Cuba is 'huge opportunity' for U.S. travel companies, BCG says

[May 10, 2017]  HAVANA (Reuters) - Cuba represents a "huge" but challenging opportunity for U.S. cruise, airline and hotel companies as American visitors to the Caribbean island could increase as much as sevenfold by 2025, according to a report by the Boston Consulting Group.

As many as 2 million Americans could visit up from 285,000 last year, excluding Cuban Americans, the BCG study published on Wednesday estimated.

Given tourism infrastructure is already creaking, that means there are business opportunities aplenty but U.S companies must learn to navigate a centrally-planned economy with its quirks.

U.S. travel to Cuba has already surged, albeit from very low levels, in the last two years since the former Cold War allies announced a detente and the Obama administration eased travel restrictions to the island.

"The reality is that U.S. travel to Cuba is in its nascent stages, and all the players are still learning how to make it work," the report read. "Success, as with most things Cuban, will require unusual - and often unorthodox - approaches".

BCG did not address the uncertainty cast by the election of U.S. President Donald Trump who has threatened to row back on the normalization of relations.

The Cuban government aims to double hotel capacity by 2030 through partnerships with foreign companies, it pointed out. So far, Starwood is the only U.S. hotel company operating in Cuba.

Instilling a hospitality mindset in tourism workers who were mostly state employees, even at U.S.-owned companies, on low wages could be challenging, it noted.

Poor service sat particularly badly when rooms were "extremely expensive for the region".

"The risk is that U.S, travelers who visit Cuba and stay at a hotel that is part of a brand they trust will experience prices much higher than usual - and more customer service," the report read.

A man uses his mobile phone near the cruise ship Norwegian Sky in Havana, Cuba, May 9, 2017. REUTERS/Alexandre Meneghini

Meanwhile there was also an opportunity for expanding cruise lines to Cuba, BCG said. Nearly two thirds of 500 U.S. travelers surveyed would consider one to Cuba. Several U.S cruise operators have started offering lines to Cuba in the past year.

They have to deal with different challenges such as including a cultural element to their trips to comply with U.S. government rules on travel to Cuba, BCG noted.

U.S. companies should work together with the Cuban government to resolve some of these issues.

As for airlines, they needed to deal with excess demand for flights to Havana. They could carry out campaigns to lure Americans to other Cuban cities, BCG advised, and tap into Cuban demand for flights to the United States.

(Reporting by Sarah Marsh)

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