Tuesday, November 17, 2009

Hotels Interest in Cuba

Sol Melia to Gain From U.S. Repeal of Cuba Travel Ban

By Jens Erik Gould and Nadja Brandt

Nov. 16 (Bloomberg) -- Spanish hotelier Sol Melia SA will benefit over American rivals like Marriott International Inc. if a bill before U.S. lawmakers this week to end a 46-year travel ban to Cuba is enacted while a broader embargo is kept in place.

The trade embargo would ban U.S. hotel operators from lodging the 1.1 million Americans that the U.S. International Trade Commission says may visit annually if the travel ban is lifted. And repealing the ban may drive business away from other Caribbean resorts operated by U.S. companies, said Robert Muse, a Washington-based lawyer.

“While lifting the travel ban is a perfectly commendable project, the main economic beneficiary will be Sol Melia,” said Muse, who advises U.S. clients on Cuba-related issues. Palma de Majorca, Spain-based Sol Melia is the world’s largest resort operator. It manages 24 hotels on the communist island.
The U.S. House Committee on Foreign Affairs will hold a hearing Nov. 19 on the travel ban, the first since Democrats took control of Congress in 2007.

U.S. hotels, mobile phone providers, travel insurance companies and credit card issuers see the bill, known as the “Freedom to Travel to Cuba Act,” as a step to ending the embargo, said Jake Colvin, vice president of the National Foreign Trade Council.

Standing Room Only

The Washington-based trade association has held about six meetings with dozens of its 300 members to discuss business opportunities with Cuba since President Barack Obama succeeded George W. Bush in January.

“If these meetings were taking place under Bush,” who favored retaining the travel ban, “you could’ve fit everyone interested in a closet,” said Colvin. “Now they’re standing room only.”

Christopher Sabatini, policy director at the Council of the Americas in New York, agreed that repealing the travel ban may lead to a reconsideration of the embargo. “The idea is to get rid of the travel ban and then let the momentum build,” he said.

The legislation has 179 bipartisan co-sponsors in the House and needs 218 votes to pass if all 435 members vote. A similar bill was introduced in the Senate.

Marriott shares rose 70 cents, or 2.6 percent, to $27.66 at 3:38 p.m. New York time. Sol Melia’s shares rose 26 cents, or 3.9 percent, to 6.76 euros.

“We certainly would monitor any changes the U.S. government makes regarding doing business in Cuba,” Tom Marder, a spokesman for Bethesda, Maryland-based Marriott said.


U.K.-based InterContinental Hotels Group Plc. says it will not enter Cuba as long as the embargo is in place. The company is subject to U.S. laws because the majority of its investments are in that country, said Alvaro Diago, who is chief operating officer and head of Latin America.

U.S. hotel companies aren’t getting their fair share of the Cuban market while European companies have already a foot in the market,” Diago said in an interview.

U.S. tourists will flock to Cuba because their inability to travel there for almost 50 years has created an “allure” and “mysteriousness” about the island, said Eric Trump, executive vice president of development and acquisitions for Trump Organization, a real estate investment and development company founded by Donald J. Trump.

‘On our Radar’

Cuba has been on our radar, but until we can actually get in there, it’s harder to plan preliminary steps,” Trump, 25, said in an interview. “We are such a presence in south Florida. It’s such a staple for us. Cuba would fit right in there.”

Wyndham Worldwide Corp., the franchiser of Days Inn hotels and Super 8 motels, considers the lifting of the embargo a matter of time, according to Eric Danziger, president and chief executive officer of Wyndham’s hotel division.

“Sol Melia is there presently and that gives them a current advantage,” Danziger said in a telephone interview, adding that the market has great appeal.

Ignacio Sosa, a Cuban-born founder and managing partner of Boston-based hedge fund OneWorld Investments from 1998-2008, said “singling out Cuba as the only country Americans can’t travel to has produced no positive results.”

Sosa, who emigrated with his anti-Castro family from Cuba in 1960 when he was four years old, will testify at the hearing with retired U.S. Army General Barry McCaffrey, the White House’s anti-drug czar from 1996-2001, and James Cason, who headed the U.S. interests section in Havana under Bush.

On Sept. 3, Obama ended restrictions on Cuban-Americans traveling and sending money transfers to relatives back home. That’s expected to double to 200,000 the number of U.S. tourists visiting the island this year, Sabatini said.

‘Holy Grail’

“If you are a potato, you can get to Cuba very easily,” Representative Sam Farr, a California Democrat and one of the co-sponsors of the bill, said in a Sept. 21 interview. “But if you are a person, you can’t, and that is our problem.”

Orbitz Worldwide Inc. said Nov. 11 that it received 100,000 signatures for a campaign it started in May called OpenCuba.org. Lifting the travel ban to Cuba would probably increase Orbitz’s revenue from airline and hotel bookings, Chief Executive Barney Harford said in a Nov. 10 interview.

U.S. passengers on Caribbean cruise lines, with their accommodation and amenities already provided at sea, will demand sightseeing stops in Havana, said Bob Whitley, president of the United States Tour Operators Association, which supports lifting the travel ban.

Cuba is the Holy Grail of cruising,” Richard Fain, chief executive officer of Miami-based Royal Caribbean Cruises Ltd., said in an Oct. 6 interview in New York. “I can’t wait until we have a free and open Cuba.”

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net
Last Updated: November 16, 2009 15:50 EST