The New Gold Rush: As Airlines Move Headlong Into Cuba Service, is its Potential Overhyped?

The Christian Science Monitor covers JetBlue’s desire to expand into Cuba now that many legal restrictions on doing business have been lifted, and US citizens can go with a wink and a nod.

It’s got a good start – the low-cost carrier will begin weekly flights from New York to Havana in July, and it operates two routes out of Tampa and Fort Lauderdale, Fla., in partnership with a Cuban charter operator. …JetBlue wants to be ready to expand beyond the weekly flights.

The ‘Cuba boom’ may be a bit overhyped — some might think that Cuba is just a Caribbean destination that doesn’t yet have the infrastructure to support many visitors — but proximity to the US and precisely that it doesn’t yet have this infrastructure is what makes it an exciting destination for US businesses and US airlines.

JetBlue is well-positioned to benefit from this — with a strong presence in New York for financing and tourism, plus South Florida for its proximity and historical ties. American is equally positioned in this market.

People Want to Go “Before It’s Ruined”

This is actually a pretty offensive idea I think, to want to go see ‘the natives’ before they have a chance to reap the advantages of economic development, while they’re still stuck living and working in many ways in the 1950s.

Even before it becomes a potential resort locale, “people will be going now to see what it once looked like” under Castro, Mr. Leff says – the 1950s cars, the crumbling buildings.

But there’s a curiosity factor, a rush to be first as though it’s visiting uncharted territory (hint: there have been regular scheduled flights from Canada, Mexico, and the Caribbean for years).

So there will be a tourist boom at first. And Cuba is undeniably close to the U.S. Ultimately tourism isn’t likely to exceed that of the Bahamas for US visitors, but getting to the level of a major Caribbean destination means it has tremendous headroom.

There Needs to Be Changes in Cuba’s Government and Infrastructure Before There’s a Boom

Much of the world has traded with Cuba, the US hasn’t but there hasn’t been a blockade since the 1960s.

Cuba needs hotels and transportation — they need modern cars! — and to get capital investment they need an environment where that investment is safe to make. You aren’t going to invest $500 million in a hotel unless you’re confident that once you’ve built it, it’s going to stay yours.

They need a system with limited corruption to transfer title or provide long-term certainty in use of land, to allow for building in a relatively streamlined process, and for basic utilities to service new development.

Still, US businesses are making what inroads they can in the hopes of being in a position to capitalize on 60 years of delayed economic development. Netflix launched in Cuba earlier this year, despite the fact that just 5 percent of Cubans have Internet access strong enough to use the streaming subscription service. Venture capitalists are starting to raise funds for direct investment in Cuba, and in April Wharton Business School held a “Cuban Opportunity Summit,” bringing together industries that could benefit from a US-Cuba thaw.

Long-term, “there’s a lot to be done, precisely because they’re so backward,” says Gary Leff, author of ViewFromTheWing, a blog for the frequent flyer community, in a phone interview.

This isn’t the quote I would have liked to see make the piece, it’s certainly the least eloquent way I put it in the conversation, but the point remains that there’s a catch-up growth opportunity provided that Cuba can overcome regime uncertainty and its history of expropriating private property.

Catch-up Growth – Business – as Much as Tourism Presents Huge Potential in the Near Term

It’s precisely all of the building and investment in technology that will need to happen to bring Cuba up to the infrastructure levels even of the Caribbean, let alone nearby South Florida, that presents a huge opportunity — for growth and for growth in travel.

Initially there will be quite a bit of business travel in order to get there, Cuba isn’t just a tourist destination it will be a business destination in order to build it into a tourist destination.

It’s far from a certainty that Cuba follows a path of development, that’s an opportunity for its people and that would be wisely followed by the travel and tourism industry. But enough time may have passed since the 1950s that in Argentina at least there’s a saying, “Tengo una remera del Che y no sé por qué,” or “I have a Che T-shirt and I don’t know why.”

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Read about Michael Totten’s visit to Cuba here – maybe not such a good idea to visit until things change substantially.
    http://www.worldaffairsjournal.org/blog/michael-j-totten/welcome-cuba
    http://www.worldaffairsjournal.org/blog/michael-j-totten/lost-world-part-i
    http://www.worldaffairsjournal.org/blog/michael-j-totten/lost-world-part-ii

    Example of life in Cuba from MT 2nd link:

    “I’m used to seeing military and police checkpoints when I travel abroad. Every country in the Middle East has them, including Israel if you count the one outside the airport. The authorities in that part of the world are looking for guns and bombs mostly. The Cuban authorities aren’t worried about weapons. No one but the regime has anything deadlier than a baseball bat.

    Castro’s checkpoints are there to ensure nobody has too much or the wrong kind of food.

    Police officers pull over cars and search the trunk for meat, lobsters, and shrimp. They also search passenger bags on city busses in Havana. Dissident blogger Yoani Sanchez wrote about it sarcastically in her book, Havana Real. “Buses are stopped in the middle of the street and bags inspected to see if we are carrying some cheese, a lobster, or some dangerous shrimp hidden among our personal belongings.”

    If they find a side of beef in the trunk, so I’m told, you’ll go to prison for five years if you tell the police where you got it and ten years if you don’t.

    No one is allowed to have lobsters in Cuba. You can’t buy them in stores, and they sure as hell aren’t available on anyone’s ration card. They’re strictly reserved for tourist restaurants owned by the state. Kids will sometimes pull them out of the ocean and sell them on the black market, but I was warned in no uncertain terms not to buy one. I stayed in hotels and couldn’t cook my own food anyway. And what was I supposed to do, stash a live lobster in my backpack?”

    Tourism in Cuba from MT 3rd link:

    “Even if Trinidad [a city in Cuba] could be preserved against time without repression and violence, it’s neither realistic nor reasonable to expect Third World people to live in backward conditions for the amusement of foreigners who want a break from modernity.

    Would you be willing to live primitively so rich foreigners can spend a few days in your town and enjoy the silence and the dearth of corporate billboards and Starbucks?

    Cuba is the most oppressive country for thousands of miles in any direction, but I understand now why many tourists return home and say it’s fantastic. Parts of it are if you don’t think about it too much. Unlike me, tourists don’t go there to pull back the curtain or peer behind the façade. They don’t spend hours and days contemplating how and why Cuba is frozen. They simply enjoy the fact that it is. It’s understandable. They’re on holiday and they want to relax. But I was not there on holiday, and my cognitive dissonance didn’t last very long.”

  2. For me, the “See it before it’s ruined” just means that I want to see it before there’s a mcdonalds and starbucks on every corner and tons of tourists.

  3. Cuba already has a thriving package tourist industry as well as modern roads and buses. True, they’ll need — more — hotels if it’s to become the Florida of the Caribbean again, but it’s not hard to see that happening. Other than capital ownership (which is a genuine issue) there’s no barrier to tourism in Cuba.

    You say that “Ultimately tourism isn’t likely to exceed that of the Bahamas,” but Cuba already has more than double the number of tourist arrivals as the Bahamas even with no (negligible) US travel. Once the floodgates open tourism to Cuba will dwarf the Bahamas. That’s only to be expected as Cuba is an enormous island with 600 years of history, fantastic architecture and museums, mountains and beaches whereas Nassau is a series of islands totaling the size of Connecticut and only a few of which are habitable. It has no cities or architecture of note and virtually no interest for anyone not looking for beach vacation.

  4. @LarryInNYC U.S. was in the sentence prior to Bahamas, and I’ve clarified that I don’t see Cuba becoming bigger than the Bahamas in the near-term for US visitors.

  5. Cuba currently sees about one million Canadian visitors per year, out of population of 35 million. That’s almost the total number Bahamas sees from all sources. If you figure US arrivals at some comparable ratio, US travel to Cuba will be huge. That’s not even considering the higher number of people with Cuban ancestors in the US, the fact that Cuba is cheaper than the Bahamas, and the privileged location occupied by Cuba with respect to the Florida cruise ship market (not forgetting that cruise ships alleviate the shortage of privately-owned hotel rooms in Cuba).

  6. Ah, if only I could have visited Nazi Germany before it was spoiled by Western Capitalism.

    But yet, with any luck, I can still visit North Korea before the pubic execution of Government officials comes to an end. I would so love to get a Selfie of myself during one of those” colorful events”.

  7. If you tend to be close-minded and bothered by religion or politics then Cuba is not the place for you. However, if your interests lie in meeting different people, learning different cultures, seeing new scenery, (other than your hotel beach) then Cuba is an ideal choice. The old cars, the architecture, the music, the hills, valleys, beaches, the Cuban culture, the wonderful people, those are the things that make Cuba so fascinating. I have visited there 22 times, anywhere from 2 to 4 weeks at a time, and will be going again. I have also been to 33 other countries, but nowhere that draws me back like Cuba. Unlike ordinary tourists I do not stay in a government hotel, but rather rent a room in homes of ordinary Cubans and help out in my own. small way. Many times I was warned by US gov’t authorities that as a US resident . “you can’t do that, $500,000 fine or 5 years in jail maybe”. As the ACLU told me, nothing ever came of those warnings. How would it look for America to put their people in jail for being tourists?
    As others have said, once the Starbucks, Walmarts, etc. move in, old cars and buildings replaced, then that charm will be gone, but it will take more than our lifetime for the people to become jaded.

  8. If the Cubans were smart, they would find a way to convince Americans to stay home and just send the money! Now, it’s a perfectly wonderful place to go, with no loud, rude, uninformed Americans there to clutter the place up. 5 years from now? Probably not worth it.

  9. The wild-card in the pack is Trump. He had expressed antipathy towards Cuba.
    Of course if they invite him to build some mega-hotels on the island and/or golf courses, everything will change.
    Now that would set them well underway to ‘spoiling’ the country.

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