Spanish hoteliers fear that blackouts and supply shortages will continue into 2025, which “will hamper tourism activity.”
14ymedio, Havana/Madrid, March 3, 2025 — Havana’s Iberostar Selection Hotel, located in the controversial 42-story, 155-meter-tall Tower K, is now taking reservations. During last night’s citywide blackout, the building on downtown 23rd Street was a beacon of light in the otherwise dark capital. With one of its 594 rooms going for $1,200 to $2,000 a week, including breakfast, the hotel’s opening could hardly have come at a worse time as Cuba’s tourism sector and the country at large hit new lows.
Though official figures on the number of international visitors to Cuba in January are not yet available, predictions are they will be be catastrophic. Dismay is so great that hotel management is genuinely concerned about the poor public image local residents already have of it. A source within Iberostar, the second largest hotel company in Cuba after Melía, told 14ymedio, “People are going to associate the hotel with increased poverty.”
Melía’s own figures provide little room for optimism. The company just published a summary of its 2024 annual audit, which showed that its Cuban operations were far from profitable. It reported a 39% occupancy rate the for first three quarters of last year. It was a meager 37% for the entire year, three percentage points less than in 2023.
Massive blackout in Havana, where only the recently completed Tower K and the Capitolio still have power.
“2024 began on a positive note, thanks in part to a strong international market that showed great promise, resulting in a good position that met expectations for all of the first quarter and part of the second quarter,” the report states in regards to Cuba, its most disastrous market by all accounts. It is the destination with the lowest occupancy rate, followed by Asia at a very distant 52.6% occupancy, though Asia is also the market with the highest growth rate (more than 6%).
Melía raised its room rates in Cuba in 2024. This, along with an increase in the number of rooms, should have allowed it to maintain its earnings. According to the report, the average room rate (ARR) rose 5.6% to 81.20 euros. It is worth remembering that the previous year it went down dramatically (37.2% to 76.90 euros) in an unsuccessful effort to attract customers. Even with the 2024 increase, the Spanish hotel chain does not even come close to its 2022 ARR of 122.5 euros.
“Subsequently, the country’s socio-economic situation became more complex as evidenced most notably by widespread power outages and supply-chain difficulties, which have discouraged tourism activity,” the report notes. “This led to a reduction in the number and frequency of airline flights, which affected travel from markets such as Canada, Spain, the United Kingdom and Argentina. One bright spot, however, has been Customer Direct,* which represents the largest segment. As for tour operators, agreements with several companies have been canceled as have group bookings, which reduced capacity at the destination hotels.”
Melía’s total earnings from the Cuban market was 12.7 million euros, 18% less than the 15.5 million euros from the previous year
Melía’s total earnings from the Cuban market was 12.7 million euros, 18% less than the 15.5 million euros from the previous year. However, with record profits from its worldwide operations this year, the hotel chain can afford to take a wait-and-see approach. Its net revenue was 162 million euros, 24.5% more than the previous year. Additionally, its earnings rose 6.4% to 2.056 billion euros.
The start of the year saw a situation in Cuba similar to that of late 2024, meaning fewer guests and lower room rates. How things play out this year will depend on the solution to the supply and energy shortages as well as how quickly airlines restore canceled routes and increase the number of flights,” the report warns.
One of the indicators that showed a clear decline was the RevPAR (revenue per room), which was only 30.50 euros (2.3% less than the previous year) due to low occupancy. The outlook is even more bleak when other hotels are taken into account. In a report published in November by Cuba Siglo 21, Cuban-born economist Emilio Morales found overall hotel occupancy to be only 25%. This would mean that three quarters of Cuba’s hotel rooms are empty.
And now comes Tourism Day, which will be celebrated on March 4. Government officials, with Prime Minister Manuel Marrero at the helm, celebrated it over the weekend at a Havana restaurant, Ferminia. At the event, Marrero, who served as minister of tourism for many years, posed questions to workers from the tourism sector.
“With the country in the midst a wartime economy, what else can we do that would allow us to revive tourism? How do we break this vicious cycle in which we have problems with service due to a shortage of financial investment? How do we really strengthen the engine of the Cuban economy?” Marrero asked. Among the many (largely impractical) solutions he announced was greater attention to human resources which, he said, would “make a difference in the sector.”
The tourism sector used to provide some the most sought-after jobs in Cuba because, among other things, it gave employees access to foreign currency in the form of comparatively generous tips. Now, however, it suffers from the same labor shortages as other state-run industries. It seems unlikely that the situation will change anytime soon.
*Translator’s note: A feature which allows customers to make reservations directly with with Meliá rather than through travel agencies.
____________
COLLABORATE WITH OUR WORK: The 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.
