4 questions for Fernando Fernandez, Apple Leisure Group

(Classic Car in Cuba)

As Cuba hosts its first hotel development conference, SAHIC Cuba, May 16 to 17, HOTEL MANAGEMENT speaks to Fernando Fernandez, VP development at Apple Leisure Group, who is attending the conference in the hopes of expanding the presence of the Newtown Square, Pa.-based company’s all-inclusive brand AMResorts, which operates 52 resorts across six all-inclusive collections in Mexico, the Caribbean, Costa Rica and Panama.

Fernandez discusses the current state of U.S. travel to Cuba, which is limited to 12 specific categories and continues to exclude general leisure travelers, and the outlook for the Trump administration’s relationship with the country as well as Cuba’s need for a more Americanized hotel product.

Americans still can’t go to Cuba for leisure travel and already some U.S. airlines have pulled out of Cuba. Is this a watch-and-wait scenario for American hotel development in the destination?

When [President] Obama announced the changes in the U.S.’ relationship with Cuba, I think everyone thought the process toward leisure travel would be quick, and then the election happened. But the new president is taking his time, so we’re not sure if the U.S.’ conversations with Cuba will continue, which is delaying the process of allowing Americans to travel to Cuba for leisure. That means there are obviously fewer passengers flying to the country from the U.S. Hotel companies also haven’t been able to finalize any closings in Cuba or put our brands on any hotels there because there are fewer passengers traveling there than expected.

AMResorts started the application process for a license to operate in Cuba over a year ago and in the first six months the process moved along quickly and we provided the Cuban government with a lot of information. Then everything slowed down and we noticed there hasn’t been any progress on the application and the process continues to be on hold as we watch and wait to see what the Trump administration decides about Cuba.

There is also concern about what that decision will be; will he continue the process that Obama began or simply keep it as it or go backwards. There are no answers as to what the future holds. In the meantime, Apple Vacations has a program to Cuba that has seen a year-over-year increase in U.S. travelers to Cuba, but the increase hasn’t come as fast as we thought it would.

Right now, Americans can go to Cuba if they meet a certain criteria, but it’s not easy and if you’re traveling with your family, you don’t want to go through the process. But Cuba is a perfect destination because it’s so close to the U.S. and it already has 10 international airports connected to more than 40 cities around the world. Now we just need the capability for U.S. travelers to go to Cuba without going through a lot of paperwork and forms and visas. So we’re really hoping this is going to change soon.

Do you expect pent-up demand for Cuba among American travelers will affect business at AMResorts’ other properties in the region?

In the beginning, I think there will be overlap in demand because Cuba will obviously be a very interesting place to visit. But I think that overlap will eventually fall off and Cuba will become more of a competitor for urban destinations because Havana is such a draw for travelers to Cuba. I think travelers who love the Caribbean are going for the beaches. Havana is truly a city destination. So relaxing on a beach isn’t necessarily the priority for travelers going to Cuba. We also don’t anticipate a major decline in guests to our other resorts when Cuba opens to Americans because Canadians and Europeans have been going to Cuba for years; they’re familiar with the island and they are also among our guests. Also, right now Cuba is on the way to developing product to U.S. standards, but it’s still a work in progress and that too will keep Americans from coming to Cuba.

Do you expect the all-inclusive in Cuba to differ from AMResorts’ other properties in the region?

Right now, Cuba has a very European hotel product and what U.S. travelers are accustomed to is a very high-end, luxury product that is beautiful and offers a certain level of dining and service. If you go to Cuba right now, there are some very nice properties, but they won’t meet that American expectation. But they will be developed as we’ve been in conversations with hotel companies in Cuba. The focus first needs to be on the existing dining, amenities and Internet connection because right now, most hotels have a very weak connection. American travelers take these things for granted because other properties in the Caribbean already have them.

Which regions of Cuba do you expect will be most suitable to the all-inclusive product?

Since Havana is a city destination, it’s not really where we would like to be. Havana is more suitable for an EP [European Plan] hotel product. The entire coast of Cuba is suitable for an all-inclusive product. The country has unbelievable beaches and they plan to develop a lot of the beaches. Gaviota, a major player in Cuba, has plans to develop about 20,000 rooms by 2020. Cuba’s coastline and cays are really suitable for all-inclusive products. But there are potential opportunities for anyone who wants to develop in Cuba and Gaviota has a well-defined development pipeline for the entire island.