Nearshore Americas

Starwood Becomes the First U.S. Firm to Run Hotels in Cuba

Starwood Hotel and Resorts Worldwide landed in the history books this week after the U.S. hotel chain signed a deal to run three hotels in Cuba. All Cuban hotels are state-owned, so Starwood’s entry into Cuba challenges the nation’s trade embargo with Cuba like never before.
The announcement came on the eve of President Barack Obama’s visit to the communist island. As per the agreement, a hotel owned by the tourism arm of the Cuban military will become a Sheraton Four Points.
Starwood stated that it will invest millions to renovate and rebrand the Quinta Avenida, Santa Isabel, and Inglaterra hotels and reopen them by the end of the year.
The Quinta Avenida is owned by Gaviota, a military-run tourism conglomerate. The Santa Isabel and Inglaterra, which are run by other state agencies, will be operated as part of Starwood’s Luxury Collection brand.
Reports say Starwood has already won approval from the Treasury Department for two of the hotels and is waiting on approval for the third. Starwood is also talking of training and hiring Cuban expatriates to run the hotels.
But it is not clear how Starwood would hire people in the communist country. Cuban law prevents direct hiring of Cuban workers by foreign firms. Another hurdle for employers is that they cannot demote or fire underperforming staff in the name of streamlining their business operation.
According to Associated Press, the number of visitors to Cuba surged nearly 20% last year, with nearly 80% more Americans flying to the island. With the United States lifting its ban on commercial flights to Cuba, the number is expected to increase sharply this year.
The Obama administration has now removed most of the restrictions on travel to Cuba. It has even allowed individuals to visit the island for “people to people” educational trips.

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Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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