Wednesday, May 12, 2010

Optimism About Travel Legislation

11 May 2010 8:30 AM
By Patrick Mayock
Associate News Editor

SAN JUAN, Puerto Rico—When President Obama lifted long-standing restrictions on Cuban-Americans visiting their native island in April 2009 after nearly two decades, it seemed only a matter of time before the United States further eased its embargo on the Caribbean nation, potentially opening a flood of travel and investment while altering the landscape of the region’s tourism industry.

That time could be less than a year away, if pending legislation makes its way through Congress as is projected, panelists said during a general session at the 14th annual Caribbean Hotel & Tourism Investment Conference last week.

The Travel Restriction Reform and Export Enhancement Act (H.R. 4645), which prohibits the U.S. president from regulating travel to and from Cuba and liberalizes agricultural trade with the communist nation, could be brought to a vote in the House of Representatives as early as July, according to Timothy Ashby, a corporate attorney with Miami-based Sonnenschein Nath & Rosenthal.

The legislation already has enough votes to pass, Ashby said, though Speaker of the House Nancy Pelosi has asked bill co-sponsor Rep. Collin Peterson (D-Minnesota) to ensure 220 votes (the bill only needs 217 votes to pass) before she brings it to a vote.

If the bill passes the House, it will be attached to an appropriations bill in the Senate, which likely would be voted on between the midterm elections and the Christmas holiday recess, Ashby said. Then it would go to President Obama, who already has said he would sign it into law. The law would open travel to Cuba for all U.S. citizens beginning in 2011.

Impact on Caribbean

Lifting travel restrictions on Cuba would provide an immediate boon for the country’s travel industry, Ashby said.

U.S. travel restrictions to Cuba could be lifted by as early as next year, said Timothy Ashby of Sonnenschein Nath & Rosenthal.

Within the first year travel restrictions are lifted, the U.S. International Trade Commission predicts Cuba will receive between 554,000 and 1 million travelers from the U.S. The Cuban Ministry of Tourism agreed with those projections, adding the country could expect 3 million U.S. tourists within the first five years.

The Economist Intelligence Unit projects a 15-percent to 20-percent increase in international arrivals and a 10-percent increase per year in foreign exchange earnings, said Emily Morris, the Unit’s Cuba country analyst.

“By year 2014, you have Cuba just narrowly overtaking the Dominican Republic as the first tourist destination in the Caribbean,” she said.

Cuba is already preparing for this influx of visitors. The country is looking to expand its existing supply of 50,000 hotel rooms by at least 20,000 rooms during the next five years, according to Carlos Vogeler, regional representative for the Americas for the United Nations World Tourism Organization.

Even without expansion, the country's tourism industry is showing growth. Cuba received 2.4 million tourists during 2009, 40 percent of whom came from Canada, That represents a 3.4-percent increase from 2008 to 2009. (The world’s international tourism market declined 4.3 percent last year.)

The country received US$2.3 million in tourism-related receipts during 2009.

Any short-term benefits that befall Cuba would not adversely affect the rest of the Caribbean travel industry, the panelists agreed. On the contrary, lifting travel restrictions would instead strengthen the region’s appeal throughout the world.

“If such a thing would happen, it’s not something to fear in the Caribbean. It’s something to welcome,” Vogeler said. “That will definitely impact positively … the whole market.”

“Development of Cuban tourism actually creates a bridge for an increase in the total volume of tourists to the Caribbean,” Morris said, adding the island would create a natural route via air or sea for travelers and businesspeople.

Morris did acknowledge a short-term negative impact on the Dominican Republic, Cuba’s closest competitor. But after a slight setback during 2011, the country would eventually approach 5 million international tourist arrivals by 2014.


A lift of travel restrictions also could usher in a swell of U.S. investment in Cuba.

“The Cubans are also open to U.S. investment,” Ashby said. “ … They would welcome U.S. investors as they would welcome tourists.”

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