Cuba to Upgrade Facilities in Battle for Caribbean-Bound Tourists

HAVANA, Cuba — Chiara Penati always heard that Cuba was all about sun, sand and tropical breezes. Coming from Italy, she never dreamed she would find Old Havana's architecture to be intriguing.

"At home people always talk of Cuba and the beach," said Penati, who recently visited the island on a two-week vacation. "What I didn't expect was how beautiful a city Havana is. It's been a wonderful experience."

Penati's impressions would be music to the ears of Cuban tourism officials, who are scrambling to broaden their island's tourism offerings and bolster one of the communist nation's chief sources of revenue. Government officials recently announced a plan to invest about $185 million over the next few years to upgrade more than 200 tourism facilities, from golf courses and marinas to hotels and inns.

The move is part of an effort to remain competitive in the often cutthroat Caribbean tourism market. It also comes as Cuban officials acknowledged a small but worrisome dip in tourist visits, which fell by about 100,000 last year to an annual rate of 2.2 million.

For the current year, Cuba is on track to top 2 million visitors again, according to a recent article in Opciones, a government-run newspaper for foreign investors. Although foreign press reports have cited further declines in Cuban tourism this year, the article gave no figures for 2007, and tourism officials were not available for interviews.

Known in the 1940s and 1950s for its casinos, flashy tropical floor shows and sex tourism, Cuba largely ignored tourism following Fidel Castro's 1959 Revolution and the country's transformation into a Marxist state.

But with the collapse of the Soviet Union in the early 1990s and the loss of some $6 billion in annual Soviet subsidies, Cuba turned to tourism again as its best option for salvaging a foundering economy.

Partnering with foreign firms, chiefly from Europe and Canada, Cuba invested heavily in refurbishing its aging hotels and beach resorts, and tourism numbers climbed dramatically. Today the sector accounts for about $2 billion in yearly revenues, making it one of the country's top earners.

Cuba currently has more than 40,000 hotel rooms, up from about 12,000 in the early 1990s. Employment in the tourism sector is about 300,000.

American firms have been shut out from participating in Cuba's tourism revival by the four-decade-old embargo that prohibits most U.S. companies from doing business on the island. Despite the embargo, Americans were frequent visitors to Cuba in the 1990s, as the Clinton administration encouraged cultural and educational exchanges.

Those visits have been severely curtailed by the Bush administration, which responded to arguments by Cuban exiles that Americans spending money in Cuba only serve to prop up Castro's heavy-handed communist regime. Although no recent estimates are available, the number of Americans visiting Cuba dropped from about 86,000 in 2003 to 51,000 in 2004.

Bush also tightened the rules on visits to the island by Cuban-American families, and those numbers have dropped from about 100,000 in 2004 to about 30,000 per year, according to Cuban press reports. While Cuban-Americans typically visit the island to spend time with family and not for traditional vacations, they have still been an important source of tourism revenue.

Topping the list of Cuba's foreign visitors are Canadians, who accounted for about 600,000 visitors last year, followed by Britain with about 211,000 visitors.

Cuban officials cite higher air fares as a reason for the recent decline, along with the Bush administration's tightening of the embargo, which prompted the drop in visits by Cuban-Americans.

Foreign press reports also cite high prices compared to a few years ago when Cuba was struggling to gain its footing in the Caribbean market, along with a recent currency revaluation and the imposition of a 20 percent tax for exchanging U.S. dollars to Cuban convertible pesos, the currency tourists are required to use on the island.

Some reports also mentioned complaints by foreign visitors of poor service and bland food at some Cuban resorts.

With competition intense from neighboring resorts in the Dominican Republic and Cancun, Mexico, Cuban officials seem determined to reverse the recent slide.

The upgrade plans recently announced include spending about $160 million on facilities like golf courses, marinas and small theme parks. The rest will go to improve highways and build 50 boutique hotels, smaller inns that cater to visitors who want an alternative to lavish luxury hotels.

Cuban officials also announced plans to improve the country's major airport in Havana and four smaller airports in other parts of the island.

Work also continues on the restoration of Old Havana, one of the hemisphere's most picturesque colonial cities and a key attraction for foreign visitors. The restoration, which is not funded by the recently announced initiative, has already seen the complete rebuilding of crumbling historic landmarks on several plazas in the old city, and is steadily expanding along several major arteries.

"It's gorgeous," said Alan Rassaby, an Australian who visited recently. "You walk down the streets and feel like you are in another world. I hope if they do eventually open up to Americans, it won't all be ruined by fast food restaurants."