Cuba looks to tourism to fuel economy

Cuba looks to tourism to fuel economy
New chain of hotels highlights island's culture, architecture
By Michael Martinez | Chicago Tribune
December 29, 2007

CIENFUEGOS, Cuba - When Cuban officials peer into the historic Hotel
Palacio Azul, they see a piece of Cuba's future. In their view, it's an
economy infused with foreign cash.

As the elegant, seven-room lodge was renovated to become part of a new
government hotel chain promoting the island's heritage, it served as an
appropriate example of the small steps with which interim leader Raul
Castro has tried to improve Cuba's developing economy, but possibly his
grander ambitions too.

Ever since Castro announced last summer that he was broadly seeking more
foreign investment, the international business community has been keenly
watching to see the extent of the opening he may make in the tightly
centralized economy, including the hotel sector, a tried and true
booster for the island's communist government.

So far, the government has been short on specifics, but discussions in
mass organizations such as trade unions and a few early measures by
Castro have created optimism, especially among businessmen participating
in last month's Havana International Trade Fair, which promotes foreign
companies selling goods to Cuba.

But analysts don't expect dramatic measures.

"He may be in favor of a practical reform but within the socialist
framework," said Paolo Spadoni, a Cuba expert who's a visiting assistant
professor in political science at Rollins College in Winter Park. "It
will be gradual and rather limited. It won't be spectacular change."
Castro, who has a reputation for using limited free-market models for
reforms, is considered the pragmatic counterpart to his brother Fidel,
Cuba's leader since 1959. Fidel Castro, 81, handed provisional control
over to his 76-year-old brother in July 2006, after undergoing emergency
intestinal surgery.

Since then, Raul Castro has changed some government practices and rules
that some view as inching toward remedying the island's economic
problems, including low wages, food shortages and an inadequate
infrastructure. Oil exploration, nickel mining, transportation, housing
and water treatment are areas where Castro may seek foreign investment,
analysts said.

Tourism helped bail Cuba out of austerity in the 1990s, and officials
again are turning to this cash-generating engine, saying it tops the
list of sectors in which Cuba needs more foreign partners.

In 2006, tourism dropped 3.6 percent, partly because visitors complained
about Cuba's revalued currency, luggage theft, poor service and a
failure to attend to complaints. Cuban officials have blamed rising air
fares, shifting exchange rates and hurricanes. The government had hoped
the sector would grow by about 8 percent last year, to 2.5 million
travelers. Instead, 2.2 million visited, according to Bohemia magazine.

Among other measures initiated under Castro, the government last month
announced that some aircraft can be privately owned by "individuals or
legal entities."

At the Hotel Palacio Azul, Lerida Torres, 49, a clerk, explained how the
hotel was converted from a mansion built about 1920. The building had
most recently housed offices, but the government spent $70,000 in 2002
to create a hotel for 15 guests.

The two-story Blue Palace, as it translates in English, was renovated
again in the past year. In September, officials inaugurated it as a
flagship for their new Hotel Encanto chain that highlights cultural and
architectural landmarks.

Built on Cienfuegos' upscale Punta Gorda shore, the Blue Palace was
designed with neoclassical and Art Deco motifs by Rome-born architect
Alfredo Fontana Giugni, who also built Cienfuegos' roads, aqueduct and
sewer lines, said Torres.

At the inauguration, Tourism Minister Manuel Marrero Cruz said the group
of 50 proposed hotels, 10 of which are under construction, aims to tap
into "an unsatisfied demand" among tourists.

One Blue Palace guest, Hans Jung, 64, who runs a 77-room hotel in
Nunspeet, The Netherlands, declared the new lodging "very good." "You
don't expect this because it's a communist country," Jung said. "They're
doing a hell of a job."

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