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Tourist economy in trouble

Posted on Tue, Apr. 03, 2007

economy in trouble
Economically crucial visits by foreign tourists are free-falling, with
flight costs, infrastructure issues and the exchange rate all playing a
role.
BY WILFREDO CANCIO ISLA
El Nuevo Herald

Cuba's tourism industry, the island's main economic engine for the past
15 years, is in a steep fall amid a mix of factors that range from
rising air ticket prices to changes in tour ownerships and crumbling
tourist facilities.

The first alarm rang late last year, when Ministry of Tourism (MinTur)
figures showed 2.2 million people had visited the island in 2006, down
from 2.3 million in 2005.

The decline has accelerated so far this year. January and February
indicators show a combined drop of 7 percent compared to the same months
in 2006, according to the most recent MinTur figures, with February
visitation falling 13 percent.

Spanish tourists, historically the island's third-largest group, dropped
by 45 percent over both months.

Cuba's tourism industry has been generating more than $2 billion per
year in recent years, and provides direct and indirect employment to
about 300,000 people.

Cuban authorities explaining the drop have cited a rise in air fares,
due to the cost of fuel, currency exchange rate shifts and the scares of
the notoriously violent 2005 hurricane season. Also mentioned are the
Bush administration tightening of restrictions on Cuban-American trips
to the island, which according to Cuban news media reports dropped from
100,000 in 2004 to about 30,000 a year since.

On the plunge in Spanish tourism, MinTur officials focused blame on the
suspension of three weekly flights by the Iberojet charter and
the sale of the cruise line Pullmantur to Miami-based Royal Caribbean
Cruises. A Pullmantur ship used to sail every week from Havana after
picking up tourists who had flown in from Madrid, but the company was
forced to end its Cuba stops under the new owners because of the U.S.
trade .

LEFT UNSAID

But internal MinTur documents obtained by El Nuevo Herald, independent
experts and tourism-sector workers on the island show there are other
serious problems not mentioned by MinTur.

Most of Cuba's tourism facilities were built in the 1990s and have
received little maintenance since then, said a MinTur official who asked
for anonymity out of fear of government punishment.

''The structure created for years in the tourism industry is crumbling
piecemeal,'' the employee said. “Tourism in Cuba is headed for chaos
and it will take years to revert the present situation.''

The MinTur documents also point to the inability of the Tourism
Construction Enterprise (Emprestur) to repair hotels because of the lack
of materials.

The employee said there's also widespread dissatisfaction with the way
Tourism Minister Manuel Marrero Cruz and leading managers are running
things. Marrero, former president of the Gaviota Group, run by the Cuban
armed forces, and a trusted aide to Cuban interim leader and Defense
Minister Raúl Castro, was appointed to the post in early 2004 after the
removal of Ibrahim Ferradaz amid reports of a corruption scandal.

''What's happening in tourism is a reflection of a behavior that has
spread nationwide,'' said economist Oscar Espinosa Chepe on
the phone from Havana. “People are disgusted with the economic
situation at home, workers don't take pride in their work and inertia
corrupts the entire organization.''

PRICEY PESO

Also affecting tourism was the Cuban government's decision in late 2004
to effectively increase the value of its currency by 20 percent, making
foreigners' stays and meals in Cuba that more expensive.

“It was logical that a devalued dollar would cause a drop in tourism
from Latin America and Canada, because the visitors from those countries
buy very cheap packages, said Carmelo Mesa Lago, professor emeritus at
the of Pittsburgh and a long-time Cuban economy watcher.

With 44,000 hotel rooms, Cuba had an occupancy rate of 63.5 percent in
2004 and only 55.7 percent in 2005, according to the United Nation's
Economic Commission for Latin America and the Caribbean. The average
daily expenditure per visitor dropped from $175 in 2003 to $97 in 2005.

MinTur has not released occupancy statistics for 2006, but the MinTur
official estimated it at 50 percent.

Trying to reverse the trend, MinTur announced a strategic plan for 2007
that involves support for investments, construction of new facilities
and repairs of existing hotels. The plan also envisions improved
highways and road signs, and guarantees of electricity and water for the
tourism industry.

Marrero has announced a ''total change in the philosophy of promotion
and advertising for the island,'' and in January unveiled a campaign
named ''Viva Cuba,'' designed to present a new image of the country, at
the International Tourism Fair in Madrid.

http://www.miamiherald.com/581/story/61689.html

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