Team Leader: Mary Peplinski
Primary Author: Clay Carter
Keywords: infrastructure, air-transportation capacity, foreign visitor, seasonality
In 2015, tourist visits to Cuba reached a record high of just under 3.5 million, up 17% from 2014. With growing support in the US to lift its ban on tourist travel to Cuba and the already eased restrictions for those travelling to Cuba exempt from the ban, it is projected that this figure will continue to rise rapidly over the next few years. It is estimated that if the US travel restrictions are officially lifted, 1.5 million Americans would travel to Cuba annually. There is growing concern as to whether Cuba’s comparatively weak infrastructure is capable of supporting this tourism boom if, and when, the ban is lifted.
Complicating this issue, in the first half of 2016, Cuba experienced an economic slowdown as a result of the deceleration of its GDP growth. This has triggered cuts in infrastructure spending and investment. These conditions have made it increasingly difficult for Cuba to make many needed improvements to its infrastructure.
That being said, the Cuban government has prioritized investment in infrastructure pertaining to the tourism industry. In particular, they have recently expanded their air-transportation capacity to more than 8 million tourists per year, putting this sector in a capable position to handle an influx of tourists. Cuba is also continuing to focus on the expansion of their hotel capacity. Hotel capacity in particular poses a substantial concern in being able to handle a tourism boom. For the short term at least, there is limited hotel space available on the island. However, considering that foreign visitor’s occupancy in hotels did not exceed 70% at any period in 2015 and with plans to increase its hotel capacity to 85,500 rooms by 2020, and further to 200,000 rooms by 2030, Cuba seems to be sufficiently capable of mitigating – but not eliminating - this risk in the short and long term.
Cuba’s significant dependence on European and Canadian markets for escaping harsh winters and other seasonal factors has contributed to a marked seasonality of Cuba’s tourism industry. Considering tourism is the second largest source of foreign revenue for the country, this seasonality contributes to the macro-economic instability currently displayed in Cuba. However, the US cruise industry brings with it the potential to offset this instability. As a result of the seasonality mentioned above, Cuba receives relatively few international visitors from May to October which is peak season for the American cruise industry. Cuba has developed four ports with infrastructure capable of receiving cruise ships while other places on the island have the potential to become ports of entry. The lifting of the US ban has the potential to make the Cuban economy more sustainable and predictable, especially through the cruise ship industry.
Another unique infrastructural risk in Cuba is the restriction on foreign business workforces. A foreign business may neither bring its own personnel to Cuba nor hire employees directly. Rather, it is required to hire only through Cuban government employment offices. These employment agencies select the workers and negotiate wages, hours, and other employment terms. The Cuban workforce is well educated however the workforce selected by these agencies to run and maintain the tourism industry has lacked proper training. American tourists will demand a higher level of customer service and quality of facilities than Cuba has historically been able to supply. Tourism authorities are looking to address this by increasing the number of graduates in tourism training programs and developing hospitality management as a post-graduate study.
An additional threat to the sustainability of the Cuban tourism industry is their ability to supply food and beverages. The growth in tourism has expanded demand for food and beverage commodities and shortages often occur. These shortages usually occur at the expense of the domestic population. This poses a serious threat to Cuban-tourist relations and needs to be addressed by the Cuban government.
Despite Cuba’s economic slowdown and infrastructure spending cuts, it seems they are capable of sustaining a tourism boom if the American ban is officially lifted. However, significant risks still exist with regards to further developing and maintaining the infrastructure that supports the tourism industry in Cuba in the long term.