Wednesday, April 04, 2007

Cuba's tourist economy in trouble

Miami Herald online
Posted on Tue, Apr. 03, 2007
Cuba's tourist economy in trouble
Cuba's tourism industry, the island's main economic engine for the past 15 years, is in a steep fall amid a mix of factors that range from rising air ticket prices to changes in tour ownerships and crumbling tourist facilities.

The first alarm rang late last year, when Ministry of Tourism (MinTur) figures showed 2.2 million people had visited the island in 2006, down from 2.3 million in 2005.

The decline has accelerated so far this year. January and February indicators show a combined drop of 7 percent compared to the same months in 2006, according to the most recent MinTur figures, with February visitation falling 13 percent.

Spanish tourists, historically the island's third-largest group, dropped by 45 percent over both months.

Cuba's tourism industry has been generating more than $2 billion per year in recent years, and provides direct and indirect employment to about 300,000 people.

Cuban authorities explaining the drop have cited a rise in air fares, due to the cost of fuel, currency exchange rate shifts and the scares of the notoriously violent 2005 hurricane season. Also mentioned are the Bush administration tightening of restrictions on Cuban-American trips to the island, which according to Cuban news media reports dropped from 100,000 in 2004 to about 30,000 a year since.

On the plunge in Spanish tourism, MinTur officials focused blame on the suspension of three weekly flights by the Iberojet charter airline and the sale of the cruise line Pullmantur to Miami-based Royal Caribbean Cruises. A Pullmantur ship used to sail every week from Havana after picking up tourists who had flown in from Madrid, but the company was forced to end its Cuba stops under the new owners because of the U.S. trade embargo.


But internal MinTur documents obtained by El Nuevo Herald, independent experts and tourism-sector workers on the island show there are other serious problems not mentioned by MinTur.

Most of Cuba's tourism facilities were built in the 1990s and have received little maintenance since then, said a MinTur official who asked for anonymity out of fear of government punishment.

''The structure created for years in the tourism industry is crumbling piecemeal,'' the employee said. ``Tourism in Cuba is headed for chaos and it will take years to revert the present situation.''

The MinTur documents also point to the inability of the Tourism Construction Enterprise (Emprestur) to repair hotels because of the lack of materials.

The employee said there's also widespread dissatisfaction with the way Tourism Minister Manuel Marrero Cruz and leading managers are running things. Marrero, former president of the Gaviota Group, run by the Cuban armed forces, and a trusted aide to Cuban interim leader and Defense Minister Raúl Castro, was appointed to the post in early 2004 after the removal of Ibrahim Ferradaz amid reports of a corruption scandal.

''What's happening in tourism is a reflection of a behavior that has spread nationwide,'' said dissident economist Oscar Espinosa Chepe on the phone from Havana. ``People are disgusted with the economic situation at home, workers don't take pride in their work and inertia corrupts the entire organization.''


Also affecting tourism was the Cuban government's decision in late 2004 to effectively increase the value of its currency by 20 percent, making foreigners' hotel stays and meals in Cuba that more expensive.

``It was logical that a devalued dollar would cause a drop in tourism from Latin America and Canada, because the visitors from those countries buy very cheap packages, said Carmelo Mesa Lago, professor emeritus at the University of Pittsburgh and a long-time Cuban economy watcher.

With 44,000 hotel rooms, Cuba had an occupancy rate of 63.5 percent in 2004 and only 55.7 percent in 2005, according to the United Nation's Economic Commission for Latin America and the Caribbean. The average daily expenditure per visitor dropped from $175 in 2003 to $97 in 2005.

MinTur has not released occupancy statistics for 2006, but the MinTur official estimated it at 50 percent.

Trying to reverse the trend, MinTur announced a strategic plan for 2007 that involves support for investments, construction of new facilities and repairs of existing hotels. The plan also envisions improved highways and road signs, and guarantees of electricity and water for the tourism industry.

Marrero has announced a ''total change in the philosophy of promotion and advertising for the island,'' and in January unveiled a campaign named ''Viva Cuba,'' designed to present a new image of the country, at the International Tourism Fair in Madrid.

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