Cuba’s Leaders See Hotel Expansion Boosting the Economy

HAVANA TIMES – Cuba has decided to place its bets on the tourism sector as the “driver of the economy” and plans to double the number of hotels on the island and reach over 155,000 rooms in a decade. It involves an estimated 17.6 billion USD investment, 66% of which will come from government/military capital.

Cuba’s hotel wager is a special multimedia piece which was developed over six months to map Cuba’s hotel sector, identify the key players in this area and describe how the building process in Cuba works, where they have great hopes for growth.

In 30 years, tourism has become the second most important economic activity on the island, and the fastest growing. The government has placed its bets on transforming Cuba into a grand hotel in the future, for whoever can pay the price that is.

Returning to Luxury

Up until October 2019, our team had counted 381 hotels in Cuba with over 72,000 rooms, almost four times what was available when in the early ‘90s Cuba decided to place its bets on tourism to become the savior of the national economy.

The hotel business is shared among four chains: Islazul, Cubanacán, Gran Caribe and Gaviota. The latter, part of a huge military consortium, is the most powerful and the only one outside the Ministry of Tourism’s jurisdiction.

However, Cuban operators haven’t positioned themselves on the global market as heavyweights because they need more than beautiful landscapes in order to do this. Since May 10, 1990, when the first hotel management contract was signed, the number of hotels run by foreign management has only grown. Today, there are 19 foreign companies running 119 hotels nationwide, most of which are between 4 and 5 stars, as well as the 6 luxury hotels.

The hotel business

Furthermore, the Cuban government dreams about completing over 290 building projects by 2030. This building progress is headed by Gaviota, which belongs to the Armed Forces Business Enterprises Group (GAESA). The largest hotel operator in Cuba, it has 31,907 rooms and if it meets its targets for 2030, this number will increase to 92,000. That’s more than the rooms that exist in the Dominican Republic or Puerto Rico, today.

The GAESA’s plan, will cost nearly 11.8 billion USD which will be paid with Cuban cash, because they don’t accept, nor need, foreign funding. The other national companies do depend on foreign investment. Something which hasn’t been attained at the pace they had hoped in recent years.

GAESA’s scheme to build hotels

If we bear in mind the fact that the number of tourists visiting the island has increased every year, the occupancy rate of hotels didn’t exceed 50% in 2018; the US government’s restrictive measures have affected this market (our ideal market) quite significantly; in May 2019, there were 7000 rooms out of use, the same number of all the rooms in Pinar del Rio, Cienfuegos, Santiago de Cuba, Camaguey and Cayo Largo, put together; and there is great competition within the region: Riviera Maya, Punta Cana, Cancun.

Some questions remain unanswered: Will this have all been a wise bet? Who are they building for?

We invite you to take a look at the three reports, two interactive components and a video that was created with the results of this investigation that analyzes the Cuban government’s wager for a luxury future for its hotels, the participation of Cuban and foreign companies in hotel management nationwide and the building process of new hotels. Plus, the interactive components offer us more detailed results about the number of active hotels on the island, their star rating and who manages them, as well as a detailed list about the building projects expressed in the Ministry of Tourism’s 2018-2030 Development Plan.

This article was translated to English from the original in Spanish.