Cuba Travel: The big squeeze

This year has seen the biggest exodus of Cuba dedicated travel agencies since the government allowed representation offices on the Caribbean island of foreign agencies in the early 90´s. The idea back then was to allow foreign travel companies and wholesalers to have on the ground staff to better manage inbound visitors and thus increase tourism figures and visitor satisfaction. These agencies were run independently and were probably the only privately owned/managed businesses operating on the island. Over the past 4 years these agencies have seen their liberties gradually reduced. These changes are said to have severely restricted many agents’ activities. The Cuban government on the other hand says that foreign agencies are not able to carry out the activities they were doing.


Some changes include:


*Total ban on direct contracting of services such as hotel rooms, even if those hotels are managed by foreign entities such as Spain´s Sol Melia or NH Hotels.


*Obligation of foreign agencies domiciled in Cuba to contract 100% of their services from Cuban wholesalers who then sign with foreign hotel groups, etc. adding a substantial “operating commission”


*Total ban on direct contracts between foreign agencies domiciled in Cuba and car rental, airlines (even Iberia, Air Europe & Air France), excursions, transfer services. These services must be contracted by an intermediary Cuban Gov wholly owned wholesale agent such as Cubanacan or Cubatur.


*Ban on sales of services to Cuban Americans or Licensed Americans. The Cuban Gov has erected a barrier prohibiting locally registered foreign agencies from selling any services to nationals of the US. Primarily by banning the provisions of services at Terminal 2 (where all Americans arrive) then prohibiting via “orientations” that Hotels allow Cuban Americans to check in unless their voucher is from a Cuban approved agency. Essentially “Cuban approved” being 100% nationally owned agencies such as Havanatur. The same has now spread to Car Rental and other ancillary services.


Many agencies feel betrayed after many years in Cuba. One Spanish agency owner who refused to be named through fears of repercussion said “They´ve shut us out; it’s clearly a desire of the Cubans to close every market that becomes attractive such as the Cuban American market”


Another agency owner from Canada who recently closed representation in Cuba said “we gave up, we had Cuban staff for whom we were being charged by Cuban employment agencies up to 900 CUC (about 1000 USD) per month while they received 30 USD. We had to pay the employees more directly to get them motivated, a 3000 USD office which in Canada costs 1500 USD and the incredibly bad internet service which is charged at 120 USD per month for 1 MB connections. Phone calls back to Canada charged at 2.50 CAD per minute, Cell phone service costing the same for one line in Cuba as 10 lines in Canada. This list goes on… The final deciding factor for us was the obligation to confirm all services via Cuban wholesalers when in fact we have Sol Melia, Breezes and other Hotels at lower rates outside Cuba than in Cuba. We started confirming services through Canada but ran into problems with our Cuban representatives Cubanacan who threatened to revoke our license if we continued. We simply shut down and have seen a profit increase as a result. Being on the ground in Cuba is no longer commercially viable as they try to prop up local wholesalers costs with foreign agency percentage increases across the board”


This last remark is one spelled out by all the people interviewed. ALL interviewees complained that Cuba´s bloated national agencies with 100´s of employees simply serve as go betweens of foreign managed hotels and other services then add a premium to confirm bookings, previously confirmed directly at lower rates. These added amounts being absent when booking the same services outside of Cuba directly with the foreign Hotel chains.


A worker at Iberostar confirmed “effectively we can no longer legally sell straight to a foreign agency registered in Cuba. Conversely we can sell directly to a foreign agency not registered in Cuba”


A Dutch agency owner finalized these thoughts. “We are opening operations across the Caribbean and moving most of our previous (Cuba) client database to other Caribbean islands. We´ve created a parallel network where bookings are handled from one center and clients looking for a Caribbean vacation or a repeat Cuba stay are offered other destinations where we can make more money. I am not sure how long we will stay with physical operations in Cuba. We have already opened an administration crossover on another Caribbean island in preparation of this eventuality”


It could be that Cuba´s tourism ministry is preparing for a massive influx of US travelers as background talks continue between the two governments. Could this explain why officials and the said ministry are gradually tightening the screws on foreign agencies in Cuba and banning their interaction with the initial Cuban American influx? It could also mean that Cuba is so strapped for cash that the percentages ceded to foreign agencies as opposed to selling services directly have become a prize worth pursuing. As our last agency said though, by biting the hand that feeds Cuba could risk losing repeat travelers to the island to other Caribbean destinations, possibly overnight. As a previous Signature Vacations employee and travel industry expert said “getting people to return is of paramount importance. While other destinations offer all sorts of benefits to us to procure return visitors, Cuba seems to offer the impression that they are invincible and people will always return. They think they have the golden egg and that travel professionals will accept constant meddling, obviously with the economic crisis and other Caribbean nations crying out for more visitors, we won´t”

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