 1,800 additional rooms by the end of the current year. In 2018, 2,700 more rooms will be made available throughout the country. The locations are traditional destinations like Havana, with four new hotels under construction, Varadero, Cayo Santa María, Cayo Coco, Cayo Guillermo and Playa Pesquero. It is worth mentioning that the northern keys of Villa Clara have seen a significant accommodation expansion so far this year.
Likewise, efforts are focused on less explored areas such as Camagüey’s Cayo Cruz, where Gaviota recently began building a hotel that should be ready in the first half of 2018, and in which it expects to have available 4,096 rooms by 2021; Cayo Paredón Grande, north of Ciego de Ávila, where in the short and medium term some 3,216 rooms in six hotels will be built, and the Ramón de Antilla peninsula in Holguín, which will see hotel and golf course construction projects and infrastructure for cruise ship arrivals.
“We must double the number of rooms we have by 2025. We already know who will manage the construction sites for 2017, 2018 and 2019, and that is an advantage,” González explained.
In December 2016, AT Comercial, belonging to the Gaviota Group, signed the contract for its first joint enterprise with IBEROSTAR, for the production of hotel supplies in the Mariel Special Development Zone (ZEDM).
Meanwhile, Eduardo Acosta, president of the Gran Caribe chain, noted that the 50 hotels and hotel complexes and 12,800 rooms of the group are concentrated in five key Cuban tourist destinations, including Havana, Varadero and Cienfuegos.
A total of 60% of the group’s facilities are operated by 10 foreign chains, mainly consisting of four and five-star hotels. Gran Caribe is committed to foreign participation in management and marketing contracts, but with external financing.
According to Acosta, a group of hotels, mainly located in Havana, will be remodeled to adapt to new standards. These include the Hotel Riviera, with IBEROSTAR, and the Vedado-Saint John, with an Italian chain. Already approved and awaiting the final signing is a contract with a group from Singapore to run the Hotel Duville, while six chains are bidding for the Hotel Plaza contract.
“We recently signed contracts with Meliá for the entire hotel plant in central Cienfuegos and, with the idea of continuing to increase competitiveness and diversifying tourism products, we decided to have our city hotels included in tourist circuits, a modality that is becoming increasingly strong among national tour operators,” he added.
Representing Cubanacán, Commercial Vice President María Isabel González explained that the chain has more than 90 facilities located throughout the country, representing a great strength as this allows for the marketing of varied modalities and products.
The specialist explained that 15 of these hotels are today operating as joint ventures, while more than eight prestigious international chains currently manage and market Cubanacán hotels under the modality of international economic associations.
González noted: “There has been growing interest from foreign companies to go beyond the beaches. There are varied products and Cuba’s attributes are valued. Thus they will help us to provide a better service.”
So far in 2017, Cubanacán has added three new companies to its list of partners: Believe, Roc Hotels and Valentin Hotels, to manage a total of 608 rooms. The first is already managing Havana’s Hotel Copacabana and the third, the Tropicoco, located on the beaches east of the capital.
Similarly, to respond to the needs and priorities of the tourism sector, Roc Hotels is operating in Santa Lucía, one of the geographical points most seeking to attract foreign capital.
The most recent move, González explained, was the expansion of relations with Spanish chain IBEROSTAR which, through hotel management and marketing contracts, has assumed 650 new rooms, located in the resorts of Jardines del Rey, Gibara, and Santiago de Cuba.
The Cubanacán representative added that the group is establishing nine new joint ventures (with already identified partners), to build 4,000 rooms in Havana, Santa María, and Santa Lucía. In addition, the portfolio promoted by the Cuban hotel group includes 12 projects for the creation of joint ventures for the building of hotels, mainly in Las Tunas, Camagüey, and Havana, and 12 for management and marketing contracts.
González noted that international economic associations are very advantageous as, “in addition to attracting important global hotel groups and specific markets, for some years these have allowed for external financing to bring the facilities up to the standard level each operator requires.”
Although less internationally known, Islazul is another Cuban hotel group with great strengths. It has 110 (essentially small and medium) hotels, offering around 11,000 rooms throughout the island. Some of its facilities are located close to nature reserves, while others are in island's the main cities.
Islazul President Julio Barzaga explained that a little more than a year ago, the company opened up opportunities for foreign investment. “While almost all of our hotels are two and three-star, our business portfolio includes several four-star projects as well as houses and apartments.
“We try to group together hotels for foreign capital, fundamentally promoting administration and marketing contracts. The first one was signed with the Spanish group Sercotel for the management of facilities in Havana. A contract is also being drafted in Pinar del Río, and for three hotels in Camagüey with Meliá,” the Islazul president noted.
Although the chain has long focused on responding to the demands of the domestic market, the investment possibilities established through 16 projects demonstrate that the chain has progressively internationalized its operations and is raising its quality standards.
According to Barzaga, global prestige can be achieved with the participation of large companies, to facilitate the expected returns, while “always carrying out negotiations with rigor and agility.”
Francisco Camps and Mateo Caldentey, deputy director general of Meliá Hotels International and IBEROSTAR Hotels & Resorts representative on the island, respectively, recognized the security, heritage, and natural beauty that characterize the island, as well as the climate of respect and trust in which they negotiate with national hotel chains such as Gran Caribe, Cubanacán, and Gaviota
On the one hand, Camps highlighted Meliá’s presence throughout the archipelago, from Havana to Santiago de Cuba, concentrated mainly in beach resorts, which began in the early 1990’s with the creation of the country’s first joint hotel.
The Spanish chain recently announced that in 2018 it will assume the management of eight new hotels in the central cities of Cienfuegos, Trinidad, and Camagüey, with a total of 931 rooms. These will join the twenty hotels already managed by Meliá across Cuba.
“We have not only been in the most important tourist resorts, such as Havana and Varadero, but in others such as Cayo Santa María, where we were the first foreign business, and Holguín. We are committed to the development of the country and we have assumed the challenges of introducing and promoting new tourist destinations,” the Meliá representative stressed.
Meanwhile, IBEROSTAR, established on the island since 1993 under different hotel operation modalities, has expanded its participation in Cuban tourism and now runs some 17 hotels spread throughout the country.
The chain is currently preparing to build a factory in the ZEDM. According to Caldentey, this vital logistics initiative will first be responsible for supplying IBEROSTAR facilities, and then extending its products to those of other companies.
The representative highlighted the jump in quality seen in Cuban tourism in recent years, noting that the private sector boom is an added value, contributing to the growth of the island’s leisure and travel industry. “We do not have to worry about that. That there are more private B&Bs and restaurants contributes to more tourists,” he said.
In this regard, Champs stated, “Competition is healthy and new private businesses and the development of non-agricultural cooperatives force us to get our act together and improve our products. These are complementary initiatives that serve to boost the economy and advance the architectural recovery of Cuban cities.”
Both sector representatives argued that when doing business in Cuba, one must be aware that the country always seeks to generate the greatest amount of possible benefits for wider society. Camps highlighted that potential investors can rest assured that the energy and social costs of investing in the island are the same as in countries like the Dominican Republic or Mexico.
In the near future, Caldentey revealed, IBEROSTAR will take on a new hotel in Playa Pesquero, from Gaviota, the IBEROSTAR Holguín, a five-star facility which will have 638 rooms, and another in Guardalavaca, together with Cubanacán
In charge of a series of joint projects, the President of Cubasol, Abelardo Fernández, explained that this entity providing mainly non-hotel services, is composed of five companies: one providing tourist transport, which includes the majority of buses (3,000), taxis ( 9,000) and motorcycles (2,000); Palmares, dedicated to restaurants and recreational sites, which runs more than 800 facilities (cafes, restaurants, nightclubs); the Caracol chain, with more than 760 stores; a company operating five international marinas; and Turarte, providing artistic shows and entertainment.
“We have a high responsibility for tourism development. We have formed a sixth company, Cubagolf, which responds to all the real estate associated with golf and already has three joint ventures constituted and a fourth to be signed in the summer,” Fernández explained.
The third project was approved for the construction of a golf course in Punta Colorada, Pinar del Río, which will be the largest in Cuba and one of the biggest of its kind in Latin America. This initiative will be the result of a joint venture with the Spanish group La Playa Golf & Resorts S.L.
As the Cubasol representative reported, the group has a total of 13 projects, involving several foreign companies. “By the end of 2017, we should have 10 signed projects,” he stated.
The aim is to build more than twenty golf courses, to make Cuba a leading golf destination. These facilities are expected to have 21 associated five-star hotels offering more than 4,800 rooms; 12,230 villas or independent houses and 30,187 apartments. Today there are only two golf courses in the country: one in Havana and another in Varadero.