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Investing In Cuba: A Tantalizing And Troublesome Proposition

August 5, 2015

Daniel Sachs, Forbes

HOUSTON – For an estrangement that lasted 54 years, the resumption of diplomatic relations between the US and Cuba happened rather quickly. Just seven months elapsed between Barack Obama’s December announcement of a change in US policy and the opening of a US embassy in Havana last month. Of course, the two countries won’t enjoy anything resembling normal relations until the US Congress repeals the trade embargo against Cuba. That niggling detail continues to temper the ambitions of many US companies hoping to capitalize on a new market. But while major investment opportunities for US businesses will remain off the table for the time being, warming relations have produced some tangible, if limited, opportunities for companies looking to enter what was until very recently a closed economy for Americans.

Several sectors could see immediate benefits from the Obama administration’s revisions to the Cuban Assets Control Regulations and Export Administration Regulations. One potential boon sector is travel. Although general tourism for US citizens remains prohibited under the embargo, Americans can now book online travel directly with US airlines and travel agents if traveling to the Island for one of a number of authorized reasons. This replaces the previous system of making bookings through government-authorized agencies. Cheapair now offers charter flights from Orlando and New York to Havana, allowing travelers to book travel online for the first time. Online accommodation rental firm Airbnb has moved into the Cuban market, though its opportunities are likely to be limited in the immediate term—95% of Cubans do not have access to the internet to advertise their properties, and although they are now technically allowed to buy and sell property, the vast majority of Cubans still do not own their own houses. Carnival Cruises announced earlier in July that it will operate a service to Cuba in 2016, though its passengers will be volunteers and authorized educational visitors as opposed to tourists.///

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