How will the thawing of US-Cuba relations affect holidays to Cuba?

In the week before Christmas President Obama announced the restoration of full diplomatic relations with Cuba, more than 50 years since they had been broken off. He pledged to open an embassy in Havana and also to “cut loose the shackles of the past” and sweep aside one of the last vestiges of the Cold War.

While Republican lawmakers who control the Senate and the House have said that they would resist lifting the 54-year-old trade embargo, the President is likely to repeal regulations within the embargo that will effectively “hollow it out” and allow trade between the two countries to resume. With tourist related activities potentially falling within this “hollowing out” process it many only be a matter of time before American-Cuban tourism increases.

If this happens then what will it mean for holidaymakers looking to travel to Cuba? What will happen to the character of the place and prices?

 

Will Cuba’s distinctive character change?

 

Some people predict a large influx of American tourists which could change the character of Cuba forever. They point to Mexico where huge swathes of land (particularly around Cancun) have been filled with vast American style resort hotels. Here there are American menus, all inclusive bars and attractions inspired by those in Florida. Is this likely to happen in Cuba though?

The short answer is probably not. For a start it is unlikely that there will be huge quantities of American tourists arriving to begin with. Airlines would need assess potential demand (remembering that many Americans would be reluctant to support a communist country) and then re-arrange schedules. There are also likely to be a visa requirements that will stifle demand, with many Americans questioning whether it would be worth the extra hassle when they can go on a cheap flight to Florida, which is less than 100 miles from Cuba.

By definition the first contingent of American tourists who will travel to Cuba in any meaningful numbers will be the most adventurous. These people will not be travelling to stay in a hotel that is a carbon copy of the ones they can stay in within the United States. Instead they will be looking to enjoy an authentic experience and to enjoy the “true Cuba” with their own eyes. So it’s unlikely in the short term that much will change.

The biggest change is likely to come from outside rather than inside Cuba. If  investment restrictions are loosened and large American hotel chains decide to build properties in Cuba then they will use the blueprint that has worked for them in the past. This generally consists of a building a hotel that has a homogeneous core (American friendly menus, activities and room facilities) together with a thin layer of local dressing (paintings, furniture, ornaments etc..).

The local attractions are unlikely to change though as organisers are acutely aware that the tourist market is incredibly crowded and that to attract visitors you have to be different rather than the same. You can’t imagine the Cuban tourist board saying “come to Cuba it’s just like Florida”. Again any significant changes are more likely to come from external investors building new attractions rather than the current ones changing. This external investment certainly won’t happen in the short term and may not even happen in the long term. After all there would be no quicker way for the Cuban government to lose their communist credentials than by allowing large multi-national corporations to come to Cuba and build attractions that are essentially the same as others that they have built around the world.

 

Will prices rise?

 

So if the culture of Cuba is unlikely to change then what about prices?

Despite Cuba’s communist credentials prices will still be based on good old fashioned capitalist principles of supply and demand. If hotel owners can charge more they will. Demand tends to outstrip supply in the tourist business (as building new accommodation takes planning and time) which would suggest that prices may rise in the short term. However, for the reasons mentioned previously, it is unlikely that swarms of American tourists are going to be clambering aboard fleets of new flights to Cuba. It is likely to be a slow, measured increase rather than a rapid invasion (no Bay of Pigs references please).

If hotel owners do see a large increase in visitor numbers from a particular country then they sometimes just increase prices for tourists from that country. This has been particularly the case with the recent rise in the number of tourists travelling from Russia and China. So you will often see on contracts between hotels and tour operators that the hotel has put on “European prices” or “worldwide prices except Russia and China”, meaning that they have separate, more expensive contracts for tourists from those countries. Historically hotel owners are reluctant to upset their current, loyal customer base by increasing prices too much.

 

 

So it looks like not a huge amount is likely to change for the tourist travelling to Cuba, which has to be good news for all concerned.

In a country built on radical revolution, it now seems that gentle evolution is the order of the day.