Cuba travel is still hot for Americans, new study says

Tourists takes a selfie by the statue of revolutionary hero Ernesto “Che”Guevara in Santa Clara, Cuba. American travelers have begun to explore destinations outside Havana.
Tourists takes a selfie by the statue of revolutionary hero Ernesto “Che”Guevara in Santa Clara, Cuba. American travelers have begun to explore destinations outside Havana. AP

Despite some U.S. airlines’ decisions to scale back service to Cuba or abandon their Cuba routes, Americans’ interest in visiting the island is still strong and there’s plenty of potential for growth, according to a new travel study.

An analysis by The Boston Consulting Group released Wednesday estimates that even with current U.S. travel restrictions in place, as many as 2 million U.S. travelers could visit the island annually by 2025.

Last year, visits by Cuban Americans and other U.S. travelers totaled 614,433 — a 34 percent increase.

The biggest restraint on growth is “on the Cuban side in terms of supply [of hotel rooms] and tourism infrastructure,” said Marguerite Fitzgerald, author of the study and managing partner of the consulting firm’s Miami office.

Cuba already is struggling to handle its current level of visitors, the analysis said.

Even though U.S. travelers aren’t supposed to visit Cuba to merely bake on the beach and are required to engage in purposeful travel that falls into 12 categories such as family visits, humanitarian trips and people-to-people tours, Fitzgerald said these U.S. restrictions haven’t been much of a factor in restraining growth.

However, that could change.

“The biggest unknown is whether U.S. travel policies change [under the Trump administration] and become more restrictive,” she said.

Nevertheless, BCG said demand among U.S. travelers is strong and is expected to grow over the next three years.

In late 2015 and then again in late 2016, the consulting firm surveyed 500 travelers who had been to Cuba or were considering a trip. Thirty percent expressed interest in visiting Cuba and 80 percent of those said they wanted to make a trip within the next three years.

A recent internet survey by Allianz Global Assistance USA, a travel insurance provider, showed 40 percent of the 1,514 people who responded said they would be interested in visiting Cuba. The firm said that was 2 percent fewer than in its 2016 survey.

When the U.S. Department of Transportation announced last year that it was opening up regularly scheduled commercial airline service to Cuba for the first time in more than five decades, U.S. airlines rushed to apply for 110 daily slots from the U.S. to Cuba.

But now, both American Airlines and JetBlue have announced cutbacks in the frequency of their flights to cities outside Havana, and some other U.S. airlines are abandoning the Cuban market altogether. Silver Airways stopped all its Cuba flights on April 22; Spirit will fly its last Fort Lauderdale-Havana flight on May 31, and Frontier will stop its Miami-Havana route in June.

Some are reading those flight cancellations as an indication that Cuba travel is a bust for American travelers.

“That’s misleading. It’s a question of oversupply,” said Frank Comito, chief executive of the Caribbean Hotel & Tourism Association.

Airlines were applying for the flight frequencies as if there were no restrictions on Cuba travel and normal business traffic between the U.S. and the Cuba existed. But Havana is still a hot ticket, according to the report. Delta, American Airlines, Southwest and JetBlue all promptly applied to be granted the abandoned Havana routes.

“The reality is that U.S. travel to Cuba is in its nascent stages, and all the players are still learning how to make it work,” said The Boston Consulting Group study. “Airlines, hotels and cruise lines will need to develop their understanding of demand and how to stimulate it, as well as how to operate in a centrally controlled country that is suffering from years of underinvestment.”

Cuba faces a host of challenges as it seeks to attract more visitors: “The country’s main international airport, in Havana, is bursting at the seams, and because there is an insufficient supply of accommodations, room rates have climbed to above the Caribbean average.”

But BCG research suggests that “there is strong and growing interest [in Cuba travel] among U.S. travelers.” The consulting firm projects compound annual growth rates of 20-50 percent in the number of U.S. visitors to Cuba through 2020.

During Cuba’s International Tourism Fair last week, Tourism Minister Manuel Marrero said that Cuba had already received 2 million international visitors during the first four months of the year, putting it on track to easily surpass last year’s record of 4 million, second best in the Caribbean after the Dominican Republic.

The BCG research showed that U.S. demand is highly concentrated in Havana with 80 percent of survey respondents saying the capital city was their first-choice destination. Only 10 percent of respondents said they were interested in cities such as Camagüey, Holguín, and Matanzas. Airlines have cut back on service to all three cities.

“Airlines could address this imbalance in demand with marketing campaigns aimed at educating U.S. travelers about Cuba’s lesser known cities,” Boston Consulting suggested.

“American travelers have very little awareness of areas outside Havana,” said Fitzgerald, “but people are starting to explore.”

Cuba also has ambitious plans to develop destinations beyond Havana.

During the tourism fair, the Cuban press reported that the government announced the creation of the Punta Colorada joint venture that will develop golf courses and tourist accommodations in western Cuba. It also announced a German-Cuban joint venture to build a resort complex in Punta Gorda, Camagüey, that will include a marina with 300 slips and a five-star hotel.

The Cuban government also signed a letter of intent with China’s Yantai Golden Mountain for a real estate/golf course development in Loma Linda, Guardalavaca, according to the Cuban newspaper Juventud Rebelde.

Follow Mimi Whitefield on Twitter: @HeraldMimi