Travel Companies Disappointed, Pleased Or Studying Trump’s Cuba Changes

Ramon Espinosa  / Associated Press

A vintage car passes in front of the Four Points by Sheraton hotel in Havana June 28, 2016. Trump’s changes in Cuba policy put U.S. hoteliers’ operations in Cuba in doubt. Ramon Espinosa / Associated Press

Skift Take: Now is the time for all travel companies to decline to be narrow-minded and to look at the big picture. For cruise lines to talk about the boost they might get in Cuba because hotels will be hard-hit is small-mindedness at its worst.

— Dennis Schaal

As the country’s latest position on travel to Cuba was revealed — kind of — Friday afternoon, tentative reactions from industry insiders started to roll in.

There was disappointment, frustration, confusion, some relief, and a lot of caution that the full picture would not be known still for weeks or months. Norwegian Cruise Line Holdings even labeled Trump’s Cuba travel policy revisions “a win for the cruise industry … ”

The biggest changes for travelers is that the U.S. will prohibit Americans from undertaking individual people-to-people trips to Cuba, and restrictions will be placed on doing business with hotels and attractions run by elements of the Cuban government.

President Donald Trump formally announced the policy Friday at a speech in Miami, couching it as the fulfillment of a campaign promise, the day after White House officials briefed reporters.

“The previous administration’s easing of restrictions on travel and trade does not help the Cuban people,” Trump said. “They only help the Cuban regime.”

Flights and cruises will be mostly left intact, but new restrictions will block business transactions with Cuban military enterprises.

The U.S. Department of Treasury’s Office of Foreign Asset Control still must come up with regulations to add fine print to broad policy, which will give travel companies more to work with.

More than a handful of U.S. airlines, including American Airlines, Southwest Airlines, JetBlue, and Delta, as well as multiple cruise operators, including Carnival, Norwegian, and Royal Caribbean, tout itineraries to Cuba. Five Expedia brands, including Expedia.com, Hotels.com, Travelocity, Orbitz and CheapTickets, started offering hotel bookings and private accommodations in Cuba last month, and the Priceline Group’s Booking.com has operated a Cuba business for some time. TripAdvisor is authorized to facilitate bookings to Cuba, and its editorial content about accommodations and activities there have been available for some time.

Overall, observers said getting rid of the option for individuals to choose people-to-people travel will likely have a wide impact as travelers who want to engage on that kind of trip will be forced to plan with an organizing group. The Obama administration made it possible for individuals to plan their own people-to-people trips in March of 2016.

Matthew Aho, a special advisor on Cuba at law firm Akerman, said that announcement last year came as airlines were promoting the launch of regularly scheduled commercial flights.

“The truth is that the only way to fill those flights was to make it possible for a lot more Americans to go to Cuba in a pain-free way,” he said. “I think that changing this policy really raises some serious questions about the viability, commercially, of regularly scheduled flights. It’s going to lead to a reduction in the number of Americans who are traveling to Cuba, it’s going to make it much more expensive.”

Aho also pointed out that spending a trip with a large group on big tours makes meaningful interactions with Cubans much more difficult.

“What this is going to do is prevent thousands of lawful American travelers who want to go to Cuba to enage in meaningful interaction wth Cuban people and want to stay in cases particulates [private homes] and eat in private restaurants, it’s going to prevent them from doing that,” he said.

Even for those in the travel industry who expected to see their own business get a slight boost, the news was not positive.

Eddie Lubbers, CEO and founder of inbound direct seller Cuba Travel Network, said he expects more visitors who want to go to Cuba without a crowd will turn to his service, which organizes approved trips for individuals and groups up to five people. He said that as travelers realize the Cuba picture is changing, they may look to a specialist to help arrange their trips.

“I think this is potentially good for our business,” he said. “Though in general terms, we’re not at all in the business of profiteering from sub-optimal situations and I think for the industry, of course, this is a setback.”

The Disappointed

One of the most pointed statements against Trump’s Cuba-policy changes came from World Travel & Tourism Council CEO David Scowsill, who labeled the reversal “a retrograde step for the Cuban people.”

“There is latent demand from the U.S. for people to visit Cuba to explore its history and culture, and it would be a retrograde step to revert once again to Americans traveling in groups,” Scowsill said in a statement. “Over the last months the uptake in travel from the U.S. to Cuba has not been as high as expected, primarily as hotel capacity has not kept up with the demand, leading to some of the U.S. airlines cutting back capacity to the island. President Trump’s announcement will put further pressure on the airlines.”

It won’t only be Cubans who will suffer from the changes, he argued.

Scowsill concluded: “There is plenty more scope to grow the travel sector in Cuba. The country is not reliant on the US market for further tourism growth, but it is American businesses and leisure consumers that will suffer from this proposed move.

The American Society of Travel Agents decried the changes but said the organization planned to participate in the process as the Treasury and Commerce departments come up with new regulations.

“ASTA is disappointed with the Trump administration’s announcement that it plans to turn back the clock on expanded travel and trade between the U.S. and Cuba,” the group said.
“While challenges remain in terms of Cuba’s readiness for large volumes of American travelers, the past few years have seen a growth in business for U.S. travel agencies, tour operators, airlines, cruise lines, hotel and other travel companies. That progress is now at risk.”

Cuba Educational Travel, which organizes people-to-people exchanges and tours for U.S. citizens in Cuba, also released a statement criticizing the move.

“Additional prohibitions and oversight on travel will only confuse Americans and dissuade them from visiting Cuba, causing significant economic hardship to Cuban entrepreneurs and average Cuban families, as well as Americans working in the hospitality sector,” said Collin Laverty, president of Cuba Educational Travel. “The U.S government should trust its people and respect our constitutional right to travel freely. Americans are organically supporting the private sector and interacting with ordinary Cubans. Top-down orders to do so will not help to facilitate that process.”

The Relieved

An Airbnb spokesperson said in a statement that it appeared the homesharing platform would be able to continue operating.

“Airbnb has helped individual Cuban people earn extra income and we have seen how travel can break down barriers and promote understanding. Travel from the U.S. to Cuba is an important way to encourage people-to-people diplomacy,” the company said. “While we are reviewing what this policy could mean for this type of travel, we appreciate that the policy appears to allow us to continue to support Airbnb hosts in Cuba who have welcomed travelers from around the world. We look forward to reviewing the details of the policy and speaking with the administration and Congress about this issue in the weeks and months ahead.”

Cruise operators were among the most cheerful in the travel industry, all using the word “pleased” in statements. Norwegian Cruise Line Holdings added even stronger language:

“We were very concerned about any potential changes, given how popular Cuba itineraries have proven to be with our guests, and we view this as a win for the cruise industry, our valued guests and travel partners,” the company said. “Across our three brands, there are 70,000 guests booked to sail to Cuba who would have been very disappointed if they were unable to experience this spectacular destination.”

Norwegian, Carnival Corp., and Royal Caribbean Cruises, all stressed that they offer shore excursions that comply with regulations. What is still unclear is whether cruise lines will be able to continue to give cruise passengers the option to explore on their own while ships are in Cuba or if passengers will be forced to stay with an organized group.

Operators said they would review the additional regulations as they emerge.

Carnival Corp. chief communications officer Roger Frizzell said in an email that the company plans to move forward with scheduled cruises as well as its efforts to get approval for more ships to visit. He suggested the new measures might even provide a boost to the cruise option.

“We have always believed that cruising is the best way to experience Cuba, so this may ultimately highlight the advantages of traveling by cruise ship to Cuba to consumers,” Frizzell said.

Still Studying

Marriott International, the only American hotel company operating a property in Cuba, said in a statement that it was still analyzing the president’s directive.

“Its full effect on our current and planned operations in Cuba may depend on related forthcoming regulations,” the company said.

The hotel chain said it was still ready to build on the gains that had been made over the last couple of years. In March 2016, Starwood signed a management deal with a Cuban military-affiliated entity to operate three hotels in Cuba. The former Hotel Quinta Avenida is now a Four Points by Sheraton hotel. Marriott acquired Starwood in September 2016, and both companies had received U.S. treasury approval to do business in Cuba.

“We have invested significant resources establishing a presence in Cuba, and with one hotel open and another in the pipeline we have just begun our work creating opportunity and a more vibrant tourism sector on the island,” the statement said. “More importantly, as Cuba moves to reform its economy in the post-Castro era, American businesses should be present to lead by example. We will continue to urge the Trump administration and Congress to recognize and utilize travel as a strategic tool in efforts to improve relations with Cuba, allowing us to be part of a promising future, as opposed to reverting to the policies of the past.”

Airlines, too, said they were reviewing the administration’s new stance. While United was notably noncommittal about future plans, saying only that it was “currently reviewing these policy changes and will continue to follow this closely,” other carriers including JetBlue, American, Delta, and Southwest said they planned to keep flying to the island.

Delta Air Lines said the company would adhere to any changes in regulations regarding travel to Cuba and continue to provide daily non-stop service from New York-JFK, Atlanta and Miami to Havana within those parameters.

American too pledged to work with the administration to update any policies and procedures as needed.

“As a global airline, American is committed to continuing to operate service to Cuba,” the airline said. The statement warned that future changes in regulations could affect new plans for travelers: “We urge all customers who are planning travel to Cuba to closely monitor updates from the U.S. government.”

Online travel companies were reluctant to make any immediate statements on Wednesday before the policy changes.

A TripAdvisor spokesperson said it was too early to comment.

In October 2016, TripAdvisor was the first online travel company to get a a license from the U.S.Treasury Department’s Office of Foreign Assets Control to do business in Cuba. The license enables TripAdvisor to facilitate the booking of flights, hotels, vacation rentals/short-term rentals, and attractions in Cuba.

The user review side of TripAdvisor’s business already had a presence in Cuba.

Trumps Cuba policy changes came at an ironic time for Expedia Inc., which last month opened up its global points of sale, including Expedia.com, Hotels.com, Travelocity, Orbitz and CheapTickets, for the booking of hotels and home-sharing options in Cuba. Customers pay for their stays online at the time of booking.

An Expedia spokesperson didn’t have an immediate comment on Wednesday about the outlook for Cuba pending Trump’s announcement. Likewise the Priceline Group, which does business in Cuba, declined to comment.

Skift editors Andrew Sheivachman, Brian Sumers, and Dennis Schaal contributed to this report.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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