Cuba is the largest and most westerly island in the Caribbean, located at the mouth of the Gulf of Mexico, 145 km south of the Florida Keys. The Cuban archipelago consists of the island of Cuba, the Isla de la Juventud (Isle of Youth) and 4,195 cays and islets - a total surface area of 111,000 square kilometres. 1,200 km long and 210 km at its widest point, Cuba is home to over 11 million people, two million of which reside in the capital city Havana.

The Ciboney were the first inhabitants of Cuba, settling on the island around 1000BC, and were followed by the Arawaks around 900AD. When Cuba was ‘discovered’ by Christopher Columbus in 1492 on his voyage to the New World, and claimed on behalf of Spain, the indigenous population totalled over 100,000, comprising a mixture of Ciboney and Arawaks.  By 1555 the native population numbered 3,000, reduced through a combination of disease, malnutrition, enslavement, rebellion and suicide.

Like many of its Caribbean neighbours, Cuba developed a monocrop dependence on the sugar industry. African slaves were introduced to the island in the 17th century, imported to work in the copper mines and on the sugar plantations. By the end of the 18th century, Cuba was the world’s largest sugar producer. Into the next century as the sugar industry boomed, increasing numbers of slaves were imported every year to work on the plantations and in the refineries. By the mid-nineteenth century, slaves comprised one-quarter of the Cuban population, with an additional 20 percent of the population freed slaves, and at a time which saw the emancipation of slaves in many sugar-based economies, Cuba’s slave population continued to multiply.

In 1868, a revolt against Spanish rule was sparked by a member of the plantocracy, and led to the Ten Years’ War, and the eventual cessation of slavery in 1886. In 1895, the populace’s bid for independence led to all out war with Spain. The eventual success of this bid came after intervention by the USA and at a hefty price, with the Americans assuming military control of the newly independent nation. The American occupation of Cuba which began in 1898, brought with it an ‘Americanisation’ of the Cuban people - the construction of bridges, roads and sanitation systems by the military, the construction of schools and hospitals, the training of Cuban teachers in America, and the importation of American goods, religions, and tourists. 

Revolution and evolution

Political corruption, economic uncertainty and US-backed leadership led to increased dissatisfaction in the Cuban population following the 1952 military coup by Fulgencio Batista y Zaldivar. In 1953, Fidel Castro, a political activist and young lawyer began to gather a following of young people opposed to the Batista dictatorship. Arrested, tried and sentenced to 15 years in prison, Castro was released in 1954 and fled to Mexico where he formed the 26th of July Movement. In 1956, Castro returned with a band of guerrillas in a failed attempt to invade Cuba, but remained on the island building his band of revolutionaries, eliciting the peoples’ support and conducting raids on Batista’s military installations. On New Years Eve 1958, Batista fled the country, and Fidel Castro Ruz assumed power.

Economic reforms implemented almost immediately were aimed at redistributing the wealth in the country and closing the gap between the rich and the poor. Limits to land ownership were enforced, rents were reduced, standardised wages and price controls were introduced, and some land holdings were nationalised. These policies did not sit well with the Americans who in 1958 owned 75 percent of Cuba’s fertile land, 40 percent of their sugar industry and 90 percent of their public services, especially when Fidel Castro was forging economic ties with the then Union of Soviet Socialist Republics (USSR). In 1961 the Americans severed diplomatic ties with Cuba. It is estimated that Fidel Castro confiscated over US$8 billion of land, businesses and the travel and trade embargo implemented by the US still exists to this day.

The rise, fall and resurrection of tourism

In the 1950s, Americans flocked to Cuba, accounting for 89 percent of the total number of visitors to the island, and 32 percent of total American arrivals to the Caribbean region. At its peak in 1957, Cuba attracted 272,265 American tourists, by 1960, a year after the revolution, this number dropped to 61,098, and dwindled to almost zero over the next two decades.

Tourism’s economic potential diminished in importance in the years after the revolution, as the country’s focus turned once more to its sugar, tobacco and mineral exports. Favourable barter arrangements with the USSR saw Cuba’s sugar being purchased at a market premium, in exchange for agricultural machinery, crude oil and technology. By 1970 over 85 percent of Cuban trade was with the USSR and its Eastern Europe allies amounting to an estimated US$6 billion per year. The 1990 collapse of the Soviet Union signalled an end to the economic subsidies and barter arrangements between the two countries, and tourism was embraced as an economic lifeline and means of generating much needed foreign currency.

In 1990, a total of 340,300 tourists visited Cuba, by the end of 1999 that number had reached 1.6 million. Nine international airports coupled with daily flights from most of its main markets of Canada, Spain, Italy, France and Germany have helped to fuel this growth, which is expected to top 2 million this year.

Sun, sea and sand is the main product offering, however the health, diving, historic and nature tourism niche markets are also prominent. Many visitors combine beach and city holidays, opting to divide their time between one of the many resorts, and some of Cuba’s historic cities. The Ministry of Tourism is actively promoting this ‘destination’ product, and eventually aim to include visits to other Caribbean islands as part of the entire Cuban vacation experience.

Hotel development

In order to accommodate the rapid tourism growth, the hotel sector has more than doubled the available rooms in the last decade. At the end of 1999, there were 189 properties having over 30,000 rooms. Hotel construction has continued unabated, and so far in 2000, 22 four star hotels opened in Cuba including Sol Melia’s 429-room Paradisus Varadero Beach Resort.
 

The hotel sector in Cuba is dominated by four main companies – Gran Caribe, Cubanacan, Gaviota and Habaguanex. The exponential growth in room availability over the past decade has been made possible through joint ventures primarily with Gran Carib, Cubanacan and a number of non-American international partners. There are currently 24 joint venture companies which have 11,900 rooms under development, and 3,700 currently in operation.  Currently Sol Melia (Spain), Super Clubs (Jamaica), Accor (France), Barcelo (Spain) are the main international companies in joint venture agreements to manage properties in Cuba. 
 

Eight primary regions which account for over 90 percent of the current room supply, have been singled out for focused development by the Ministry of Tourism. The regions are also home to the majority of Cuba’s natural, historic and cultural attractions including the UNESCO (United Nations Education, Scientific and Cultural Organisation) World Heritage Sites of Old Havana, Desembarco del Granma National Park, Viñales Valley, San Pedro de la Roca Castle, Trinidad and the Valley de Los Ingenios.
 

Outlook

There is speculation of a potential change in US sanctions and foreign policy in the new year with the swearing in of a new US President. Anti-embargo sentiment has been building, fuelled by the case of six year old Elián Gonzáles, the Cuban refugee caught in a tug of war between his Miami based relatives and his Cuban based father. However the Cuban Ministry of Tourism’s planning and development forecasts are based on a closed American market, rather than one which may at some point in the future allow free movement between the USA and Cuba. They project seven million visitors will come to Cuba by the year 2010, spending approximately US$11.8 billion. Should the US trade and travel embargo be lifted, and Americans be allowed to travel freely to Cuba, anywhere between one and four million are expected to visit in the first year. In the meantime, all signs point to the tourism industry continuing its massive growth, and barring any change in government policy, tourism will continue to be the backbone of the Cuban economy.

© 2000 Arthur Andersen.