Cuba gets first American-branded hotel since 1959

It's finally happened: For the first time since 1959, a hotel in Cuba is operating under a U.S. brand. The former Hotel Quinta Avenida in Havana’s Miramar district has been rebranded Four Points by Sheraton Havana. Owned by the country's military, the hotel is one of two that Starwood Hotels & Resorts Worldwide  agreed to manage in a multimillion-dollar deal with Cuba in March.

Since the agreement was signed, Starwood has said that it has made "significant life and safety upgrades" to the property to "ensure that it meets the company’s global standards," and the hotel will continue to undergo upgrades and improvements over the next few months. Travelers from the United States must meet all of the travel requirements established by the U.S. government before departing for Havana.

Starwood also partnered with owner Gran Caribe to rebrand the Hotel Inglaterra as a member of The Luxury Collection, and 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. 

Starwood's soon-to-be parent company Marriott is also planning to open properties in Cuba, but no definite plans have been announced yet. In March, Marriott's president and CEO Arne Sorenson wrote a blog post about the brand's plans for the country: "Behind the lofty goals of greater collaboration are some tactical ones. The hospitality industry recognizes an obvious need for tourism infrastructure—especially in light of President Obama’s recent easing of travel restrictions. More Americans will be coming—but work remains to get Cuba prepared.  Case in point, the influx of people for the U.S. Administration’s visit has likely taxed the country’s hotels." 

New Opportunities

The rebranding and the new hotels are just part of a gradual loosening of restrictions regarding relations between the U.S. and Cuba. In December 2014, President Obama made travel between the two countries easier. Since then, American travel to Cuba has boomed, and Havana's hotels are perpetually full. The country had 1.5 million tourists visit in the first four months of 2016, up 13.5 percent from a year earlier. In 2015, Cuba exceeded 3.5 million visitors for the first time. The increase in visitor nnumbers has prompted the Cuban government to plan construction this year for more than 13,000 rooms in the beach resort areas. Ultimately, the Cuban government is aiming to add 85,000 new rooms by 2020.

Currently, international trade with Cuba is restricted by specific rules. Private partnerships are not allowed, forcing all foreign businesses to apply to the Cuban government for permission to develop in the country. Both the private international business and the government must provide capital and then divide the profits in a pre-determined pattern.

But those rules have been changing, and rapidly. Just before Marriott and Starwood announced their Cuban initiatives, the U.S. Office of Foreign Assets Control published a rule that further facilitates travel to Cuba, authorizes additional types of financial transactions and allows companies to have a greater business presence on the island. American businesses can get approval to operate in Cuba if they can prove that they will help the Cuban people, Doreen Edelman, a shareholder at Baker Donelson said. As such, Airbnb has been able to operate in the country for more than a year because they only work with private Cuban entrepreneurs operating casas particulares. “They’re not dealing with Cuba’s hotel sector in general, because that’s government-owned,” she explained. Of about 200 hotels in the country, she said, half are owned by the government, a quarter are owned by international companies in a joint venture with the government, and a quarter are run by private individuals—working under the guise of foreign hotel owners.

Earlier this month, six U.S.-based commercial airlines received authorization from the U.S. government to offer direct flights to Cuba, another first that is likely to help the tourism numbers grow even higher. American Airlines, Frontier Airlines, JetBlue Airways, Silver Airways, Southwest Airlines and Sun Country Airlines can now fly directly from Miami, Fort Lauderdale, Chicago, Minneapolis/St.Paul and Philadelphia to nine destinations in Cuba (Camagüey, Cayo Coco, Cayo Largo, Cienfuegos, Holguin, Manzanillo, Matanzas, Santa Clara and Santiago de Cuba). Notably, the six airlines that received permission to fly to Cuba represent fewer than half of the lines that submitted applications.

In Havana, ICAP (Instituto Cubano de Amistad con los Pueblos) is a social organization that helps facilitate a better understanding of Cuba for foreigners by bringing international visitors to Cuba and connecting them with locals. Last year, Vladimir Falcon, who works in the U.S. division of ICAP, called Cuba “forbidden fruit” for American travelers, and said that Havana is currently unprepared for the anticipated “tourism tsunami.” The city’s hotel scene is currently “feeling stress,” he said, and local government is working with both local and international developers to open new hotels. Tourism, he said, is a driving force for the nation’s economy—which can float all boats. “We can use it to improve our infrastructure,” he said. “Tourism will be a door.”