Thursday, May 10, 2007

Promoting tourism

Cuba is holding a tourism promotion fair this week amid news that 2006 tourist visits fell 3.6 percent between 2005 and 2006.

A news report in early 2006 fingered the cause: high prices, set entirely by the Ministry of Tourism and accentuated by Cuba’s exchange rate for the convertible peso, that make Cuba less attractive compared to other destinations in the Caribbean.

I have no experience buying the all-inclusive packages sold to Canadian and European travelers to beach resorts, the prices of which have drawn complaints from foreign tour operators. But when one sees that a modest rental car in Havana, for example, costs an American about $100 per day, one senses that the ministry is pushing the limit.

It will be interesting to see the tourism results for 2007, and whether Cuba adjusts prices to draw more visitors. Cuban officials surely understand the “elasticity of demand” that professors teach in Economics 101. If Cuba is satisfied with low growth or no growth in tourism, it will be yet another sign that the government feels secure in its economic position and that the tourism sector, on which the government depended in large part to escape the foreign exchange crisis of the early 1990’s, is not as crucial as it once was. Venezuelan support, Chinese credits, high nickel prices, and an improved energy picture have created breathing room.

A sign that the message about high prices may be getting through: On the second day of the fair, Prensa Latina reports, the ministry announced that it will charge normal prices for aviation fuel for planes refueling in Cuba.

A Lexington report on Cuba’s tourism industry and its role in the Cuban economy is here (pdf).

4 comments:

leftside said...

I'm not sure the decline is all about uncompetitive prices. It is more about profits. Cuba is still a bargain compared to almost anywhere in the Carribean, especially when you consider the fact you can actually experience a facinating country. Rueters cites the fuel tax, wage increases and the currency tax. They've dumped the first and I doubt any Cuban is against the latter 2 policies. But the government recognizes it needs to get the numbers up.

Karamchand said...

Es parte del desinterés a partir de ver resueltos los problemas financieros con la regalía venezolana, el turismo siempre fue mal visto por el dictador, traía los aires y noticias allende los mares, donde millones tienen una vida normal, cosa que al cubano le está vedado, pero aun cuando una mentira repetida mil veces no se convierte en verdad, si no tienes quien te diga la verdad, la mentira perdurará por siempre; y esos turistas en sus contactos, aún sin hablar traían y traen la verdad que le es negada al cubano por mas de 40 años, casi 50. De ahí que el gobierno en realidad no sea fan del turismo, al contrario, lo aceptó por no haber alternativa ante la destruida economía y la caída de la URSS.

leftside said...

Karamchand, it is true the Revolution was, in large part, a reaction against the mass Morte Americano tourism. Therefore mass tourism had never been a priority until it absolutely had to be - post 91.

But to claim that this is 100% because the authorities want to discourage interaction is a bit too cynical. There are genuine nationalistic reasons the Revolution wanted to limit tourism - the history of debauchery and exploitation, the original foreign control of the sector, national security concerns, etc.

Jim said...

Your comment about $100/day cars is very simplistic. Cabs of all kinds are available cheaply. Cars are scarce. Food, drink,and attractions are very reasonable.