Why hotel developers are delighted about the prospect of an open Cuba

If all goes as planned, soon you'll be able to have your Cuban cigar—and smoke it, too, legally.

For longer than many in the U.S. have been alive, ties between the Caribbean island country and the U.S. have been strained—illustrated by years of embargo.

But after the recent release of Alan Gross, held in Cuba as a prisoner for more than five years, there is now the groundwork in place to restore full diplomatic relations with Cuba.

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And that has U.S. companies—hotel companies—chomping at the bit. Just check out the lede in a New York Times column from yesterday: "PepsiCo wants in. So do Caterpillar and Marriott International."

An open Cuba would mean big business for hotel companies eager to plan their flags and tap into a relatively untapped resource.

As The Wall Street Journal reported, U.S. hospitality companies reacted "with hope mixed with a bit of caution" to Wednesday's news that the U.S. and Cuba were ending their decades-long rift. Hotel executives told WSJ that though they were eager and excited about the prospects of an open Cuba, there were hurdles and risks associated with moving in to do business on the island.

But those risks might be overshadowed by the unlimited potential of Cuba as a destination due to its undeveloped beaches and close proximity to the U.S.

"The minute it’s available, we’ll be down there," said Choice Hotels International CEO Stephen Joyce told the Journal.

Marriott International CEO Arne Sorenson sounded as bullish. "We will take our cues from the U.S. government, but look forward to opening hotels in Cuba, as companies from others countries have done already," he said.

A statement from UK-based IHG read: "President Obama’s announcement on the U.S. and Cuba re-establishing diplomatic relations is quite fresh; therefore, we will continue to assess how this impacts the hotel sector, broader travel and tourism industry and our business for the short- and long-term."

Up until now the hotel infrastructure in Cuba has been dominated by European and Canadian chains, and smaller local operators. Finance & Commerce quotes Eddy Arriola, chairman of Apollo Bank, a Miami-based lender for real estate projects, "U.S. hotel operators are better poised to enter the market than developers seeking to build. The companies that are there now are the hotel operators that run a business. U.S. developers will have a much more difficult time because the major land owner is the Cuban government."

Still, it may be a tad premature to get too worked up in regard to travel and development in Cuba. Travel to Cuba for the past several years has been limited to aid-related travel, as well as what's known as the people-to-people exchange program—guided tours focused on education and cultural exchange—not, as a Fox News story put it: fun in the sun. And that's not going to change in the near future, the piece went on, as "travel is still banned except for these narrow, and very expensive, programs."

Moreover, for developers, there undoubtedly will be challenges to building and ownership. As recent as 2011, Cuban citizens had trouble buying and selling property.

Still, hotel companies relish the opportunity. As Aaron Radelet, a spokesman for Hilton Worldwide told The Wall Street Journal, "Our founder Conrad Hilton often spoke of 'world peace through international trade and travel,' which remains just as important and core to our business today."

After all, Hilton once had a hotel in Cuba: the Habana Hilton, which opened in 1958. The Bay of Pigs Invasion happened three years later. 


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