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Confusion over Trump Policies Makes Cuba Travel Slow Down

08-08-2017

When Donald Trump told a crowd in Miami on June 16 that he was “canceling the la

When Donald Trump told a crowd in Miami on June 16 that he was “canceling the last administration’s completely one-sided deal with Cuba,” it set up some false expectations that seem to be hurting the Cuba travel market.

Trump’s comments in Florida were misleading in more ways than one.

For American tour operators who take travelers to Cuba, Barack Obama’s deal to loosen restrictions on travel to Cuba was hardly one-sided. For them it meant business, and lots of it, because pent-up demand for travel to the long-forbidden island paradise is prodigious.

In the second place, Trump did not “cancel” Obama’s opening of relations with Cuba—to the great relief of tour operators who need that business to recover their investments into tour operations in Cuba.

In fact, the changes Trump actually made were relatively small, though the exact interpretation of some of the policy changes will not be known until Sept. 15, when they are due to be spelled out specifically by the U.S. Office of Foreign Assets Control (OFAC).

The problem now for Cuba tour operators is that many people took Trump at his word that he had "canceled" the Obama changes and assume they cannot travel to Cuba anymore.

That is not the case, but the tour operators don’t have as big a platform to get their message out to the public as Trump has to introduce confusion into the market.

The confusion can be traced to the fact that Trump, in search of the greatest dramatic effect, portrayed his policy changes as much greater than they actually were.

“There was a shadow cast over the market before election and after the election,” said Tom Popper, president of insightCuba. “That shadow gradually dissipated up until June 16. Then there was some confusion based on some of the language. Trump said he was canceling the policy, when in the end the changes were very moderate. The language didn’t match the policy.”

There are essentially two changes made by Trump’s executive order that could directly affect the tour business to Cuba.

One is that individual, self-reporting travel is no longer allowed. This means Americans once again have to travel with tour operators that provide People to People programs which meet the requirements of the U.S. Office of Foreign Assets Control. This is a return to what was business as usual prior to the opening of individual travel that took effect March 2016.

Trump’s executive order closed that possibility, effective last June 16 for those who had not already purchased their travel arrangements.

Overall, that change will have little effect on the market. Individual travel was only open for a little more than a year and had barely gotten started. Those who might have chosen to travel individually will now have to go with tour operators or cruise lines. Presumably, much of that business will shift over to tours and cruises that are not affected.

The second change is that American tour operators will not be able to do business with companies that are owned by the Cuban military. There will remain some mystery about the effects of this until Sept. 15.

According to the Miami Herald, “Military holdings include Gaviota hotels and villas, tour companies that offer everything from Jeep safaris to night tours of Havana, rental car agencies, gas stations, marinas, convenience stores, a tourist bus fleet, a small airline, attractions ranging from beer gardens to discos, and just about every state hotel, restaurant and shop in Old Havana through its Habaguanex brand.”

For tour operators, this will be more or less of a headache as they eliminate the disqualified companies from their tours and find alternatives. For the traveling customer, it will have virtually no noticeable effect. For those traveling on ships, the hotel issue will not be an issue.

So, the truth of the matter is that the Trump changes in Cuba policy, other than individual travel, will have virtually no effect on travel to Cuba.

But, as politicians and marketers tell us, it is often more about perception than reality.

“Cuba didn’t change,” said Michael Goren, president and CEO of Group IST. “It’s still 90 miles from us. The people are nice. The culture is great. It’s a fantastic experience. Folks there love Americans.”

For Group IST—which offers mega yacht cruises for 15 to 72 passengers in partnership with Variety Cruises—neither the individual travel or the hotel issue will have any effect.

“Some of the hotels will not be available to American groups,” said Goren, "but on our boat, there is no problem. I feel the market is so confused. The public and many of the travel agents don't understand what administration is doing. It gives us an extra job to educate them.”

“Our Cuba program had been doing very well until this past June,” said Nish Patel, president of Mayflower Tours. “The concerns about what will happen with the new regulations has slowed the bookings for this program. There is much confusion as to how travel to Cuba is impacted. Once the specifics of the changes are announced, it may clear up some confusion.”

Until Sept. 15, the new hotel regulations will have no effect on the requirements for Cuba tour operators. After that, the changes will be behind the scenes and probably not detectable by travelers. The changes could even have a positive effect by causing tour operators to freshen up their programs with new hotel choices, and it will open the market to other hotels and investors.

“We are in full compliance with changes imposed by the Trump administration to Cuba travel policies,” said Arthur Berman, vice president for Latin America for Central Holidays.

“Travel agents and their clients can reliably book with the peace of mind that Central Holidays provides. As the specifics of the changes are announced, we are aware that we may need to make adjustments, but are appropriately positioned to tweak programs as needed to remain in compliance always and provide a seamless and outstanding experience for travelers.”

It seems that the fog may be lifting as September approaches. Peggy Goldman, president of Friendly Planet Travel is seeing some let-up in the malaise that followed Trump’s June announcement.

“We have been getting lots of reservations for Cuba in the past week or two, definitely an upward tick over the period immediately following Trump’s announcement of changes to Cuba policy,” said Goldman. “This may have to do with the many articles and advertisements that I’ve seen stressing the continuation of Cuba travel. Maybe those messages are finally starting to trickle down to the public. It’s too soon to call it a trend, but reservations are definitely increasing at Friendly Planet.”

Unfortunately, however, the uncertainty persists.

“There continues to be a great deal of confusion among travelers,” said Goldman. “We have many calls every day from people interested in visiting Cuba and wanting explanations about the new policies. I suspect that if OFAC issues clear regulations promptly, those of us involved in the Cuba market will be very busy trying to explain the rules to travelers.”

If OFAC delays its announcement of the new policies, that could cost tour operators more money.

“If the new rules are not issued promptly, the confusion will continue,” said Goldman, “and I expect travelers to be hesitant to jump on the Cuba bandwagon, as they were doing before Trump changed the playing field.”

“Travel agents tell us that the new regulations have resulted in confusion amongst prospective travelers to Cuba,” said Pamela Lassers, director of media relations for Abercrombie & Kent.

“We explain that Abercrombie & Kent’s people-to-people cultural exchanges have not been affected by the new regulations, as participants are engaged in a full-time schedule of activities designed to inform, educate and promote meaningful interaction with the people of Cuba as required under the U.S. Department of the Treasury Office of Foreign Assets Control ‘people-to-people’ regulations.”

However, Lassers reports, interest continues to be strong, especially in ship-based alternatives, for which the new regulations will clearly have no effect. Fortunately for tour operators, the confusion seems to be dissipating again.

“Now we are seeing a little bit of clarity returning to market,” said Popper. “In the last three weeks, we’ve seen a surge in booking. We seem to be getting some results from the efforts to educate the public.”

Cuba continues to be a tough terrain for tour operators, but for those who have been in the market for a while, that is just business as usual.

“I heard of several tour companies that decided to discontinue Cuba,” said Ronen Paldi, president of Ya’lla Tours. “The reality is that for those of us that were, and are, committed to Cuba, it is a viable destination, and we will continue selling Cuba and adjusting to the new regulations.”

Source: Travel Pulse

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