SAHIC Cuba, the country’s first international hotel and tourism investment conference, appeared to usher in a new era of hotel development. It could be the beginning of something big – but in Cuba, everything takes time, despite its being poised on the brink of an explosion in visitors from its neighbor to the north.
It was clear this week during the two-day event that the government’s tourism ministry and its hotel development companies remain firmly in control of any growth, even as they touted their desire to do it quickly. The conference, attended by about 240 delegates, including hotel companies, consultants and Cuban officials, was seven years in the making, according to Arturo Garcia Rosa, founder and president of SAHIC – Latin America Hospitality Investment Conferences.
“This will be a very good beginning,” Garcia said before the event, held at the Melia Cohiba, just off the Malecon, the oceanfront drive that snakes along the north side of the city. It is a beginning of sorts, although it was more of a reunion for companies like Spain’s Meliã Hotels International, which established the first international hotel joint venture in the country in 1990, or Iberostar Hotels & Resorts, which came in 1993 as a tour operator and then expanded.
Some other companies, like Marriott International and its Four Points by Sheraton in Havana, have a foothold in a single property. Indonesia’s Archipelago International just signed a management agreement Grupo de Turismo Gaviota for a single hotel. Other American companies in attendance, including IHG, Hilton, Wyndham Hotels & Resorts and Choice Hotels International, are limited by the economic embargo but milling hopefully near the dance floor. But with the number of international tourists last year totaling 4 million, the party is only getting started.
The need for speed
The Cuban government is seeking dance partners with 224 tourism-related projects. It points to 2030 as the goal to have marinas, hotels, resorts and “extra-hotel” development to support all that tourism. In development this year are 82 hotel projects and their coveted management contracts.
Jose Daniel Alonso, director general of tourism development for Cuba’s ministry of tourism, said the country’s priorities for development included:
- tourism linked to events such as holidays and festivals
- medical tourism, to bolster the country’s health services
- Nature tourism, to take advantage of abundant natural resources and national parks
- Infrastructure
Daniel also pointed out that the country is lacking in 4- and 5-star hotels and is looking to develop more of those. One sticking point: Where other countries are accustomed to signing 20-year management contracts, Cuba historically has limited those to five years. But it is signaling an openness to be more flexible, depending on the individual contract. “We are willing to evaluate any concept,” Daniel said.
Part of the program included brief presentations by Cuban officials about hotel projects for whom partners are being sought, including:
Cubanacan Group
Cubanacan, which has 93 operating hotels and has 12 joint ventures and 12 hotels under management contracts, is looking for another management contract in Santiago de Cuba for a 5-star, 152-room hotel; it’s also looking to develop Jose Marti airport’s first on-site hotel.
Grupo de Turismo Gaviota
Gaviota is looking for foreign hotel chains to manage and supply design recommendations for land and marine development on the Ramon de Antilla peninsula in an area that needs infrastructure and would open in phases.
Gran Caribe Hotels
Gran Caribe, which operates more than 12,000 rooms, is looking for a capital investment of about US$20 million for the historic 188-room Hotel Plaza in Havana, which comes with a management and marketing contract.
Pros and cons
The human factor could be an advantage. Francisco Camps Orfila, Meliã’s Cuba deputy director, said 85% of the first hotel employees in country were college educated. “Human resources is one of the strengths that can support the success of any hotel company here,” he said during a panel discussion featuring companies with a history of doing business in the country. Meliã’s development plans include introducing some brands that don’t have a presence in the country yet, including InnSide, Gran Meliã and ME by Meliã.
Fellow panelist Mateo Caldentey Llull, delegate in Cuba of Iberostar Hotels & Resorts, emphasized the foodservice culture of the country.
And what keeps them up at night? (Not Airbnb, which was occasionally referred to as a “value-add” in a country with a dearth of hotel beds.) “In order to manage hotels in Cuba, you need to pay special attention to what’s happening around you,” Camps said. “You need to have itinerant management skills so you can touch with your own hands every aspect of hotel operations.”
New hotels coming online means a big increase in demand for services, so training and development is critical, Caldentey said. “We are proactive,” he added. “We are always pushing for improvement… You need to be on top of everything.”
Any advice for potential investors? “Try not to extrapolate a business model from foreign countries into Cuba. It’s important to know how Cuba operates, its characteristics, and work in a team spirit,” Camps said. “You need to work together.”
Changing/not changing
Cuban officials repeated their acknowledgment throughout the conference that the country needs to move faster to find partners and sign deals for hotels, resorts, marinas and golf courses. And not simply to sign those deals, but to improve the infrastructure, physical and technological, to support the expectations of millions of tourists who want to discover the island’s authentic culture and charming vistas – and then share it in real time via social media, without the sketchy WiFi connectivity that plagues even upscale hotels.
They also asserted that despite the onslaught of affluent tourists (Garcia predicts that there may be as many as 12 million in the next 10 years), and the risk of American fast food, coffee and fashion eventually infiltrating the narrow streets, the unique Cuban culture will survive. “They know they need a lot of things,” Garcia said of the Cuban people, “but they love who they are. They loved and protected and conserved the culture for so many years. But they will not sell their culture very easily.”
The balance of historic preservation and international luxury might be summed up in the new, 246-room Gran Hotel Kempinski Manzana La Habana, which features a small museum in its basement that reveals part of the original city defense wall, high-end European brands in its ground-floor mall and spectacular views of Havana in all its brightness and decay from the infinity pool on the roof, all housed in a meticulously refurbished historic building.
As Eusebio Leal Spengler put it, “Havana is a state of mind.” The city’s historian drew two standing ovations during a morning interview with Garcia to discuss his work over the past 30 years preserving and restoring the deteriorating Havana Vieja neighborhood.
“Nothing is impossible here,” Spengler said. With the seemingly endless opportunities here, many of the hotel representatives at the conference might hope that is true.