Freer US travel to Cuba poses a challenge

According to the North American trade publication, Travel Weekly, US tourism to Cuba is now growing at such pace that the country is experiencing a shortage of both highly trained Cuban professional guides and non-Cuban certified tour directors to accompany the tours that US Treasury regulations require almost all US visitors to take.

It is just one indication of a situation that as this year goes on may change, if as seems likely the US Administration allows its citizens to travel to Cuba on an individual basis.

At present it is only possible for most US passport holders to visit Cuba for one of twelve specified purposes through a tour operator holding a general licence. However, a new approach being considered by the Obama administration, when taken with two other developments, could all but free US travel to Cuba by the end of this in what will almost certainly effect US visitor arrivals elsewhere in the region.

It has been clear for some time now that the US administration has been preparing to ease the procedures that restrict individual travel to Cuba, but in the last two weeks US officials have confirmed that the President is considering changes by executive order that would allow US citizens to book tickets for travel to Cuba by simply attesting on-line or at an airport, as they buy a ticket, to compliance with the US Treasury licensing rules.

The development coincides with separate negotiations between the US Federal Aviation Administration and their Cuban counterparts to develop a new bilateral air services agreement. This is expected to the lead to the resumption of scheduled commercial flights by major US and Cuban carriers, possibly as early as the end of this year.

In addition, the US Treasury is considering removing remaining impediments to the use of US credit cards in Cuba so as to overcome US banks legal and practical caution about acting on previous permissions. Such regulatory changes will also facilitate the establishment of correspondent banking arrangements in Cuba.

The new policy may also be extended to licensing individual travel on US based ferries and cruise ships that will start sailing to Cuba early next spring.

Although the US government’s intention is that people-to-people contact will bring about a change in thinking and attitudes in Cuba, the most likely immediate practical outcome will be the near to full liberalisation of US travel to Cuba.

All of which suggests that from the latter part of this year on, the Bahamas, Puerto Rico, Jamaica, Cayman, Cancun and the Dominican Republic may begin to feel the impact, and then later, if US cruise visitor regulations are eased, other regional destinations may see ships withdrawn as they begin to sail around Cuba.

According to Cuban reports, the number of US visitors it received increased by 36 per cent in the first five months of 2015. More generally, Cuba has already become according to the Caribbean Tourism Organisation the second most popular tourism destination in the region after the Dominican Republic, with the arrivals gap between the two narrowing. Cuba itself believes that it will become a strong regional competitor if the US market fully opens with the country first at risk the region being Puerto Rico.

The conundrum for the rest of the region is how best to respond

At its most obvious this involves Northern Caribbean nations actively pursuing with tour operators two centre holidays and finding ways to improve air services and encourage cross destination investment and branding by regional and international hotel groups. It also involves placing much greater emphasis in each country on service, quality, cuisine and training so as to ensure that the experience in the rest of the region remains one step ahead of Cuba’s largely mid to low-end and weak repeat-business offering, as well as in continuing to diversify visitor feeder markets as rapidly as possible.

For the longer term urgent government attention is needed to be aid to the thoughtful recommendations in the recently produced Caribbean Hotels and Tourism Association (CHTA) paper ‘Cuba: the great disruption for the good of the Caribbean’.

This asks how much of the US$3 billion per annum in future new business Cuba expects to earn from an opening to the US will be at the rest of the region’s expense and argues for collaboration with Cuba in every aspect of tourism. It also calls for a new tourism development agenda involving high level discussions with the Cuban authorities and industry, and for a ‘US Caribbean Basin Tourism Initiative’ that supports the development through tourism of a ‘economically viable, safe and stable Caribbean’.

Most expect President Obama to all but free travel to Cuba later this year. If the effect is to divert US visitors, it will demonstrate what the industry has been saying about the danger of governments not taking seriously enough developing policies that recognise tourism’s economic centrality to the region’s economic fortunes.