Cuba’s tourism sector booms amid relaxed travel restrictions

16 June 2017 Authored by Consultancy.lat

After decades of travel restrictions, Cuba’s tourism numbers continue to climb indicating the beginning of a tourism boom for the socialist island. A new report titled “Taking the Long View on Cuba’s Tourism Opportunity” by The Boston Consulting Group explores North American interest in the island and provides key areas in which Cuban tourism can improve.

The number of tourists heading to Cuba almost doubled to 4 million people in the six years up to 2016. The overall increase in visitors has had an beneficial effect on the national economy, with tourism contributing almost 10% of the national GDP in 2016. The rise in tourist numbers has seen the GDP grow 3% over the past decade, which in turn has provided many Cubans with money from non-government streams. The average monthly government salary is around $25 — which approximately half of the population survives off of.

Although the United States continues to impose economic sanctions on the country, relations between the two nations are at their best point in years. The warming relations were reflected by President Obama’s visit to Cuba last year — the first US president to do so in nearly a century. When he arrived, President Obama stated that “it is a historic opportunity to engage with the Cuban people”, a sentiment apparently shared by thousands of Americans — with 285,000 taking advantage of relaxed travel requirements in 2016.

Travel to Cuba grows rapidlyThe report by The Boston Consuting Group (BCG) identifies Canadians as the biggest group of tourists to the island, accouting for 1.4 million annual visits. Meanwhile, American tourist visits rose by 77% in the past two years, in comparison to a 14 percent rise total tourist visits. For Americans wishing to visit the island, being granted a visa has become increasingly relaxed. Whereas in previous years, Americans could only obtain a visa through a “people to people” cultural exchange or missionary work, in mid-2015 the restrictions were lifted, and it was no longer necessary to organize travel through authorized groups. 

Being able to book and travel individually to Cuba has also seen a wave of US airlines begin servicing travel routes between the two countries. The number of flights between the US and Havana at the end of last year increased by a staggering 2,400% between September and December, the period directly after the easing of travel restrictions. Around the same period there was also a 3,300% increase in flights from the US to other Cuban airports.

Aggressive growth scaled back

The explosion of travel to the island during this initial rush period seems to have died down, though, with airlines scaling back service routes. Despite this decrease in demand, there is still cause for optimism according to the BCG report, which included survey data from past and potential US tourists to Cuba. The report estimates that tourism from the US will grow between 20 to 50% annually, and may reach 2 million visitors by the year 2020. 

As demand continues to grow, both US and Cuban tourism businesses will need to adapt to the boom. Tourism infrastructure in Cuba is still nascent due to decades of economic stagnation and underinvestment in basic infrastructure. Whilst the country strives to protect its cultural heritage, it has nonetheless planned over a hundred state-sanctioned priority projects in the tourism sector, including hotels, marinas, and golf courses.

“Cuba represents a huge opportunity for travel companies, but success will not be achieved easily," remarked report author Marguerite Fitzgerald. "Companies that accurately understand demand, take the steps needed to operate in a centrally-controlled economy, and invest for the long term will likely be rewarded.”

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