Two of Spain’s leading hotel chains with long experience in Cuba are to open new properties on the island nation after several years of hard times and uncertainties and a new bounce in tourism numbers.
Meliá Hotels International is to debut the five-star Meliá Trinidad Península in the central coastal city of Trinidad known for its Spanish colonial buildings and cobblestoned streets dating from when it was a center for sugar production.
Spain’s leading hotel operator and the 17th largest in the world is also opening the four-star Sol Caribe Beach in the well-known seaside resort town of Varadero where Meliá already operates 11 hotels under several of its brand names.
With these two additions, the Majorca-based company will have 33 hotels in Cuba, making it the largest foreign operator on the island by far and where executives argue there is still a bright future for investment.
“Cuba is a unique holiday destination in the Caribbean with still a large growth potential and solid tourism sector,” Meliá’s Area Director in Cuba Gonzalo Echevarria told Hospitality Insights.
“It’s a one-of-its-kind land in the region that will continue to be an attractive choice for travelers, especially now that the industry is recovering after the unfortunate pandemic period and the number of trips globally are expected to increase in the short run,” he added.
Recent challenges
Cuba, and its lucrative tourism industry which is the second largest source of foreign exchange, was hit hard by COVID-19 until the government-imposed travel ban was lifted a year ago. International tourists were also put off from visiting the island following anti-government street protests in 2021, the largest in decades.
And this summer an outbreak of Dengue fever which can sometimes be fatal made headlines in some of the country’s main generating markets like Spain. In May, a gas explosion during renovations at Havana’s historic Hotel Saratoga killed 47 people, mostly construction workers.
In the latest disaster to hit Cuba, last month Hurricane Ian left a path of destruction in the west of the island, killing three people, leveling thousands of homes and leaving tens of thousands of people without electricity.
However, Cuban officials say international travelers are coming back in droves. In the first seven months of this year, close to 835,000 foreign tourists visited the island nation, a 550 per cent increase over the same period in 2021, according to the National Statistics Office.
The leading generating markets were Canada, the United States, Spain, Russia, Germany, United Kingdom, France, Italy and Mexico. Tourism officials say they expect a total of 2.5 million visitors in 2022, or around half of pre-Covid numbers.
Echevarria said feedback from Meliá’s main source markets echo the government claim that tourism’s back. “However, we believe numbers will escalate gradually. Our key goal will be in providing new and loyal guests with innovative holiday experiences in safe and sustainable environments,” he said.
The executive dismissed concern that the political unrest and the Dengue outbreak would significantly harm visitor numbers.
“Cuba is perceived as one of the safest destinations in the area and it truly is,” he said. “Travelers will always have concerns with this type of situation but in our case, we haven’t had negative feedback from them regarding these issues.
“Viruses like Dengue are seasonal and have always existed and that is why the government maintains strict control of potential focal sources of the disease. And high-standard medical care is guaranteed to all visitors.”
Meliá and other foreign operators largely closed during the pandemic but are gradually reopening with 20 of Meliá properties up and running. Echevarria said the rest will begin accepting guests again in October and November.
Government ownership
Spanish hotel companies operate in Cuba in cooperation with the government which owns the properties. This has sometimes caused problems for the operators under the US Helms-Burton Act of 1996, including Meliá.
Under Title III of the law designed to deter foreign investment in Cuba, claimants can seek compensation for property confiscated by the Cuban government following the communist revolution in 1959 which includes some properties which are now hotels and that once belonged to Cubans who fled to the United States.
According to Ignacio Aparicio, a partner at the Andersen law firm in Spain and the director of its Cuban Desk, successive US. presidents had suspended the application of Title III until the Trump Administration.
“Since then, many lawsuits have been filed in US courts against companies allegedly trafficking in confiscated assets,” he said. “So far, several lawsuits have been dismissed…and we are not aware of any final decision of condemnation.”
However, under Title IV of the act, the US can prohibit the entry into the United States to executives and their family members which Washington deems to have trafficked in property over which a U.S. national has a claim.
“During the Trump Administration, the US Secretary of State decided to prohibit the entry into the U.S. of some 20 executives of the Meliá hotel company, as well as all their families including its CEO Gabriel Escarrer,” Aparicio explained.
“Meliá and other Spanish hotel companies have, for many years, been committed to tourism development on the island because of the future importance of this market and because they do not recognize the extraterritorial application of the Helms-Burton Act,” he said.
Travel bans
The Trump Administration also tightened travel bans to Cuba for most Americans and banned direct flights to Cuban cities other than Havana. But the Biden Administration is now rolling back some of the restrictions.
Meliá’s Area Director in Cuba said the company did not foresee any further problems with the effects of the act on its investments there.
“US policy towards Cuba has a negative effect on tourism in general. However, companies have found alternatives to overcome these difficulties and built strong and sustainable business models in the island despite the existing restrictions, Meliá being among them,” he said.
“We’ve worked well in Cuba since the beginning,” Echevarria said. “The relationship with our partners here has been respectful and fruitful…and we are confident that this will continue to be the case in the future”, adding that the operator has new management contracts with Cuban authorities in the pipeline.
Another major Spanish chain, Iberostar, is adding to its portfolio of 18 hotels in Cuba with the opening this year of a five-star property under its Iberostar Selection Esmerlada banner in the beach resort of Cayo Cruz.
It is part of the company’s Caribbean expansion plan which is to include two new hotels in Mexico, two in the Dominican Republic, and another in Aruba, its first foray into that Dutch destination.