Will 2015 be the year Americans are finally free to visit Cuba?

By Larry Luxner

Daily flights from Atlanta to Varadero. Overnight Miami-Havana ferry service. A Starbucks outlet at José Martí International Airport, and a Habanos duty free cigar shop at JFK.

It sounds too good to be true. Yet within a few years, could all these things be ubiquitious, given President Obama’s ambitious plans to resume bilateral relations and upgrade the U.S. Interests Section in Havana to a full-fledged embassy?

Possibly. There’s no doubt interest in Cuba has skyrocketed ever since Obama — in a Dec. 17 televised speech — urged Congress to lift the trade embargo that’s prevented average Americans from vacationing in the Caribbean’s largest island for half a century.

Obama’s dramatic and unexpected policy shift came about following 18 months of secret negotiations that led to the simultaneous return of U.S. prisoner Alan Gross from a Cuban jail to his Maryland home after five years, and the release of three Cuban spies considered “heroes” by the Castro regime.

Less than a month later, on Jan. 15, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued new regulations that, for the first time, allow U.S. citizens and residents in 12 categories who could already visit Cuba to travel there with a general OFAC license rather than a specific one.

Among these categories: Cuban-Americans visiting family members; journalists on assignment, business travel involving authorized U.S. exports; and so-called “people-to-people” (P2P) travel through educational, religious or humanitarian missions.

No longer will such people need to apply for a personalized license, obtain case-by-case approval and submit lengthy, tedious reports to OFAC on where they went and with whom they met while in Cuba.

Nor will they face any dollar limit on authorized expenses. For the first time since 1962, such Americans may now use U.S. debit and credit cards. They can also bring back up to $400 in Cuban goods — including up to $100 in cigars, rum and other alcohol and tobacco products for personal use (though at $300 to $400 per 25-cigar box of Cohibas, Montecristos or Romeo y Julietas, only half a dozen top-shelf premium cigars at most would qualify for duty free entry into the United States).
Oregon-based travel agent Ronen Paldi, owner of Ya’lla Tours USA, said legal travel to Cuba is now based on the honor system.

“It’s certainly much easier now, because there’s no need for any license or permission from OFAC,” Paldi told Travel Markets Insider in a phone interview from Portland. “The fact there is no longer a per-diem limitation, and that everybody can book Cuba trips, made it easier from a logistics point of view.”

At any rate, leisure tourism by Americans is still a no-no. Paldi said that given the 5.3% jump in international arrivals last year, Cuba’s shaky infrastructure can hardly keep up with current demand — and that’s without the massive surge of U.S. tourists expected to crowd Cuban cities, beaches and resorts once the floodgates open.

“Hotels are already at 95% occupancy, there isn’t enough parking, and there are not enough English-speaking tour guides to meet demands,” he complained.

Paldi, whose Ya’lla Tours USA offers customized, individual tours to Cuba, warned that sometime during 2015 — and perhaps as early as Apr. 1 — prices for American tourists will jump by 40%.

“On the other hand, European and Canadian tour operators that serve non-resort destinations are very upset that their allotments are being taken away in favor of the Americans, who are paying much more than the others,” he said.

For example, Canadians now pay $1,100 to $1,200 for a Cuba vacation package that includes round-trip direct flights to Varadero from Toronto, Montreal or Vancouver, as well as seven nights in a hotel, excursions, three meals a day and all drinks (including alcohol) and snacks. The typical American would pay that much for two or three nights.

Nevertheless, on Jan. 23, only eight days after OFAC issued its new regulations, MasterCard announced it would remove the block on U.S.-issued card transactions effective Mar. 1. In a statement, it promised to “work with its U.S. issuers to support their Cuba-related activities and decisions” and advised that “before traveling to Cuba, U.S. cardholders should contact their bank to ensure the card will be supported on the island.”

Not to be outdone, American Express also says it’s “planning on initiating business activities in Cuba,” according to a spokeswoman, though Amex has no merchant relationships or terminals in Cuba yet.

For that reason, travelers to Cuba are advised to take plenty of cash, since systems to handle processing of U.S.-issued credit cards will take time to deploy.

The euphoria generated by Obama’s announcement was evident at the recent New York Times Travel Show, where a Cuba panel at the Jan. 23-25 event attracted a standing-room only crowd. That event, held at the Jacob Javits Convention Center, featured a speech by Jorge Abigantud, director of Cuban state travel agency Amistur SA, as well as presentations by U.S. travel service providers such as Marazul Charters, Cuba Travel Services and ABC Charters.

Asked about the island’s severe tourism infrastructure limitations, Abigantud said his government is trying to fix the problem.

“Cuba has been working with this challenge, not only with regard to U.S. travelers but travelers from all over the world,” he told Miami-based Cuba Standard Monthly. “We have been building new hotels with new infrastructure, and are looking for different solutions. Don’t worry — please visit Cuba!”

The New York show coincided with an announcement by Kayak.com, based in Stamford, Conn., that the travel search engine had decided to display Cuba flight and hotel booking data. Said Robert Birge, Kayak’s chief marketing officer: “Now that the demand is there, we’ve decided it’s time to make that information available on our site.”

And in early March, San Francisco-based Amazon.com began laying the groundwork to ship packages to the communist island. A “ship to Cuba” button was seen on the Amazon website by Reuters correspondents in Havana, though reporters got an error message when they tried to order an item and actually have it shipped to Cuba.

Likewise, Netflix has begun offering its movie-streaming service to subscribers on the island, though it’s available only to Cubans “with access to international payment methods,” says the company — leaving most people there with no legal way to open a Netflix account, let alone pay the $7.99 monthly fee which is equivalent to a third of the average Cuban worker’s monthly salary.

It’s no surprise the cash-strapped island is desperate to keep the tourists coming.

Twenty years ago, following the collapse of the Soviet bloc upon which Cuba depended, the island received 360,000 tourists a year — and they were staying in 12,000 mostly crummy, substandard hotel rooms. By 2000, arrivals had zoomed to 1.3 million, and last year, Cuba welcomed just over 3.2 million tourists — a 5.3% jump from 2013.

According to Ministry of Tourism statistics, Cuba now has 61,632 rooms in tourist-class hotels, up from 42,734 in 2001. Those rooms are concentrated mainly in the beach resort of Varadero (with 20,067 rooms, or 32.5% of the total), Havana (12,072 rooms), Cayo Santa Maria (7,434 rooms), Cayo Coco (5,807 rooms) and Guardalavaca (5,323 rooms).

Canada remains the top source market globally, with 1.18 million arrivals (up 6.3% from the previous year), followed by Germany, United Kingdom, Italy and France.

In addition, the number of Chinese tourists visiting Cuba jumped by 27%, a trend likely to continue in 2015 with the launch of direct air service between Beijing and Havana. And despite its continuing economic chaos, Venezuela has become a leading non-traditional tourist market, with arrivals from that South American country soaring by more than 70% last year.

While Europe remains the most enticing destination for U.S. luxury travelers, Cuba ranks among the top “up and coming” luxury getaways for 2015, along with Croatia, South Africa, Vietnam and the United Arab Emirates. That’s according to a survey of 844 tour owners, managers and experts by Travel Leaders Group (TLG).

“The real destination to watch is Cuba, which was already appearing quite high on the list, even though the survey was launched prior to the president’s announcement of a process to normalize relations,” said J.D. O’Hara, president of Tzell Travel, a unit of TLG. “It shows how much pent-up demand there truly is for legal travel to Cuba, particularly among luxury travelers who want an authentic experience before the country undergoes rapid change and modernization as a tourist destination.”

Especially popular is Jardines del Rey, a booming resort on the islands of Cayo Coco and Cayo Guillermo, just off the northern coast of Ciego de Ávila province. The enclave, which will host Cuba’s International Tourism Fair in May, maintains an average 8,000 tourists a day, while Jardines del Rey’s airport — which now gets 41 flights a week — aims to hit 50 flights by mid-2015.

A tiny fraction of Cuba’s 3.2 million tourists — some 8,085 people — visited the island aboard cruise ships. The government is hoping that’ll change very quickly, but the U.S. cruise industry has taken a wait-and-see attitude.

“There’s really no work to do until the U.S. government removes all restrictions,” said Michele M. Paige, president of the Florida-Caribbean Cruise Association, an industry trade group. “Right now, [because of the 1996 Helms-Burton Act, which codifies the embargo into U.S. law], if any ship company’s vessels go to Cuba, none of them will be allowed to call on a U.S. port.”

For the time being, wealthy Americans can legally book cruises to Cuba through a U.S. tour operator with a P2P license from OFAC, such as Road Scholar or Insight Cuba. Or they can book directly with Toronto-based Cuba Cruise and register for a P2P Cuba Cruise program with the nonprofit Fund for Reconciliation and Development (FFRD).

“Our people-to-people Cuba Cruise program qualifies for the general license and is designed to immerse U.S. travelers in Cuban culture and history,” said FFRD’s New York-based executive director, John McAuliff. Those who register for the organization’s P2P travel program online will get a participant letter of authorized travel.

Even so, Cuba is hardly a bargain destination for ordinary Americans —especially when compared to nearby Puerto Rico or the Dominican Republic.

Insight Cuba offers a seven-day baseball tour to Cuba that costs $4,990 per person (including round-trip charter flight from Miami). Meanwhile, another company, Colorado-based Globus, charges $2,719 — not including airfare — for a nine-day excursion to Santiago de Cuba and other provincial towns in eastern Cuba.

Prices for religious-themed humanitarian trips aren’t any cheaper. A Mar. 19-26 Jewish relief mission organized by B’nai B’rith International costs $3,695 per person, including round-trip airfare from Miami and visits to Havana, Guantánamo and Santiago de Cuba. But at least this package features four nights at Havana’s five-star Hotel Melia Cohiba and two nights at the equally luxurious Hotel Melia Santiago.

One reason these packages are so expensive is the exorbitant landing-fee system imposed by Cuban aviation authorities, which charge U.S. charters up to $24,000 per flight to land at Havana’s José Martí International Airport. By comparison, Tampa International Airport assesses just $275 in landing fees.

The Castro regime also charges $46 per passenger for health insurance, good for the duration of a 30-day travel visa, given that U.S. health insurance isn’t valid in Cuba.

Cuba is believed to have already collected a cumulative $114 million in such fees from U.S. charters, which is why some are convinced overnight ferry operations between South Florida and Havana won’t become a reality as long as Raúl Castro is in power. Once these cheaper ferries start up, fewer people would fly, and a lucrative source of hard currency for Cuba would suddenly dry up.

On Jan. 16, United Airlines announced it would soon operate flights to Cuba from Newark and Houston — proof of the expected coming bonanza. And JetBlue said it would serve the island from “multiple U.S. cities,” calling its existing charters “a strong foundation for future expansion in Cuba.”

Fort Lauderdale-Hollywood International Airport, already a hub for JetBlue, Spirit Airlines and other low-cost rivals with extensive routes to Caribbean destinations including Haiti and the Dominican Republic, could benefit along with Miami from a widescale opening of U.S. travel to Cuba.

Despite all the PR hype, experts offer this advice: Don’t hold your breath.

Aviation consultant Michael J. Boyd of Colorado-based Boyd Group International said that eventually, Cuba would receive 1.4 million to 1.8 million U.S. air passengers annually — up from the 400,000 or so who come now. Yet as Boyd pointed out on his company’s website, “even if full, unlimited scheduled air service were immediately allowed, the fact is that there aren’t the hotel rooms, the ground transportation or the other systems that can accommodate massive increases in travelers.”

That’s not all. For commercial U.S. airline flights to Cuba to become reality, reports Cuba Standard Monthly, the two countries would have to sign a bilateral aviation accord specifying how many flights each side can operate, how often and at which airports, plus other wide-ranging matters such as landing fees.

For this reason, Paldi told TMI, “American carriers will not be flying to Cuba anytime soon, so airlift from the United States will still depend on the charter flights. Cuba won’t allow any increase in charter flights, even if a charter now has permission to fly daily and wants to increase that to twice or three times a day.”

At any rate, Paldi predicted that Congress, which must ratify any bilateral aviation accord signed by the two countries, would refuse to do so, regardless of what the White House or the State Department may want — and even though polls show that a majority of Americans, including those in South Florida, favor lifting the travel ban completely.

“That’s why Obama can’t open an embassy, even though the building and staff exists,” he quipped. “Congress won’t even give them $1 to change the letterheads.”

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