BUSINESS

Starwood And Airbnb Are Poised To Take Cuba's Hospitality Industry By Storm

The country is expecting an explosion in tourist activity after improved diplomatic and business relations with the U.S.
  • The U.S. Treasury has given Starwood the approval to refurbish two Havana hotels.

  • Airbnb will be able to expand its limited operation in Cuba.

  • Havana is known for a lack of modern hotels.

The U.S. Treasury Department gave permission over the weekend to two U.S. companies looking to make their mark on the hospitality market in Cuba: Starwood Hotels & Resorts will now have a foothold in the country and home rental company Airbnb will be able to expand its operations there.

Starwood is set to become the first American hospitality company to enter the Cuban market since the U.S. placed an embargo on the country in 1962, it announced Saturday. The company plans to refurbish two old Havana hotels and is seeking Treasury approval to take over a third. 

“There are many opportunities for us and other American companies,” Jorge Giannattasio, Starwood’s senior vice president and chief of Latin America operations, told The New York Times. “This is just the beginning.”

Cubans have been able to list their homes on Airbnb since last April, but only to rent to U.S. travelers. The 4,000 listings in the country will be open to people from all over the world starting April 2, Airbnb said Sunday. The home-sharing company announced that 1,700 people were staying in its properties in the country this week. 

Havana’s historic Hotel Nacional, located in the city’s Vedado neighborhood, is still owned by the government.
Havana’s historic Hotel Nacional, located in the city’s Vedado neighborhood, is still owned by the government.

The Treasury's decision is another step in normalizing relations between the U.S. and Cuba, a process that began when President Barack Obama and Cuban President Raúl Castro reversed a freeze on diplomatic relations in July. 

Obama is currently visiting Cuba, and is the first U.S. president to do so in nearly 90 years. 

Starwood and Airbnb are riding the wave of business opportunities accompanying the renewed diplomatic ties, which both governments expect will lead to more tourism in Cuba. The two countries signed an agreement last month that allows over 100 flights on U.S. airlines to operate between the two countries daily. 

The Cuban government still owns most hotels in the country, and travelers have long complained about a lack of quality places to stay there.

Large European chains like Melia and Iberostar have operated some properties since the 1990s, but many of their hotels need renovations and haven't adapted to modern travel standards. Power outages and food-related illnesses are common, and Wi-Fi connections cut out frequently. 

Experts warn that Cuba should proceed with caution while preparing for more tourists to enter the country. Rushing to build more hotels, they say, may threaten Cuban ecosystems, which have been preserved because major hotel chains haven't yet touched the 4,000 miles of pristine beach. If new buildings don't adhere to environmental standards, seaside hotels could damage Cuba's biodiversity and marine wildlife.

AT&T and Marriott are also waiting for the green light from the Treasury to operate in Cuba. 

These are the hotels that Starwood plans to refurbish and reopen later this year:

The Gran Caribe Hotel Inglaterra, located right on Old Havana’s Parque Central, belongs to Starwood’s Luxury Coll
The Gran Caribe Hotel Inglaterra, located right on Old Havana’s Parque Central, belongs to Starwood’s Luxury Collection.
The Hotel Quinta Avenida, a business hotel in the city's upscale Miramar neighborhood, will soon be Sheraton Four Points hote
The Hotel Quinta Avenida, a business hotel in the city's upscale Miramar neighborhood, will soon be Sheraton Four Points hotel. 
Starwood also signed a letter of intent to refurbish the Hotel Santa Isabel and add it to its Luxury Collection. It's still w
Starwood also signed a letter of intent to refurbish the Hotel Santa Isabel and add it to its Luxury Collection. It's still waiting for approval from the U.S. Treasury Department. 
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