Can Cuba’s tourism adapt to survive after Covid devastated the industry?

Cuba’s leaders arrived on the spectacular beach at Varadero this week in an effort to restart a tourism industry whose pandemic-induced devastation was all too apparent in the swaths of empty loungers on the miles of perfect sand.

So crucial is tourism to Cuba’s economy – and therefore its stability – that President Miguel Díaz-Canel, the prime minister, Manuel Marrero Cruz, and at least seven further ministers attended the launch of FITCuba, its annual tourism fair.

Marrero Cruz highlighted the island’s safety and its success in combating Covid, before praising an aggressive, if controversial, hotel building programme. He quoted Fidel Castro as saying: “Each hotel that is opened is a factory that produces an income for the country.”

Yet Cuba’s recovery faces tough obstacles, and there are signs it is not keeping up with its competitors. “Europe is booming,” said one hotelier who asked not to be named. “And the word is that the Dominican Republic and Mexico are both doing well.”

Last year, with its main market Canada closed, Cuba pinned its hopes on Russians, who made up 40% of all visitors in 2021. Then came the war in Ukraine. Flights stopped almost overnight and 8,000 Russian holidaymakers (and several hundred Ukrainians) desperately tried to get home.

Juan Carlos García Granda, the minister of tourism, also blamed “the other pandemic, the one that has lasted over six decades … the cruel US blockade”. While this is a common government complaint, there is evidence to support his contention that it had “recently been stepped up”.

Expatriate WhatsApp groups have lit up over the last two weeks with complaints that travellers flying from Havana to American cities are suddenly having their ESTAs permanently rescinded, the visa waiver that allows citizens of almost 40 prosperous countries to enter the US easily.

The US embassy would not confirm a new policy and referred questions to the Department of Homeland Security, which failed to return calls, but airline staff with American Airlines and JetBlue say it is now a regular occurrence.

Cuba’s communist-led government remains wedded to its all-inclusive beach hotels as means of channeling a visitor’s entire spending through state coffers, despite preceding the fair with a conference on sustainable tourism. They own the properties and foreign management companies run the businesses.

On Wednesday, Blue Diamond, the Canadian owners of the Royalton and Memories brands, announced a vast project to take over the management of the whole of a southern island, Cayo Largo, a total of four hotels and eight “villages” totalling 1,348 rooms. They will also manage the beach restaurants and even the shops.

Cayo Largo used to be a tourist destination, but the airport fell into disrepair. Now it has been renovated to allow airliners direct access from Canada, Italy and Germany. “That’s the only way of guaranteeing occupation,” said Miguel García Núñez, Blue Diamond’s promotion manager.

New hotels have also gone up in the cities. According to senior managers at Iberostar, the Spanish hotel chain, there is an increasing interest in holidays that take in both the beach and Cuba’s iconic cities such as Havana, Trinidad and Santiago.

“The old clients came to Cuba from Canada for sun and beach, but the millennials want to explore Cuba,” said Alexei Torres Velázquez, Iberostar’s head of marketing.

Yet only 2% of all the official hotel rooms on the island are not on the beach or in the cities, and many of Cuba’s greatest assets – including the extraordinary interior of the 777-mile-long island – remain unexploited.

Trips outside the all-inclusive bubbles also have a new danger. Cuba is struggling with soaring inflation that has seen a currency black market establish itself, with private restaurants charging at the equivalent of 100 pesos to the dollar, compared with an official government rate of 24 to one.

“We arrived with just £100 in cash,” said British visitor Max Radford, who visited in January to celebrate his engagement to girlfriend Ali. “When we went to an ATM we realised our trip was impossible at the government exchange rate. A small bottle of beer [in a private restaurant] cost the equivalent of £10 and a 20-minute taxi ride £150.”

Tourists who bring cash now have to exchange with hustlers on the street to get good rates. In his speech opening the fair, tourism minister García Granda talked about reducing the reliance on cash, and creating a card with which tourists can pay for services.

For the government, the stakes could not be higher. One of the final countries in the world wedded to central planning, it buys the food, oil and other essentials that need to be imported. To pay it needs foreign currency and at its height tourism made up 40% of the Cuban economy. Foreign businesses now regularly complain that their bills are not being paid.

Still, there was optimism at the well-attended fair. Johnny Considine, owner of Cuba Private Travel, believes changes are under way. “I have noticed people getting import licences a lot faster, so that they can get access to good food and drinks. And yesterday they announced that a Venezuelan airline will do flights from Havana to Santiago [Cuba’s second city and a 12-hour drive]. So things are happening.

“It’s just quite slow.”

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