Yanquis in Havana Finance & Development, September 2015, Vol. 52, No. 3
The thaw in relations between the United States and Cuba could lead to a big shake-up in Caribbean tourism
It’s not clear how many Americans have dreamed of strolling through Havana as Ernest Hemingway once did, sipping Cuba libres or daiquiris and driving a vintage car to Finca La Vigia, Hemingway’s home outside of town. But the world may be about to find out.
The rapprochement between the United States and Cuba could lead to the full removal of travel restrictions between the two countries, and—given the colorful, tumultuous history between them—liberalization could open a floodgate of visits from U.S. baby boomers, thirsty for a glimpse of the Havana so cherished by the Nobel Prize–winning U.S. author.
The impact of removing all barriers to U.S.–Cuba travel is uncertain, but it is the focus of much interest in the region. Tourism is the main driver of growth and employment in many of the island countries in the Caribbean, where Cuba is a giant, not only in land size but as a tourist destination too. After Cancún in Mexico and the Dominican Republic, Cuba is the third largest destination for tourists in the Caribbean. Cuba had more than 3 million visitors in 2014, according to the Caribbean Hotel and Tourism Association, a 5.3 percent increase over 2013. Most of them came from Canada, Europe, and South America.
Close to homeA major question is what will happen when the market with the greatest number of tourists in the region is opened to a large potential supplier of tourist attractions—and compared with most destinations, one that is a stone’s throw from the United States.
The United States already does business with Cuba, in particular exporting foodstuffs and medical products for cash (since 2000). And after the United States eased the travel ban on its citizens traveling to Cuba (for specific purposes) in 2012, the number of U.S. tourists headed there rose by 33 percent almost immediately, to about 98,000. But that number probably pales in comparison with the number if travel restrictions were ended.
Can Cuba absorb a sudden surge in tourists? The country has a complex system of parallel currencies—the peso for Cubans, a convertible peso for tourists, and multiple other exchange rates. This alone renders international comparisons about things like market size or production capacity difficult. However, the Association for the Study of the Cuban...