American tourists in Cuba in 2010?
The Freedom to Travel to Cuba Act, introduced into the US House of Representatives in February 2009, gained momentum recently as the US House Committee on Foreign Affairs held a hearing on the matter in November and the Cuban Tourism Ministry promoted Cuba to travel executives in a virtual meeting in mid-December. The Act would lift the travel ban on Cuba.
Although there is speculation that there is not enough support by the Democrats in the House of Representatives, US Tour Operators Association President, Bob Whitley, said at Travel Weekly's Virtual Tradeshow in December that he believes that Congress will pass the Act in the spring of 2010. Euromonitor International investigates the impact of the legislation.
|Table 1||Top Ten Caribbean Markets for US Arrivals|
|2007||2008||Year on Year|
A tourism windfall
The American Society of Travel Agents estimates that 835,000 Americans would visit Cuba each year in addition to the 960,000 that would visit friends and family or arrive by cruise ship. The Cuban government estimates that US tourism companies would earn US$1.1 billion yearly from American visitation to the island. Airlines would reap US$600 million while travel agents would take home US$200 million annually.
Destination competition may heat up
Despite the American travel embargo, Cuba is a stalwart in international tourism. It ranked 6th in international arrivals in 2008 for all of Latin America with over 2 million visitors. While the visitation and spending estimates for inbound Americans are attractive, it may be that leisure visits to Cuba cannibalise visits to Florida or other Caribbean nations in the short term instead of driving revenue growth for American tourism companies. However, from 2006 to 2008, Canadian visitation has grown simultaneously to Mexico, Cuba, the Dominican Republic, and Jamaica, which suggest that during flush economic times the risk of cannibalisation is low and other factors, such as airlift expansion and increasing disposable incomes, play an important role in driving growth in international tourism. Nevertheless, the novelty in visiting Cuba will likely override those factors in the short term. However, industry sources point out the fact that the Cuban government may limit the number of American visitors to 500,000 a year because the island lacks the sufficient infrastructure to handle an influx of Americans.
|Table 2||Top Four Latin American Markets for Canadian Arrivals|
Tough obstacles to overcome
Despite the recent momentum, The Freedom to Travel to Cuba Act may languish in Congress for years as the US government addresses other issues, such as healthcare reform. Another key piece of travel legislation, the Travel Promotion Act, has been making the rounds since 2007. Additionally, large obstacles would remain even if the act passes:
• The trade embargo would remain in place, preventing real estate developers and hotel management companies from operating on the island.
• The political environment may remain a high risk despite government efforts to woo the American travel industry. For instance, Allegiant Airlines withdrew its airplane from charter operations to Cuba in August 2009, citing an "operational complexity inconsistent with our operating philosophy."
• A crumbling infrastructure and a substandard service culture may deter American travellers.
Despite these obstacles, the pent up demand from both tourists and expatriates is expected to cause a spike in demand as soon as the travel ban is repealed with most of the immediate rewards going to airlines, travel agencies and tour operators. With an estimated 1.6 million Cuban Americans in the US, most of whom live in Florida, airlines, such as Allegiant, JetBlue, Spirit Airlines and American Airlines, will likely benefit strongly from the visiting friends and relatives traffic. However, the longevity of American holiday demand will depend upon the improvement of the infrastructure to compete with other Caribbean destinations once the novelty wears off.