By Ornaldo Gutiérrez Castillo and Nélida Gancedo Gaspar
The post-war boom, as well as the modernization of transportation and communications, has led to rapid growth of the tourist sector, particularly in countries in the process of development.
Because of the general tourism boom, not to mention the critical situation spawned by the collapse of socialism in Eastern Europe, Cuba began in the 1990s to adopt tourism as one of the basic pillars in the redefinition of its economic strategy. As a sunny Caribbean island, Cuba had flourished as a tourist destination, although it was accompanied by serious social distortions such as gambling, prostitution, and other vices. Following the Cuban revolution in 1959, however, tourism practically disappeared from the island. Part of the reason, of course, was that the United States market dried up as a result of the U.S. embargo. But more significantly, Cuba's strategy for economic and social development didn't consider tourist activity as key to the future of the island.
Tourism eventually became more important because it represented a significant group of investments that could generate hard currency. The 1997 Cuban Economic Resolution spells out the necessity to develop hard currency-earning sectors of the economy to finance other important activities, making explicit the role tourism could play in the country's economic future. To achieve this, it set a goal: to attract more than two million tourists to the country by the year 2000 and earn more than $2,600 million from the tourist trade.
Thus, tourism, in ten years of sustained development, has been converted into the most dynamic sector of the Cuban economy. One-fourth of the investments in Cuba have been made in tourism. It has contributed an impressive 43% to the balance of payments at the end of the decade, more than any other industry. In a mere decade, tourism has gone from being an incidental source of income to becoming a structural factor in the Cuban economy. Few times in international history has such a dynamic structural transformation occurred. Ten years ago, the sugar industry provided between 70 and 75% of the income of the balance of payments, while the tourist sector accounted for only 6%. Cuban Tourism Minister Ibrahim Ferradaz observed that "in the last ten years, the sector multiplied its gross income eight-fold; the number of visitors multiplied by five, the number of rooms in tourist establishments tripled, and the number of jobs in the tourist sector doubled."
This achievement can be attributed to the design and implementation of a strategy for sector development, aiming to consolidate the "structural competitivity" of tourism through the use of Cuba's existing social and cultural assets, as well as the creation of long-term sustainable competitive advantages.
It is said that when Christopher Columbus arrived at the northeast coast of Cuba on October 27, 1492, startled by the island's beauty, he exclaimed, "This is the most beautiful land human eyes have ever seen!" And he became de facto the first tour operator on the island. Undoubtedly, Cuba is an obvious site for tourism, with its picturesque beaches, underwater beauty, countryside landscapes, and ecological reserves (many yet to be explored). Its climate complements its easy air and sea access, as well as its important historical and cultural patrimony. An educated population and improved infrastructure of roads and communications add to the mix.
The Cuban government's economic policy and support mechanisms have complemented these advantages. In the Caribbean region, Cuba is now the second most popular tourist destination.
PILLARS OF TOURISM DEVELOPMENT STRATEGY
In the context of an economic crisis, decisive Cuban government policy "bet on" tourism. Between 1990 and 1999, more than $3.5 billion were invested in the tourist industry. The number of rooms available to international tourists grew from 12,000 to 35,000. Significant resources were also devoted to infrastructure such as airports, causeways connecting the keys, and other tourist facilities. The shift from an emphasis on goods and productivity to that of services has made tourism the "locomotive" of the Cuban economy.
Tourism is not only important in and of itself. It serves to stimulate other sectors of the economy. The real challenge is how tourism can contribute to the development and consolidation of sectors of the domestic economy that aren't truly competitive without losing "structural competitivity". However, the utilization of tourist demand has been sustained in a basic principle: to not force any tourist entity to buy national products, especially if those products are not considered internationally competitive. In this sense, the government does not provide support to national products in the context of the tourist industry.
Sectors related to the tourism sector operate in an environment of competition. In 1990, only 18% of the sector's purchases were domestic; by the end of 2000, the amount increased to 61%. As a result of the incorporation of several sectors of the economy into the tourist "locomotive," 198,000 jobs were created or recovered.
The insufficiency of financial resources, the lack of channels of access to markets, as well as the lack of experience in tourist operations, also led to the necessity of developing a group of alliances of various types with foreign entities. In slightly more than ten years, 26 mixed enterprises have been created in the tourism sector. Moreover, by the end of the year 2000, half of the country's hotel capacity was administered by 17 international hotel chains.
Foreign companies have become increasingly interested in investing in the Cuban tourism sector, especially after the creation of a Ministry of Tourism in 1994, coupled with the approval of a 1995 law that spelled out the rules for foreign investments. Francisco Camps, an executive with the Sol MelÃa hotel chain, considered the largest operational foreign partner with 20 hotels on the island, declared recently in a published interview that Cuba "has a lot of future in this field, and we enjoy these types of challenges."
The policy of education and development of human resources is another pillar of the strategy of tourism development in Cuba. Cuba's work force is well-educated, thus creating conditions to carry out efficient work in any field. The Cuban tourist system already has several educational centers to develop workers for this sector. In 1994, all these centers were consolidated into a network known as FORMATUR, today made up of 22 teaching centers throughout the country, from which 16,000 workers graduate annually in diverse fields of concentration.
CHALLENGES FOR THE SECTOR'S DEVELOPMENT
The Cuban tourist sector has been set up to offer year-round attractions to guarantee a steady flow of visitors, as well as repeat visits. Diversity is the key to accomplishing this goal.
Diversifying what Cuban tourism offers is to take full advantage of its diverse geography, and social, economic, and cultural possibilities, to reach all segments of the market and the largest numbers of markets. This prevents demand from vacillating widely from season to season. Severe tourist ebb and flow would endanger macro-economic stability. Tourism in Cuba is a balancing act: to find an equilibrium in seasonal flows, geographic destinations, and tourist origins.
In spite of Cuba's favorable, tropical climate, statistics show that Cuba suffers from a certain degree of tourist seasonal peaks and declines. A significant dependence on the European and Canadian markets with preferences for escaping the harsh winters, as well as excessive summer heat and fears about the hurricane season, contribute to this pattern. The existence of high and low seasons keep the sector from operating efficiently. Vice-president Lage has referred to this problem, pointing out that it increases the costs of operation and reduces profits.
This seasonality has been caused, in part, by the image of Cuba as a land of sun and beaches, instead of as a diversified country with many natural and cultural attractions. History, architecture, music, film, and art are just a few of the areas that can provide added value for the development of a more integrated, sustainable, and sophisticated assortment of tourist offerings.
Health tourism is another significant option because the recognized international prestige of Cuban medical science gives it a comparative advantage. The Servimed Company, part of the Cubanacán Corporation Group, S.A., works closely with five hotels, 23 hospitals, 11 international clinics, and a variety of pharmacies and optical stores. Health tourism accounts for two percent of tourism, and although this area does not anticipate spectacular growth in the next few years, a wide range of possibilities in the health arena could add significant value to tourism offerings. Education and sports are also important areas of development for specialized tourism, as is eco-tourism.
One of the weaknesses of Cuban tourism is its high concentration in two poles, Havana and Varadero Beach, which together generate 70% of tourist revenue. Cuba's tourist strategy seeks a better balance throughout the island. However, extending the geographical scope of tourism should not result in the indiscriminate investment in tourist activities without prioritizing.
Eight main regions all over the island have been identified as so-called tourist poles, and $700 million has been invested to date in regional infrastructure. The policy of territorial diversification has been sustained to avoid the uncontrolled dispersion of resources.
The process of expansion and development of the Cuban tourism industry within the context of the island's economy faces yet another series of challenges. The elevation of economic efficiency is one of them. In spite of the significant reduction of losses compared to the past, a group of tourist entities generated losses of $35 million. In this sense, several leaders of the sector have proposed cost-cutting measures without affecting service quality; the elevation of the efficiency of the investment process is one of the focal points in this process.
Another important challenge is to balance hotel investments and those related to developing other tourist facilities. During the 90s, the construction of hotel rooms accounted for 73% of investments. By the end of 1999, 60 hotels had been built, giving Cuba the second largest hotel capacity in the Caribbean. The remaining 27% was earmarked for infrastructure (11.3% for airports, and 5.6 % for a series of causeways) in the Coconut Key region, leaving other tourist-related investments such as restoration and recreation with only 13.8%. This imbalance has generated an unbalanced loss of diversity in tourist attractions.
The challenge for the Cuban tourist industry is to slow down the ever-increasing investment in hotel capacity and to speed up investments in non-hotel facilities and infrastructure. In spite of the low investment in these areas, non-hotel tourist amenities generate 18% of industry income. This shift presupposes a change in mentality regarding the conception of the tourist business. At the outset, it was more important to attract the greatest quantity of tourists possible through all-inclusive package deals, but right now it's necessary to rethink Cuba's tourist "product." It's time to decide whether it's worthwhile to keep growing hotel capacity in an excessive form or to develop additional tourist offerings through the development of a tourist infrastructure beyond hotel chains.
Finally, the development of tourism on islands like Cuba depends on the high quality of air transportation. The Caribbean's regional air hub is generally Miami, which isn't a possibility for Cuba because of the economic boycott by the United States government. Thus, Cuba has to reframe its air traffic capacity to meet the needs of the tourist industry.
THE CUBAN EXPERIENCE
The Cuban tourist sector now faces the challenge of increasing its competitive capacity and taking advantage of important opportunities and resources. Weaknesses associated with both objective and subjective factors have to be worked out through a coherent strategy that adequately uses the human capital in Cuba as its principal economic resource.
After discussing the tactical adjustments that the country would need to adopt to confront the current depression caused by worldwide recession and the impact of September 11, Tourism Minister Ferradaz stressed that "the situation would not affect the important construction already underway." He confirmed that tourism would continue to be a key sector of the Cuban economy. Cuba is not going to offer just any type of tourism to bring in hard currency; guidelines have been established about the kind of tourism that Cuba wishes to develop as a destination. President Fidel Castro himself has declared, "Sex tourism will never be permitted, nor drugs nor anything of that sort. This is not gambling tourism; it is healthy tourism, and that is what we want; it is what we promote, because we know that today tourists are worried about their safety and we have the conditions to offer them that security. We have a hospitable people, a high and growing level of education, that is, we have the conditions to offer these tourist services and at the same time, to cooperate with other Caribbean islands."
Cuba is not looking at tourism as some sort of short-term solution that exploits people's curiosity about the island. Nor does it see tourism as "a necessary evil" in the heart of a socialist society, explanations sometimes given by those confused about the impressive dynamism of the Cuban tourist sector. Tourism in Cuba is a strategic development associated with creating a new concept of sustainable tourism from the vantage point of its ecological, economic, and social dimensions.
Nélida Gancedo Gaspar is a professor at the Center for Studies of the Cuban Economy at the University of Havana. She has carried out several studies on the impact of tourism on the Cuban economy. She has published a variety of articles and has spoken on this subject at scientific conferences on and off the island.