Earlier this week, we looked at how Apple Leisure Group has been growing over the last several years, and how its new “Defined Delights” option for all-inclusive hotels will cater to new traveler needs. As he talked about new trends in Latin American hospitality, ALG CEO Alex Zozaya also discussed expansion into Cuba, how the Philadelphia-based company’s plans for the embargoed nation could change in coming years and how the recent election could affect tourism.
Apple Leisure Group already sends passengers to Cuba through its Travel Impressions tour operator under the people-to-people exemption, Zozaya told HOTEL MANAGEMENT. “It’s the only way we can send passengers. Tourists have to interact with locals somehow—in a gallery or museum or socially.” The interactions add value for a trip, he said, but the embargo is still restrictive in terms of what American visitors are allowed to do while on Cuban soil.
The embargo also prevents the company’s hotel ventures from gaining a foothold in Cuba. “We can’t capture that opportunity,” Zozaya said.
While Marriott and its new subsidiary Starwood got permission to operate in Cuba earlier this year, the process is lengthy and no other U.S.-based hotel businesses have been able to open there. And, Zozaya said, the results of the current election seem poised to continue blocking investment in the communist nation. Had the Democratic party won the White House or gained a stronger hold of Congress, he said, President Obama’s efforts to break down the embargo might have continued, allowing for more businesses to expand there.
Last week, Javier Coll, EVP at Apple Leisure Group, told the Cuba Journal that the company has already had some “initial conversations” about opening in the country, and Zozaya said that Apple Leisure Group had identified some properties that it could manage in the short term. “With Trump’s win, that’s less certain.”
As we noted earlier this year when Marriott and Starwood announced their plans to open in Cuba, American businesses can get approval to operate in Cuba—but only if they can prove that they will help the Cuban people. Doreen Edelman, a shareholder at Baker Donelson, explained that Marriott would operate its Four Points Hotel in Havana—the first U.S. hotel to open in the country in 59 years—through a special license. Following the rule that any U.S. businesses operating in Cuba must prove that they are helping the Cuban people, the company will provide career training for locals. “They are teaching Cubans about the supply chain and what kind of services will be needed when Marriott comes into Cuba,” Edelman explained at the time.
It is worth noting, of course, Cuba currently has 16,000 hotel rooms and another 6,000 rooms in private homes. Tourism to the country grew 17 percent last year and overall occupancy was at 62 percent. As such, any administration focused on capturing lucrative business deals may continue to see Cuba as a worthwhile investment.
Maintaining the embargo would be a “step backward” for Cuba, the CEO said. “I don’t know how we’ll do business there. I really hope the embargo will be lifted soon and we’re able to go there. The weather, the beaches, the culture, the location—it’s all great for the U.S.”
The Election Effect
After an election with plenty of talk focused on restricting trade and raising taxes on imports, Zozaya is anxious to see how possible changes could affect international tourism. If one takes the view that spending by international guests could be considered an export, new laws could affect who travels where and how much they could spend—both in terms of international visitors coming to the U.S., and American travelers abroad.
“It could affect tourism if the administration decides to increase taxes on tourists traveling outside of the country,” he said. “It could affect who travels outside of the country. That would affect our business and the international travel business.
“But I’m hopeful that won’t happen,” Zozaya added. “When it comes to tourism, I hope the effect in short-term. We have stronger buying power when we go to other countries when money is devalued, which is happening right now. The currency in Mexico has been devalued by 16 percent. Americans have 16 percent more buying power in Mexico right now than before the election. If he ends up enforcing other taxes, we’ll see what it means for tourism. I hope it doesn’t affect airlines—and also, of course, that there’s no impact for tourists.”