With the embargo lifted between the U.S. and Cuba, there is tremendous  growth potential for the hospitality market in the island country — but there are also considerable challenges.

By Stefanie Schwalb

At the recent BDNY show in New York City, the seminar Cuba: What’s Ahead, Who’s News, and What You Can Do Now attracted a crowd for a good reason. As a new frontier for commerce and tourism, exhibitors and attendees were keenly interested to hear from a panel of experts what to expect.

Moderated by Philip Fimmano, director of the trend forecasting company Edelkoort Inc. & Trend Union, the educational session delved into learning the design ropes unique to Cuba as well as some of the roadblocks to market and the important cultural aspects to consider.

Joining Fimmano in the conversation were Enrique Vela, Design Director & Associate Principal of Wilson Associates; Lisa Kong, Senior Associate at Gensler; and Sergio Saenz, Associate Principal of HKS Architects and Director of the HKS Miami Hospitality Studio.

Kong kicked off the discussion with an overview on the current conditions in Cuba and its hospitality market plus the challenges, opportunities, and design trends based on Gensler’s research. She also covered the status of tourism in 2015 and recommended the next steps to anticipate going forward.

The Basics

As the Caribbean’s largest island with land space covering 4,420 square miles, Cuba’s main source for tourism comes from the North and South American continents with one-third of its yearly visitors arriving from Canada.

Approximately 80 percent of the workforce is employed by the government, which operates five national hotel chains. Of Cuba’s 334 hotels, 77 percent are beach properties; 23 percent are in the city; and 2 percent are on natural reserves. The country also offers roughly 8,530 rooms in a significant number of private accommodations and more than 107,000 beds. The prime tourism areas are comprised of La Habana, Varadero, Cayo Coco, and Holguin.

Varadero is widely considered to be the biggest resort region in the Caribbean. Although it’s continually evolving, Varadero does not focus on experiences unique to Cuba — something Millennials, who make up the hospitality industry’s fastest-growing customer base, find valuable. Thus far, medical tourism, ecotourism, and cultural tourism dominate the industry.

The Challenges

Some of the difficulties in working in Cuba include the harsh business climate, the lack of appropriate infrastructure, and issues of quality. Since the government controls all businesses and production, that means foreign investors must recruit workers from within. The lack of transparency, legal restrictions, bureaucracy, and no private land ownership are among the obstacles.

In terms of infrastructure, be aware that there is (currently) nominal maintenance of buildings and roads, safety issues, constrained airport capacity, sub-standard HVAC technology, an energy shortage due to a deficiency of natural resources, and inferior Internet capabilities. Developers also face a lack of top-notch building materials and amenities such as retail and fine dining, no access to innovation, and no control of brand consistency or service.

The Good News

Discouraged? Don’t be. Cuba also presents plenty of opportunity. There is an immense curiosity about the country’s culture and history, and its proximity to the United States (a mere 90 miles from Florida) makes Cuba’s location very appealing.

Geographically larger and more distinct than other Caribbean islands, it offers visitors the ability to travel to numerous diverse destinations within the country. Add to that the development of a new $1-billion Mariel port aimed at trade with the U.S., and Cuba becomes a highly enticing destination.

Tourism currently attracts more than 2.5 million travelers each year, and right now the demand is outweighing the supply. There are not enough beds to manage the influx, so there will be a need for additional and superior hotels as the market unfolds.

Interestingly, one player starting to make inroads is Airbnb Cuba, which offers services with hundreds of listings even though Internet challenges have delayed progress. The casas particulares, which arose after the government started permitting citizens to rent out properties to tourists in 1997, have long been the country’s most popular accommodations.

Gensler anticipates that cruise ships may benefit initially once ports open and standards converge with expectations. After that, other players will have an opportunity by partnering with existing properties, re-positioning, and learning the lay of the land. Within 10 years, the firm predicts that ground-up new 4- and 5-star hotels and mixed-use developments will be underway.

The Reality

All of the BDNY seminar panelists agree that for now, research is the critical element to ensuring success. Developers must understand the Cuban culture and how it has evolved – while fostering a respect for what makes the country so unique – to ensure it remains that way. Being well-versed in its geography, knowing which locations are close to other amenities and infrastructure, becoming familiar with the terrains, landforms, and native flora, as well as which regions may be easier to develop will all play substantial roles in the process.

Environmental considerations must be taken into account by identifying native species, ecosystems, restrictions, and protected areas in addition to understanding how weather impacts tourism, including sun exposure and seasons. Lastly, educating oneself on the business culture – including government agencies, protocols, approval processes, restrictions of travel, and export – must not be overlooked. The panelists were adamant that those interested in the Cuban market must start to make local connections now because it’s more about who you know there versus what you can do.

The Next Step

Post research, identifying resources will be the next important task. Understanding the current supply chain and future growth, labor skills, local fabrication, and construction methods will help capitalize on capabilities and knowledge. Keeping in mind regional relevance, design that integrates local culture and art will create a truly authentic experience and curate the guest journey to make it uniquely Cuban.

Current design trends throughout the architecture and décor showcase influences such as Moorish & Baroque, Spanish Colonial, Neoclassical, Art Nouveau, Art Deco, and Contemporary. Color plays a tremendous part, which is apparent throughout many structures — from building façades to interiors. Some regionally relevant design aesthetics include balcony screening and pins, ancient rounded forms, natural ventilation and shading, and tea gardens.

While the BDNY session panelists acknowledged that the process of entering the Cuban market might take some time, they were hopeful of future prospects and concluded the presentation by stating that you can always find a niche, if you are willing to explore.