Monday, August 29, 2016

New Cuba tourism seen slow to take off despite U.S. flights

New Cuba tourism seen slow to take off despite U.S. flights
By Marc Frank and Jeffrey Dastin | HAVANA/NEW YORK

An expected explosion in U.S. tourism to Cuba will likely take years to
materialize even after U.S. airlines resume commercial flights to the
Caribbean island this week for the first time since 1961, industry
officials said.

JetBlue Airways Corp (JBLU.O) will pilot its historic flight from
Florida to the Cuban city of Santa Clara on Wednesday, the latest step
in normalizing relations that earlier this year included a visit by U.S.
President Barack Obama and the first U.S. cruise to the island in decades.

The planes may some day be filled with U.S. beach-goers, looking for an
economical Caribbean break at resorts favored by Canadians and Europeans
on the sandy keys north of Santa Clara.

But for now, U.S. law and constraints on Cuba's tourism infrastructure
will act as brakes on increasing demand, experts said.

Congress has yet to lift a trade embargo that prohibits U.S. citizens
from visiting Cuba as tourists. The Obama administration has approved 12
categories of exceptions to the ban ranging from cultural, religious and
educational travel to business and visiting family.

That means JetBlue's initial flights will mainly carry Cuban-Americans
visiting relatives or other U.S. citizens interested in seeing the Che
Guevara Mausoleum and other cultural sites.

Eventually, up to 25 flights a day by various carriers will connect the
United States and the Cuban provinces, with another 20 to Havana, under
an agreement reached by the two Cold War foes as part of a gradual
détente begun in December 2014.

Services on Silver Airways and American Airlines Group Inc (AAL.O) from
the Miami area to other outlying provinces are the next to start, in

While the direct flights could carry more than a million U.S. residents
to Cuba annually, according to John Kavulich, head of the New York-based
U.S.-Cuba Trade and Economic Council Inc, he and other experts believe
that mark will not be reached for several years.

In the beginning, the new routes are expected to absorb customers from
the average of 17 charter flights that Cuba's government says have
arrived from the United States daily for several years.

"The fares that have come out so far, announced by American and JetBlue,
have been super competitive," said Bob Guild, vice president at Marazul
Charters Inc. "I don't have any question that it's going to shrink," he
said of the charter services. Marazul, one of the largest charter
companies operating to Cuba, plans to scale back services to provinces
this fall but continue with its Havana flights while commercial airlines
await approval, Guild said.


There is already a boom in visits to Cuba from the United States. Some
300,000 Cubans living in the United States now travel home annually. In
2015, the Cuban government reported 161,233 Americans visited, compared
to 91,254 in 2014, and arrivals through June nearly doubled over the
same period last year, a trend that the dawn of commercial flights can
only further.

"The fact that travelers can book flights directly online not only
streamlines that process and makes it more affordable, it adds a feeling
of legality," said Collin Laverty of Cuban Educational Travel.

But another barrier to increased U.S. travel is that Cuba's hotels, bed
and breakfasts, transportation services and amenities are already
stretched to the limit, with a record 3.5 million foreign arrivals last
year. Higher hotel prices, pegged to the U.S. dollar, might push out
some travelers from Europe and Canada, creating more space for
Americans, said Emilio Morales, CEO of Miami-based Havana Consulting
Group. Private bed and breakfasts would absorb what they could of
increased demand, he said.

Over time, airlines are betting travel restrictions will be further
relaxed and want to get their foot in the door before Obama leaves
office next year.

"While all of the flights are unlikely to operate at capacity, the
airlines want to plant their respective flags," Kavulich said.

(Reporting by Marc Frank; Editing by Cynthia Osterman)

Source: New Cuba tourism seen slow to take off despite U.S. flights |
Reuters -

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