U.S. President Donald Trump's rollback on his predecessor's liberalization of travel to Cuba will all but eliminate a burgeoning market for independent tourism, forcing would-be visitors into organized trips, experts said.
That policy change could be bad news for airlines that have been helped by demand from solo travelers and families who have booked seats for ad-hoc informal "cultural exchanges" that had passed muster under former President Barack Obama's loosened rules.
"It's going to frustrate airlines who scheduled service on the premise that travel restrictions would eventually be removed," Robert Mann, analyst at R.W. Mann & Co, said. "It was an 'if you build it they will come' kind of a philosophy."
Now, under directives announced by Trump on Friday, independent travel to Cuba from the United States will once again be forbidden, complicating the already tricky-to-navigate industry.
The new policy will ban most U.S. business transactions with the Armed Forces Business Enterprises Group, a sprawling conglomerate involved in all sectors of the economy, including the hotel and hospitality industry, but make some exceptions, including air and sea travel. [nL1N1JD02O]
The president's directive will essentially shield U.S. airlines and cruise lines now serving the island but dim a potentially bright outlook for travel growth between the countries.
While the industry at large is bracing for weakened demand following the policy shift, specialized travel agents could potentially see a windfall as travelers rush to book authorized organized trips to the island.
"You can't get through to our call line. We're receiving 10 times the emails we were this morning," Tom Popper, president of travel agency InsightCuba, which organizes legal group tours of the tourism-restricted island, said on Friday.
U.S. cruise operators and airlines could lose around $712 million in annual revenues if the Trump administration fully reinstates restrictions on travel, Washington lobby group Engage Cuba said in a recent report. (tmsnrt.rs/2rBfMTI)
While Trump's new policy avoids the worst-case scenario of cancelling all commercial flights or severing diplomatic relations, it will still be a blow to a tourism sector betting on Cuba as a new high-growth market.
"If the goal is to help Cuban entrepreneurs, adding job-killing regulations on U.S. businesses and increasing government resources to investigate everyday Americans traveling to our island neighbor is not the answer," James Williams, president of Engage Cuba, said in a statement.
Marriott International Inc on Friday urged the White House to improve relations with post-Castro Cuba and recognize tourism as a strategic tool in the effort.
Marriott, the world's biggest hotel chain, operates the Gaviota 5th Avenue Hotel, which is owned by the Cuban military.
The Treasury Department said on its website that travel-related commercial engagements established before new regulations from the Office of Foreign Assets Control will be permitted, which appears to exempt the Marriott venture.
Airlines for America, an industry trade group, said airlines are reviewing the directive and "will continue to comply with all federal rules and regulations regarding travel to Cuba."
Obama's initial opening prompted a dash to launch flights into Cuba in mid-2016. Some early entrants, including smaller carriers Frontier Airlines, Silver Airways and Spirit Airlines Inc, have pulled out.
While larger U.S. carriers have pared back flights to smaller Cuban cities, American Airlines, Delta, United Continental, Southwest and JetBlue have requested additional flight clearances on various routes to Havana.
Cruise operator Carnival Corp downplayed any impact from the change, saying it was "pleased" its ships could continue to sail to Cuba.