Luxury hotels arrive in Cuba despite fears Trump may hurt tourism boom

Towering cranes dot the Havana skyline as communist-run Cuba races to build luxury hotels, amid indignation among some residents and concern that US President Donald Trump might reverse a detente that fueled the tourist boom.

Swiss-based Kempinski Hotels SA will inaugurate its Gran Hotel Manzana in the heart of the capital on Wednesday, billing it as Cuba's first true luxury hotel.

The five-star property, managed by Kempinski but owned by the Cuban government, occupies the top floors of a renovated Belle Epoque shopping mall filled with glitzy Gucci and Montblanc stores.

Farther down the iconic Paseo de Prado boulevard toward the Caribbean Sea, workers are developing two other sites into luxury hotels to be operated respectively by Spain's Iberostar and France's Accor SA ACCP.SA, the largest hotel group in Europe.

Tourism is the one bright spot in Cuba's moribund economy, which is struggling with falling exports and upheaval in major trade partner Venezuela.

Cuban Tourism minister Manuel Marrero said in May that more than 4.2 million tourists were expected this year, up from 4 million in 2016. He said the country was adding 2,000 hotel rooms a year to its stock of 65,000 hotel rooms and 21,000 homes renting to tourists.

Visits by Americans have soared since US-operated cruises and scheduled flights were relaunched last year as part of the detente pursued by former President Barack Obama after a half-century hiatus.

However, his successor Trump is considering tightening those rules when he announces his Cuba policy as soon as this month, according to current and former US officials and people familiar with the discussions. That would likely hurt tourism, at least in the short run, and might slow the pace of hotel construction. 

"We hope that trade and travel restrictions eased by the Obama administration will not be tightened again by the current US government," said Alessandro Benedetti, a marketing director at Kempinski. "That would not be favorable for any kind of businesses connected to tourism, such as cruise ship operators, airlines or hotel chains."

The Cuban government has courted foreign hotel operators to develop untapped markets, particularly in high-end tourism. With its gleaming white stone facade and French bay windows, the Gran Hotel Manzana features a rooftop infinity pool overlooking Havana's central park, as well as a spa with steamroom and sauna. There is also a cigar lounge with a tobacco sommelier.

Industry experts say Cuba, which offers a plethora of low- and mid-range accommodation, is right to bet on luxury, although it will be a challenge for operators to maintain standards in a tightly controlled Soviet-style economy. "We have travel agencies contact us saying they had never worked with Cuba because it didn't offer anything up to their standards," said Benedetti.

"But now that's changed," he said, citing strong interest from US tourists seeking more luxurious destinations.

It remains unclear how far Trump will go in rolling back Obama's changes. Any reinstatement of US restrictions on Cuba travel would face criticism from American travel companies as well as a growing number of US lawmakers.

The number of US visitors rose 74 percent last year, but Americans are still not officially allowed to visit as tourists. Because their trips must fit certain categories, like educational travel, most descend on Havana rather than the coastal resorts.

While Cuba has been building resorts around the island, it has redoubled its focus on the capital, where hotels are fully booked year-round and demand is growing.

"With this increase, it would be appropriate to have products of high standard," said Francisco Camps, Cuba deputy general manager for Spain's Meliá Hotels International SA, which wants to introduce its two main luxury brands. Despite assurances tourism revenues will benefit all Cubans, the move has stirred mixed feelings in a country that prides itself on social equality. "The hotels are very pretty, but they are too expensive for Cubans," said retiree Antonio Cazamayor, who lives on a monthly pension of $10.