European hotel companies oppose Cuba restrictions

Old Havana Street
Tourism to Cuba has grown considerably over the past few years. Photo credit: Jena Tesse Fox

Last week, the Trump administration stepped up its crackdowns on trade with Cuba, Nicaragua and Venezuela, rolling back Obama-administration policies and issuing new restrictions and sanctions against the three countries.

As financial website Finance Daily noted, these restrictions likely will be felt most keenly in Cuba, which has enjoyed several years of improved relations with the U.S. and increased travel. Havana even has a hotel under Marriott's Four Points brand—the first American-flagged hotel to open in Cuba in more than half a century. 

But Cuba has been struggling economically following a drop in aid from Venezuela and a downturn in other key economic sectors. The new regulations are poised to restrict “nonfamily travel” and curb the number of outbound Americans eager to visit Cuba legally. In a speech to veterans of the Bay of Pigs invasion, the failed 1961 attempt to overthrow the government of former president Fidel Castro, U.S. National Security Advisor John Bolton called such visits “veiled tourism.”

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Europe Responds

In a shift from a decades-long tradition, the administration will not renew the waiver related to Title III of the 1996 Helms-Burton Act that prevents lawsuits from Americans over properties confiscated during the Cuban revolution—a move that could cause concern for hoteliers whose properties once belonged to American businesses. 

Late last year, the U.S. State Department added 16 hotels owned by the Cuban military to the Cuba Restricted List, a listing of hotels and other entities that U.S. citizens are prohibited from having direct financial transactions with. Many of these hotels are joint ventures between European companies like Meliá, Iberostar and Kempinski and the Cuban government. 

Spanish hotel chain Meliá Hotels International, which has more than 30 properties in Cuba, issued a statement rejecting the latest U.S. sanctions. Following the full application of the Helms-Burton Act, the company said that it expects to continue operating in Cuba  and another 44 countries. The statement also noted that the company does not own its assets in Cuba outright, and therefore is not subject to any lawsuits that could be filed from the U.S. under Title III.

Not only are private businesses speaking out against increased sanctions, but the European Union itself threatened to take up Cuba's cause before the World Trade Organization at the request of the Spanish government. Perhaps not so coincidentally, Forbes noted that U.S. and EU representatives reopened talks on the trade agreement between the two superpowers to avoid a transatlantic trade war at the same time as the Cuba issue was brought to the floor. 

Represented by the Meliá, Barceló and NH hotel chains, Spain is the third largest trade partner of Cuba (behind China and Venezuela) and the main European trade partner with a market share of around 40 percent, according to Forbes. As such, the country has opposed the Helms-Burton Act since it was implemented 23 years ago. 

"The EU will consider all options at its disposal to protect its legitimate interests, including in relation to its WTO rights and through the use of the EU Blocking Statute," the EU said in a statement. "The statute prohibits the enforcement of U.S. courts judgments relating to Title III of the Helms-Burton Act within the EU, and allows EU companies sued in the U.S. to recover any damage through legal proceedings against U.S. claimants before EU courts." 

Development Continues

While increased sanctions and a struggling economy may affect visitor numbers, Cuba has been on a tourism upswing, driving both hotel demand and supply. According to the Ministry of Tourism, 4.75 million tourists came to Cuba in 2018, up 6 percent over the previous year. As of late December, the ministry expected to surpass 5 million this year.

Last month, official Cuban Communist Party newsletter Granma reported that some 3,805 hotel rooms are poised to open across the country this year, and another 5,000 will be renovated and improved by 2020. By 2030, Havana alone is set to have 5,000 additional guestrooms.

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