The cruise lines, Cuba and competition

The Business of Tourism

One day in the not too distant future it is likely that US-registered cruise ships will begin to sail into Cuban ports. That day has not yet arrived as US regulations expressly prohibit US visitors and most US registered vessels travelling to Cuba for tourism purposes, but already non-US cruise companies are opening up what looks like becoming a significant cruise market.

European companies, including Fred Olsen Line and Thomson Cruises, are now sailing out of Barbados and Montego Bay as well as from ports further afield including Tenerife and Southampton. Their success is likely to grow as Cuba is rapidly becoming a must-visit destination and it becomes harder to obtain a hotel room in cities like Havana in the high season because of the easing of travel restrictions to Cuba for Cuban Americans and for specified categories of US visitors on study tours or the like.

For some years now, Cuba has made clear that it wants cruise calls and has been developing its ports and marinas around the country with the expected ultimate prize being the further development of the port of Havana probably in conjunction with an international developer.

According to the official Cuban media quoting Jose Bisbe, the President of the Cuban tour operators, Havanatur, during the 2014/15 winter season the island received the largest number of visits ever with 200 ship calls at various ports around the island.

While this has been happening, and since President Obama’s and President Castro’s December 2014 announcement that Cuba and the US would normalise relations, the big US cruise lines have not been standing still.

At least one major US cruise corporation has been in dialogue with the Cuban authorities and there is anecdotal evidence that they are considering how best to lobby Congress. It seems they may do this along with a number of Fortune 500 companies through one of the new super Political Action Committee’ s that have recently been formed by to press for an end to the US trade embargo.

The process may be slow to bring about a complete change, but it is already clear that there are incremental steps that can be taken to modify existing regulations under the US President’s executive authority.

For instance, in the last weeks the US Treasury and Commerce departments have granted licences to allow for the first time in more than fifty years US companies to operate ferry services between Florida and Cuba. The four or possibly more companies involved are expected to operate services out of Fort Lauderdale, Miami, Key West and possibly some other US ports as well.

While Cuba has still to approve the service and agree with the companies involved which Cuban ports they will call at, the decision marks a further step in the easing of travel restrictions on US citizens.

Although the ferry services are principally aimed at Cuban Americans and offer travel at a lower cost that present charted air services and will carry baggage for free, they will also be able to carry other US visitors in the twelve allowed travel categories, continuing the process of gradually making Cuba the new normal. The services may also in time carry cargo in the form of now allowed non-state exports from Cuba’s emerging self employed sector.

Before the US imposed a trade embargo on Cuba, cruise ships and ferries called at Cuban ports on a daily basis. The growing interest of the cruise lines in Cuba is not yet a challenge for the rest of the region, but the writing is on the wall. Cuba in the space of months has become a hot destination for US citizens. If, as Cuba hopes, the US travel ban is eventually lifted, the big cruise lines call and take up incentives to home port, the rest of the region needs to consider the ways in which the structure of tourism in the region will change.