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Opening Cuba: What's the Effect on the Cruise Industry?

April 14, 2009 By: David Eisen


cuba

Will Havana soon be a cruise destination for U.S. tourists?

We now know that President Obama is softening U.S. policy toward Cuba, which, we hear, is one of the most beautiful islands in the Caribbean. Obama is lifting spending and travel restrictions for Americans with family on the island; he's also allowing U.S. telecommunications companies to make forays into the Cuban market—is the cruise industry next?

It would be a boon for the industry: the U.S. International Trade Commission estimates that 1 million U.S. tourists could eventually visit Cuba.

Wachovia analyst Tim Conder  issued a research note—kind of "what if" scenario. "We believe the recent overtures by the Obama Administration toward Cuba are positive moves toward a more open relationship between the U.S. and Cuba, but are still only initial minor policy baby steps of change," he wrote.

However, it appears that we might still be years away from a cruise ship calling at Havana. "Currently, multiple major policy changes must all be implemented before cruise operators can call on Cuban ports," he writes, listing: 1) Lifting of the broad travel restrictions to Cuba that currently apply to all U.S. citizens without family members living in Cuba. (Note: Legislation is currently pending in both the Senate and House regarding this issue.) 2) Lifting of broad economic and trade embargo sanctions which include a ban for all U.S. companies/subsidiaries from trading with Cuba, and a ban on all ships from docking in the U.S. within six months after docking in Cuba.

That said, with Cuba's hotel infrastructure lagging (only 56,000 hotel rooms, stats cite), Conder believes cruising there would be the best choice for U.S. tourists. "Industry execs estimate that once restrictions are lifted it will take six to 12 months to initiate calls to as many as 11 Cuban ports, and 18 to 24 months to construct permanent port/pier facilities required to handle most cruise ships," he writes.

In his conclusion, Conder writes that it will be one to three years—at best—before cruising to Cuba is reality. Stay tuned.


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