‘Dangerous’ because its emergence as a rival tourist destination to Bermuda is drawing ever-closer

             Report by Becky Ausenda

             Whether you are a cigar aficionado, a beach lover or a forgiving, political idealist — Cuba conjures
             a mystical allure all of its own. With 1.8 million visitors per year it’s hardly ‘off the beaten track,’ but
             for the last four decades Cuba has officially been off-limits to American tourists. This, however,
             may be about to change.
             On 23 July this year the U.S. House of Representatives voted to lift restrictions on Americans
             travelling to Cuba.
             Republican Congressman Jeff Flake, sponsored this amendment to the current embargo (along
             with another which removes the $1,200 per year limit on what Cuban-Americans can send to their
             family in Cuba). He said: “ This is all about freedom. Our government shouldn’t tell us where to
             travel and where not to travel.”
             This week, a 120-ton shipment of American brand food was sold to Cuba — the first direct
             transaction of its kind in 40 years.
             These are promising signs for those who favour a thawing in relations between communist Cuba
             and its capitalist neighbour; the indications are, however, that President Bush will use his veto, for
             the first time during his administration, to overturn the House decision. As events unfold in
             Washington, they are being closely watched not only by Cubans and Americans, but also by a
             number of observers in Bermuda. After all, Cuba boasts not only miles of stunning, unspoiled
             beaches and beautiful mountains – a growing number of top-notch, largely European-backed
             hotels and resorts are springing up on the island.
             If American investment was brought into the picture, development would mushroom and
             Americans would have one more reason not to choose Bermuda for a vacation. So what is the
             nature of Cuba’s appeal and just how big a rival could it become?
             Murray Brown is a charter operator who has been organizing holidays once a year from Bermuda
             to Cuba since 1998. He says many of his clients fall in love with Cuba and at the end of the trip will
             invariably ask: “When is your next flight?”
             Asked to pinpoint Cuba’s appeal, he says: “The people. They are average people who will take you
             into their homes and treat you to a meal.”
             He says that on their first trip to Cuba, clients tend to feel slightly apprehensive about the
             communist aspect, but once they get there they generally feel safer than in many U.S. cities. “You
             forget you’re in a communist country until you see the ‘Viva la Revolucion’ signs.”
             The trip has proved so popular that this year it has sold out without Mr Brown even having to
             advertise. He includes flights and eight night’s five-star hotel accommodation for between $1,500
             and $1,700 and throws in some tours of historical Havana, a visit to the former residence of
             Ernest Hemingway and a trip into the countryside. The cost of eating out and entertainment in
             Cuba is also low. Tourists will pay as little as $10 per meal in a Paladar “home restaurant.”
             Mr. Brown believes that in the future, more and more people will want to experience Cuba. Many
             Americans are already flouting the embargo: Last year, approximagely 150,000 U.S. citizens
             travelled to Cuba via a third country. Mr. Brown’s contacts in Cuba say that they are bracing for
             seven to eight million tourists per annum. “They are building hotels like crazy….There’s no
             question that all the destinations in the Caribbean and Bermuda will take a hit.”

             Both in his role as Shadow Minister for Tourism and as owner of The Reefs resort, David Dodwell
             has kept a watchful eye on Cuba’s development. At the moment he puts Bermuda and Cuba at
             opposite ends of the travel spectrum, but he foresees Cuba’s emergence as a rival tourist
             destination as inevitable: “Yes, Cuba will be competition one day, the question is, when? How
             soon will it be a threat?”
             In Mr Dodwell’s opinion, the only thing for a place like Bermuda to do is keep raising the bar. “The
             rough thing will be competing on price. Labour and other costs will be so cheap in Cuba.”
             Mr Dodwell highlights several reasons why Cuba might struggle to catch up with Bermuda in
             terms of quality. Firstly, he questions whether the infrastructure will be capable of handling the
             anticipated flood of visitors: “Will they be able to provide the roads, telephone lines and training for
             people? I understand that the people have great attitudes, but that isn’t enough to provide the
             service that people expect.”
             There are also nuances in the “system” which may make it difficult to deliver a world class
             product in Cuba. Due to the economic embargo, it is not possible to use U.S. issued credit cards,
             even though most Cuban establishments now expect payment in U.S. dollars.
             Mr Dodwell says that from a management point of view, the fact that hotel owners in Cuba do not
             pay their staff directly is a major problem. “You don’t pay your staff, you pay the government and
             the government pays your staff…” The implication is that the government will take a cut and
             hoteliers lose control over how much, when and how staff are paid. Conceivably this could create
             motivation problems and strikes if the “system” breaks down.
             Another factor is the red tape for local businesses. Local entrepreneurs are discouraged by the
             fact that everything needs to be regulated. This hampers the growth of small dive shop
             operations, snack bars, independent tour guides and the like. Mr Dodwell says this is another
             factor that may hinder the natural development of Cuba as a resort. He also remarks that the
             Cuban authorities have yet to grasp the cultural appeal of the colonial style buildings in the old
             parts of Havana and they are neglecting a key tourist attraction. “If preservation doesn’t start soon,
             it’s going to crumble.”
             Mr Dodwell says the investment climate is still fairly chilly. The largest shareholding that a foreign
             investor may hold is 50 per cent — the rest of the business must be owned by the government.
             According to Mr Dodwell, this makes would-investors cautious. The larger hotel groups, however,
             will not be put off entirely. “Apparently the American hotel groups like Carlston Hospitality and
             Radissons are desperate to get in there,” Mr. Dodwell said.
             American businesses such as hotel groups clearly disagree with the policy of isolating Fidel
             Castro and American tourists are openly thumbing their nose at the embargo.
             So how will President Bush justify continuing with this policy?

             Bermudian Walton Brown, political scientist, pollster and publisher, is a frequent visitor to Cuba
             and has met Fidel Castro on two occasions. He feels that the American isolation of Cuba cannot
             be justified from a moral point of view: “It has nothing to do with ideology and everything to do with
             electoral politics… America’s position is based on emotion, not logic. It makes no business sense
             and no ideological sense.”
             He points out the hypocrisy of an American government stating that Cuba is an evil, communist
             regime: “The United States now has full diplomatic ties with Vietnam which is the only country to
             have defeated it in a war… Vietnam remains a communist country, as does China. …”
             This same sentiment was expressed when the motions were proposed in the U.S. House of
             Representatives. “Americans can travel to North Korea and Iran, two-thirds of the axis of evil, but
             not to Cuba. That makes no sense, I would suggest,” said Democrat William Delahunt.
             Walton Brown explains that President Bush will come under pressure to appease the anti-Castro
             lobby in Florida, where a large element of Cuban emigrants feel aggrieved about the confiscation
             of their businesses after the 1959 revolution. In many cases, he says, they had been profiting
             under the former Batista regime by under-valuing their businesses for tax evaluation. When the
             revolutionary government announced nationalization and offered compensation based on previous
             tax records, such people lost out. Therefore many Cuban “exiles” hope to see the Castro
             government overturned so that they can return home and claim back some of their losses.
             It seems doubly ironic that if President Bush uses his veto to pacify the constituents of his brother,
             Jeb, in Florida, he will be supporting tax evaders while simultaneously claiming the moral high
             ground over the offshore tax haven issue that has harmed Bermuda’s image.
             The timing of the veto will test President Bush’s principles and it will be interesting to see if he
             allows state politics to influence his decision and side with the Sunshine State’s anti-Castro
             brigade.
             For the sake of Bermuda’s tourist industry, perhaps we should hope that he doesn’t disappoint his
             brother.