Tourism and New Business Opportunities
Cuba is broadening its possibilities to carry out travel-oriented projects. Foreign companies can now bankroll the construction and refurbishment of buildings for tourism purposes, as well as the creation of real estates for golf courses.
Tourism has long been one of the most luring and dynamic sectors for foreign investment in Cuba, given the island nation’s exceptional geographical location, its highly educated and qualified human resources, safety and security, social and political stability, and a legal framework that included taxpaying incentives and customs conveniences.
The recently-approved New Foreign Investment Act fosters tourism in particular with the addition of international partnership contracts as far as hotel management is concerned, something that was overlooked by the previous piece of legislation –Act 77 of 1995- that was subsequently overridden.
Among the new business opportunities, for instance, foreign companies are entitled to bankroll the construction and refurbishment of tourism-oriented buildings –as a form of joint hotel management- that had up to then been the predominant way of doing business on the island nation.
However, the former contracting way –the signing of hotel management contracts between potential investors and state-run enterprises- remains unchanged since companies from the turf will retain the ownership of the property and will hire a foreign partner to both run and sell the tourism facility under his own brand for five years that could be extended.
This means that companies interested in doing business in Cuba could negotiate better contractual conveniences with their Cuban counterparts, all in a bid to recover the invested money in the shortest timespan possible.
Recent data issued by the Ministry of Tourism (MINTUR) reveal that the new modality lured dozens of potential investors. Up to now, some 70 hotel management contracts have been inked with nearly two dozen world-class hotel chains. Those figures could increase far more by the end of the year.
A Well-Stocked Business Portfolio
La Carbonera is the first partnership of that kind in the country, signed between British company Esencia Hotels & Resorts and Palmares S.A., a Cuban non-hotel group. The project is estimated at some $350 million.
A second golf-related joint venture is supposed to start operations by the end of this year, while a third contract must be realized by 2015.
Opportunities for foreign investment in travel and tourism can come down to a number of top priorities, such as the building of lodging facilities under different marketing forms, in tourism-developing circuits and destinations like Havana, Varadero, Jardines del Rey, the northern keys off the provinces of Camaguey and Holguín, Santiago de Cuba, the southern coast of central Cuba and the Canarreos Archipelago.
Another concrete activity could focus on marinas, a move that implies the building of piers and similar nautical infrastructure, the construction of recreational waterparks and the fostering of incoming cruise liners.
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