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Cuba’s Commercial Real Estate Offers Enticing Opportunity for Travel Companies

European and Chinese investors may beat U.S. businesses to the island

When President Obama makes his historic trip to Havana this weekend, a very telling guest will accompany him on the first presidential visit to the island in 88 years. Marriott CEO Arne Sorenson will be on hand, one of many business leaders hoping to strike deals during this new era of openness between the two countries. In the case of Sorenson, it’s also an effort to catch up. Like other hotel chains, Marriott is trying to make headway before other international firms take advantage of what could be an unprecedented boom in hotels and tourist-related construction projects.

According to Global Construction Review, competitors from other countries are already circling around proposed sites in Cuba, looking to break into the sector by partnering with the government, which controls the industry on the island. While travel restrictions have been lifted for U.S. citizens and commercial air travel has resumed, a complete lifting of the embargo requires congressional action. Current delays may mean that visitors to Cuba in the future may not be staying at U.S.-based chains.

Foreign companies already have a head start. Beijing Enterprises Holdings is working on a five-star hotel, China’s Suntime International Economic Trading Company announced plans to invest up to $150 million in a joint venture with Cuba’s state tourism agency, Cubanacán, to build a 600-650 room Hemingway Hotel in Havana, while British developer London & Regional plans to build a half billion dollar Carbonera resort at Varadero, 60 miles north of Havana, that would include golf courses and more than 1,000 villas and condos. And that doesn’t include homegrown Cuban hotels and businesses, which are already building infrastructure to attract foreign tourists.

Both Marriott and Starwood may announce their own deals during the U.S. trip to the island, according to USA Today, in the midst of continuing record growth in the nation’s tourist industry. The country posted 14.6 percent growth in the first 71 days of 2016 alone, according to official figures from the Cuban Ministry of Tourism, and is already on pace to eclipse last year, which saw a record 3.5 million tourists visit. The race is on to build the rooms and resorts where the oncoming flood of guests will stay.