Tuesday, May 22, 2018
Business

In Cuba, the great American tourism boom goes bust

HAVANA - As U.S.-Cuba relations warmed in recent years, Matilde Portela, an Airbnb host, reveled in the flood of American tourists. An aspiring business executive at age 73, she quickly learned the art of niche marketing - adorning her home with two American flags and laying out back copies of the New Yorker magazine.

"We had so many Americans coming that we didnít know where to put them," Portela said.

But Cubaís Great American Tourism Boom has turned to bust.

During the first three months of this year, 95,520 Americans came to Cuba - a 40 percent drop from the same period last year, according to Cuban government statistics. The decrease in Americans seeking to discover one of tourismís last forbidden fruits is hurting this islandís access to hard cash and setting back the effort to reestablish ties between U.S. citizens and Cubans.

The drop in American visitors has occurred as a thaw in relations under former president Barack Obama has chilled under President Donald Trump - particularly after revelations last August that more than two dozen U.S. diplomats, family members and intelligence agents stationed in Havana had suffered mysterious brain injuries. The Cuban government has denied any involvement, but Washington has accused it of, at the very least, failing in its obligation to protect diplomats.

The result: stark U.S. warnings to Americans to avoid visiting the island. Along with a Trump administration overhaul of the travel rules to Cuba, those warnings have served as a tourism deterrent.

Those feeling the pinch the most, observers say, are the very Cubans the Trump administration has vowed to defend here - small-business owners looking to inject a dose of the free market into the economy.

Cubaís economic opening has significantly lagged those of other communist states, especially China and Vietnam. Nevertheless, Cuban officials have worried that the number of new entrepreneurs - including Airbnb hosts, the owners of small restaurants and art galleries, and tour operators - was growing too fast. Last year, the government here froze the issuance of new licenses.

Now, those like Portela who had come to depend on American tourists find themselves caught between the communist hard-liners and the American hawks.

"We canít win," said Portela, who added that her business has dropped by more than 50 percent over the past six months. "I canít understand the U.S. government. Why not help us build the private sector in Cuba instead of trying to hurt it?"

In the mid-20th century, Old Havana seduced Americans, famously including Ernest Hemingway and Frank Sinatra. But in 1962, the U.S. government slapped an economic embargo on the communist nation that prohibited Americans from vacationing there. There were loopholes and tricks to get in - such as flying through third countries - but for the majority of Americans, Cuba was off-limits.

That changed under Obama. The ban on plain-old pleasure travel was never lifted. But he began loosening the restrictions in 2014. With Americans permitted to visit the island for educational and cultural reasons - a bar easily met with a few visits to art galleries and community-based projects - direct flights to Cuba resumed in 2016.

Unlike many European visitors to Cuba, the American newcomers largely eschewed the package tours that corralled tourists at big, beachfront hotels and assembly-line restaurants. Instead, the Americans spent more time exploring the colonial streets of Old Havana on their own, scattering their dollars far and wide.

Those dollars landed in the pockets of small-business owners such as Nidialys Acosta. In 2016 and early 2017, she said, her company, NostalgiCar - which rents chauffeur-driven 1950s Chevys in a rainbow of colors - saw record growth as the Americans poured in.

"Weíve had to grow in Cuba creatively because of restrictions," said Acosta, 41, referring to the economic embargo. "We cannot get loans. We cannot import spare parts. To even buy them in the United States and bring them back in my luggage, I need to use a friendís credit card because we canít get one. But for a while, we at least had the American tourists. They were the ones driving our business growth."

With Americans now scarcer, she said, her revenue has plunged 40 percent over the past six months.

"The pain is spread beyond just us," she said. "Weíre hurt, so we donít spend as much money on restaurants or house cleaners. Itís a chain of small businesses that are affected."

Cubaís tourism industry has suffered other setbacks - including damage last year caused by Hurricane Irma. But it still managed to stage a record 2017, aided in part by a massive influx of Americans in the first half of the year.

On a recent evening in Havana, however, Niuris Higueras walked through her Havana restaurant, Atelier, pointing at all the empty tables.

"You see, you see?" said Higueras, complaining that business has fallen by 70 percent compared with the same time last year. "Look at this! We had Americans eating here last year. We had a good thing going, a great dialogue, and they were coming to Cuba and seeing it with their own eyes. But now, it feels like all that is gone."

Before a cheering crowd of Cuban Americans in Miami last June, Trump extolled his harder line on Cuba. Two months later, revelations emerged of the bizarre, concussion-like symptoms appearing among U.S. personnel in Havana. According to U.S. doctors who examined the Americans, the patients suffered from headaches, dizziness and disorders involving hearing, vision, sleep and mood. Theories about the cause of the problems varied from sonic waves to listening devices placed too close together.

In response to the incidents, the U.S. State Department issued two rare travel warnings. One in September recommended that Americans not travel to Cuba at all. A revision in January suggested that they "reconsider" any visits.

The warnings have thwarted at least some trips. Texas Christian University, for instance, scrapped plans for students to visit Cuba in January, a university official said, because of the U.S. travel warnings.

In November, the Trump administration published new guidelines on travel to Cuba, part of an effort to ensure that U.S. dollars were not directly aiding the communist governmentís power structure. The rules listed hotels, restaurants and stores linked to the Cuban military that Americans must avoid. Americans could still visit Cuba on structured tours, or via cruise ships. One of Obamaís key changes - which allowed independent travel by Americans through educational "people to people" visits - was nixed.

Yet buried inside the Trump administrationís new measures was a loophole that, much like Obamaís rules, still allows Americans to go to Cuba as independent visitors as long as they engage with civil-society groups, such as artists or local business executives.

Trump administration officials say that there are still avenues for travel to Cuba if Americans want to pursue them and that they are allowed to visit in part to support small businesses.

Asked about the U.S. measures hurting Cuban businesses, Sen. Marco Rubio, R-Fla., who supports a tough line on the communist government, said that the regulations apply only to military-owned businesses, not private enterprises. "If the Cuban people continue to suffer it is because the Castro regime doesnít allow them to hire employees, and operate and expand their own businesses, not because of the new U.S. policy toward Cuba," he said in a statement.

The problem, critics say, is that the new rules are so confusing that some Americans have simply opted not to take the risk for fear of running afoul of the law.

"The new guidelines were intentionally vague," said Collin Laverty, who operates educational visits for Americans in Cuba. "Americans can still travel to Cuba in almost the same way as they could before, but a lot of people just donít know that. I think thatís exactly what [the Trump administration] wanted."

There are signs of a possible rebound. Some Cuban tour operators are reporting an increase in interest by Americans. And after cutting flights to Cuba last year because of weaker-than-expected demand, a number of U.S. airlines this month snapped up the chance to win new routes to the island being awarded by the U.S. Department of Transportation.

If the Americans do return en masse, Matilde Portela will be waiting.

"Please," she said. "Come back. We want the Americans back!"

   
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