Recently, there has been much talk of a possible relaxation in the trade restrictions between the US and Cuba. Some of the conversation suggests it may be due to the discovery of billions of barrels of oil off Cuba’s coast. Based on this, it could mean that the United States could strengthen relations with Cuba sooner rather than later in order to help curb the gas pricing problems here in the United States.
In addition, a new study by the International Monetary Fund (IMF) implies that Mexico would stand a lot to lose by an opening of U.S. tourism to Cuba, but many Caribbean islands would not suffer at all. The study also stated overall tourism to the Caribbean would increase by up to eleven percent.
According to the IMF study, ”an opening of Cuba to U.S. tourism would represent a seismic shift in the Caribbean’s tourism industry,” and would increase overall arrivals to the Caribbean.”
This is because in theory, there would be a massive surge in U.S. tourism to Cuba, which would overwhelm Cuba’s hotel room capacity and drive Canadian and European tourism currently vacationing in Cuba to be redirected to neighboring countries.
As a result, ”the region would enjoy a period of sustained demand,” it says. In the wake of this change, some countries would potentially stand to lose U.S. tourists but would gain new non-U.S. tourists.
Currently, the biggest tourism destinations in the Caribbean, in addition to Puerto Rico, are the Dominican Republic, with 2.2 million foreign visitors a year; Mexico’s resort of Cancun, with nearly 2 million tourists; the Bahamas, with 1.4 million tourists; Cuba, with 1.3 million, and Jamaica, with 1.2 million. The figures reflect annual arrivals between 2000 and 2004, and have since gone up somewhat, the study says.
But an opening of U.S. tourism to Cuba would shake this mix immediately, because an estimated 3 million to 3.5 million American tourists would flock to Cuba, the study says.
Much of it would be because traveling to Cuba, in addition to being a novelty, would become substantially cheaper. Currently, the cost of traveling from the U.S. to Cuba for Cuban Americans and others exempted from travel restrictions is equivalent to that of traveling to Australia. According to the model, the US/Cuba travel restrictions appear to have the equivalent impact of Cuba being 7,000 nautical miles from the United States.
Currently, less than one per cent of US travelers to the Caribbean visit Cuba, compared with the 34 per cent of Canadian visitors to the Caribbean travelling to Cuba. The restrictions mean that the rest of the Caribbean enjoys what is a substantial degree of effective trade protection.
The report also suggests a lifting of the embargo will sharply increase the number of tourists visiting Cuba to 3.5 million, with a huge increase in richer American tourists (up to three million from the current roughly 50,000 a year), “outbidding” other countries’ tourists, some of whom will no longer go to Cuba.
In addition, Cuba’s current hotel inventory of 50,000 rooms is insufficient to meet this projected demand.
According to the study, there would be winners and losers from an opening of U.S. tourism to Cuba:
• Mexico’s resort of Cancun, which relies heavily on U.S. tourists, would be a net loser. It would lose 614,000 American tourists, while it would gain only 93,000 non-U.S. tourists.
• The Bahamas, which also relies heavily on U.S. tourists, would lose 499,000 U.S. tourists, while gaining 36,000 non-U.S. tourists.
• The Dominican Republic, which has a highly diversified tourism base, would be a net winner. It would lose 318,000 American tourists, while gaining nearly 400,000 non-U.S. tourists.
• Smaller islands such as Martinique, Montserrat, Antigua and Barbuda, Barbados and other countries with strong ties to European countries would also be net winners. Barbados, for instance, would lose 48,000 American tourists, but would win 64,000 non U.S, tourists.
Any thoughts on what this could mean to the tourism industry in the Caribbean region??
