Starwood gets approval for Cuba operations

Hotel Inglaterra

It's finally happened: Starwood Hotels & Resorts Worldwide has signed three new hotel deals in Cuba, becoming the first U.S.-based hospitality company to enter the market in nearly 60 years. 

The U.S. Treasury Department has issued authorization for Starwood to operate hotels in Cuba. In Havana, the Hotel Inglaterra will join The Luxury Collection and Hotel Quinta Avenida will become a Four Points by Sheraton. Both hotels will undergo renovations before raising their new brand flags later in 2016. 

The Company also announced that it has signed a Letter of Intent to convert the Hotel Santa Isabel into a member of The Luxury Collection.

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“We are confident Starwood is the right partner to help write the next chapter of relations between Cuba and American business, and we moved quickly and enthusiastically to pursue opportunities following recent government actions," Kenneth S. Siegel, Starwood’s Chief Administrative Officer and General Counsel, said in a statement. 

Hotel Signings
Starwood has partnered with owner Gran Caribe to rebrand the Hotel Inglaterra as a member of The Luxury Collection. The Inglaterra first opened its doors in 1875 and is home to the Gran Café el Louvre, which has hosted artists and travelers for over a century. Upon completion of the preservation and conversion projects later this year, the hotel will have 83 rooms and reopen under The Luxury Collection banner.

Hotel Inglaterra

Starwood has signed an agreement with Grupo de Turismo Gaviota S.A. , owner of Hotel Quinta Avenida in Havana’s Miramar district, to rebrand the hotel as Four Points by Sheraton Havana later this year. The hotel will cater to business travelers with approximately 186 rooms.

The company also has signed a letter of intent with Habaguanex, owner of the famed Hotel Santa Isabel, to convert the 19th-century colonial-style palace to a member of The Luxury Collection, pending U.S. Treasury Department approval. 

Improving Relations

Havana

The decades-long embargo (called the “blockade” in Cuba) has prevented most U.S.-based trade with the island nation, and the Helms Burton Act from 1996 has blocked many international businesses from operating in both countries for decades. Some internationally based hotel companies, however, have been able to skirt the rules and open properties in both the U.S. and Cuba, and a few limited American companies have been able to trade there--but on a cash-only basis.

It is worth noting, of course, that internationally branded hotels have been operating in Cuba for years. As of this past summer, the Spanish-owned Melia brand had at least 28 hotels with more than 13,000 rooms in Cuba, and more were in the pipeline. French hotel company Accor has two hotels in Cuba, and Spanish-based NH Hotels has one. With several hundred international partners already operating in Cuba, the country is "very much" open to building its foreign trade.

To that end, on December 17, 2014, President Obama announced plans to normalize diplomatic relations between the United States and Cuba, and in August 2015, the U.S. Embassy in Cuba was reestablished. Then, last month, the U.S. and Cuba signed an agreement that provides U.S. airlines the opportunity to operate up to 110 daily roundtrip flights, which would resume commercial airline service between the two countries for the first time in more than 50 years and promises to vastly increase the number of Americans traveling to Cuba.

Starwood was advised by D17 Strategies, a consulting firm providing strategic counsel to clients seeking to carry out Cuban trade, investment, travel, and exchanges permitted under new U.S. regulations.

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