Large Hotel Brands Prepare to Penetrate Cuba

As President Obama is making history as the first sitting U.S. president to visit Cuba in more than 80 years, large hotel chains are making their own moves to lay claims to a hospitality and tourism market that officially has been off-limits to Americans for decades. Marriott and Starwood Hotels & Resorts Worldwide have applied for permission to invest in hotel development in the country, and Marriott President and CEO Arne Sorenson is actually part of an executive team traveling to Cuba during the President’s visit.

Starwood First to Penetrate Cuba

Last week Starwood received permission from the U.S. Treasury Department to proceed with its plans. It officially became the first American company to enter the Cuban market; inking a deal March 19 that will permit the hospitality giant to renovate, rebrand and then operate three existing properties in Havana.

Reuters reports that Jorge Giannattasio, Chief of Latin America Operations & Global Initiatives at Starwood Hotels & Resorts Worldwide Inc., said the deals represent a “multimillion-dollar investment to bring the hotels up to our standards.” Currently, most hotels in Cuba are government-run, with service and amenities that tour operators admit is less than stellar.

According to Reuters, Starwood plans to transition the military-owned Quinta Avenida Hotel to a Four Points Sheraton, and will fold the state-owned Gran Caribe Inglaterra Hotel into its Luxury Collection brand. The third property, The Santa Isabel, is technically still under negotiation, but is expected to also resurface under Starwood’s Luxury Collection brand. In addition to renovating and rebranding the three properties, Starwood will hire and retrain staff.

Michael Weissenstein of Associated Press reports that the Starwood hotels in Cuba will be outfitted with everything from new mattress to improved kitchen equipment. The properties will be managed by expatriate Starwood employees, as Cuban law currently prevents widespread direct hiring of Cuban workers by foreign firms.

Marriott Also Moves Forward

In a company statement, Sorenson said, “We are gratified to receive permission from the U.S. government to pursue business opportunities in Cuba.  While there is still work to do before any agreement is reached, we are actively pursuing relationships in the hospitality sector. We have long been convinced that with the right frameworks in place, new economic opportunities, including dramatically expanded travel, abound in Cuba.  These could deliver real benefits to the Cuban people and also have the effect of bringing both Americans and Cubans closer together.”

According to Sorenson, Marriott hopes to provide hospitality training and generate economic opportunities for Cuban nationals.

Currently, very few luxury properties exist in Cuba. Marriott’s presence could significantly expand the options for luxe accommodations on the tropical island, which boasts beautiful beaches and a vibrant culture.

Booming Interest in Cuba

In December 2014, President Obama took the first meaningful steps to thaw Cold War relations with neighboring Cuba, located just 90 miles off the coast of Florida. Cuba’s tourism industry has been booming ever since. The number of international visitors rose 17 percent to 3.5 million in 2015. A record 161,000 Americans journeyed to Cuba in 2015, representing a nearly 80 percent increase from the previous year, despite the fact that they technically had to travel under the auspices of 12 authorized purposes. Obama recently relaxed these restrictions, freeing Americans to visit the island without special permission or penalty.

With increased air lift, the number of American tourists visiting Cuba is projected to continue to skyrocket. According to AP, carriers are hoping to offer as many as 110 commercial flights a day from the United States.

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