Starwood signs first U.S. hotel contracts in Cuba in 58 years
By David Adams @dadams7308
Cuba signed the first hotel contracts with a U.S. company in Cuba in 58 years on Saturday, hours before president Barack Obama is due to make a historic visit to the communist-run island.
The luxury U.S. hotel chain, Starwood Hotels & Resorts Worldwide Inc, announced late Saturday it has signed two management contracts for the state-owned Hotel Inglatera in colonial Old Havana, and the Quinta Avenida in Miramar, an upscale residential district with many diplomatic residences.
Starwood also announced a letter of intent for a third hotel, the Santa Isabel, a 19 th century colonial mansion also in Old Havana that was restored in the late 1990s and has hosted former U.S. president Jimmy Carter.
“We are thrilled to be the first American hotel company to return to Cuba,” said Starwood’s chief of Latin America operations, Jorge Giannattasio, in an exclusive interview with Univision.
Hilton was the last U.S. company to sign a hotel contract in 1958 for the Havana Libre, one of Havana’s largest hotels, which became Cuban leader Fidel Castro’s offices immediately after the triumph Cuban revolution of 1959. It is now operated by Tryp hotels, a division of Spanish hotel giant, Sol Melia.
Starwood began negotiating the contracts shortly after the Dec 17 2014 joint announcement by Cuba and the United States to begin normalization relations after more than 50 years of hostility, Giannattasio said.
Cuba's tourism industry saw a dramatic boost last year hitting a record 3.5 million visitors, a 17% increase. Visitors from the U.S. leapt 77% up to 160,000, though that number is expected to go through the roof in the next few years.
The U.S. and Cuba restored diplomatic relations last year and reopened embassies, and scheduled airline services are due to resume this fall. However, the U.S. Congress has so far declined to lift the 50-year-old economic embargo that severely limits U.S. commerce with Cuba, including a ban on tourism.
Obama has chipped away at the sanctions through a series of regulatory changes in an effort to encourage Cuba to open its economy to U.S. companies, but until now Cuba has been slow to respond. Cuba blames the embargo for dissuading investors, while others stay Cuba's own foreign investment laws are a disincentive.
Starwood said it was only able to sign the contracts after obtaining licenses from the U.S. Treasury Department exempting the company from U.S. embargo sanctions against Cuba. That included multi-million dollar investments to upgrade the hotels to five star standards.
Like other foreign run businesses, Starwood said its staff would be contracted and paid through Cuban state agencies, a controversial practice that has been criticized for setting low salaries.
The operator of several chains including Sheraton, St Regis, Westin, and Loft hotels, Starwood is one of the world’s largest luxury chains with 1,300 properties in 102 countries, including a large presence in the United States and Latin America.
The chain owes a number of hotels in Miami where its Latin America headquarters is based. It could face a backlash from the city’s large Cuban American exile population which is deeply divided over Obama’s policy of engagement and investment in Cuba.
“We understand this is an idea that unleashes opposing passions on a number of aspects, so we had to be sure that everything was legally sound,” said Giannattasio.
The company is currently the subject of a multi-billion dollar bid war between U.S. rivals Marriott International Inc and China’s Anbang Insurance Group.
Founded in 1875, the Inglaterra is Cuba’s oldest operating hotel and is famous as one of the favorite Havana haunts of British novelist Graham Greene, author of Our Man in Havana. It stands in Havana’s Central Park next to the National Theater where Obama is due to make a key speech on Tuesday.
British prime minister Winston Churchill stayed there as a young man, and while still popular with European tourists the hotel is in run down condition today.
All three Cuban hotel are currently under management by state-owned Cuban companies.
The Inglatera will operate under Starwood’s Luxury Collection group, while the Quinta Avenida will be a 4 Points by Sheraton.