After frequent price hikes, cost of visiting Cuba coming down

After frequent price hikes, cost of visiting Cuba coming down
BY MIMI WHITEFIELD
mwhitefield@miamiherald.com

American travelers checking into Cuban hotels and dining at Havana's
more upscale private restaurants since the U.S. rapprochement with Cuba
have experienced more than a bit of sticker shock.

Since the Obama administration's opening to Cuba allowed more Americans
to travel to the island most travel-related costs have jumped 100 to 400
percent, said Tom Popper, president of insightCuba, which organizes
tours to Cuba.

But what goes up usually comes down.

Mandated prices for state agencies and hotels are scheduled to drop for
the spring and summer seasons, said Popper. Different tour operators
receive their rates from the Cuban government at different times, but
Popper said the new prices quoted to insightCuba will result on average
in a $250 savings per traveler on a six- or seven-day trip this spring
and summer.

"The question was for how long were prices going to increase or stay at
artificially inflated levels," he said. "This is the first time we've
seen costs come down, instead of up, in three years."

The trend had been up, up, up.

Rates for standard rooms, which averaged around $150 a night at some
popular Havana hotels before the Obama opening, climbed to more than
$600 last year. A junior suite at the Hotel Saratoga is listed at $605 a
night during the first week of March. And the new Kempinski luxury
hotel, which is slated to open in Havana later this year, recently
announced that rates at the Gran Hotel Manzana would start at $600
during the November to March high season and at $400 from April to October.

Though bargains exist for the traveler willing to seek them out, many
visitors are surprised to find South Beach prices when they dine at some
of Havana's better paladares, or private restaurants.

"Prices are still incredibly high, given the quality of the offerings.
However, they have come down about 25 percent for March/April/May
compared to November/December of last year," said Collin Laverty,
president of Cuban Educational Travel, which organizes group travel to Cuba.

At Road Scholar, a nonprofit that offers educational travel programs,
demand has slowed a bit this year because of the high hotel prices, said
JoAnn Bell, senior vice president of program development. But she said,
"Americans continue to be fascinated by the prospect of traveling to Cuba."

A Road Scholar representative is currently in Cuba, she said,
renegotiating rates. "If successful, we will pass along any savings to
Road Scholar participants," Bell said.

There's a lot of talk about pricing among foreign hoteliers in Cuba,
said Bob Guild, vice president of Marazul, which offers tours and travel
arrangements to Cuba. "We see prices likely coming down in October (when
the next high season begins), and we are advising our clients of that,"
he said.

Guild said that a number of groups have canceled because of the high
prices, but others have come in and made up for it. Overall, he said,
Marazul hasn't experienced a drop in demand. "During the [winter] season
we've been running 100 groups a month," Guild said.

The price run-up began in 2015, said Popper, when the tourism minister
announced that hotel costs would go up 100 percent in the face of
overheating demand. "The intent of the price increases was not only to
get more revenue but also to tamp down demand. They couldn't keep up
with it," he said. Throughout 2015 and 2016, there were additional 15 to
20 percent price hikes.

Visitors are still coming to Cuba in record numbers, but tour operators
said a market correction was needed.

Cuban tourism officials are predicting that the number of international
visitors in 2017 will increase to 4.2 million, about 100,000 more than
last year. This January, the number of international visitors was up 15
percent, and the Ministry of Tourism is forecasting Cuba will finish the
high season with a 17 percent jump in international visitors.

Popper said he expects demand from the United States to cool off a bit
from the Obama heat wave when Americans rushed to take advantage of new
regulations that made it easier to travel to Cuba. They are permitted to
visit if they fall into 12 specific categories such as educational
travel, but aren't supposed to take trips to simply soak up the sun on
the beach.

284,937 Americans visited Cuba last year
Last year, 284,937 Americans visited Cuba, a 74 percent increase from
the previous year. Cuban Americans are counted in a separate category
for the Cuban diaspora, and they added nearly 330,000 to the total
number of visitors coming from the United States.

But it's possible that President Donald Trump, who has ordered a review
of all executive orders related to Cuba, could take action that would
affect U.S. travel to the island.

Last year, U.S. commercial airlines competed for the first regularly
scheduled routes to Cuba in more than five decades. Some airlines
received flight frequencies from the Department of Transportation that
would make sense only if travel to Cuba from the United States were
totally opened up and regular tourism permitted.

JetBlue recently decided to put smaller planes on its routes to Cuba,
and American Airlines cut its daily flights to Cuba from 13 to 10 in
mid-February. Silver Airways, which flies out of Fort
Lauderdale-Hollywood International Airport, also has reduced frequencies
on some of its Cuba routes.

"The airlines had no historical data whatsoever [on the Cuba market].
They made a huge guess," Popper said. "But all of them tried to gobble
up as much capacity as they could and now they are making adjustments."

Although passenger tallies out of some new gateways offering flights to
Cuba, such as Charlotte, are lagging, traffic to Cuba through Miami
International Airport is up since the first regularly scheduled flight
from MIA to Cuba took off on Sept. 7, 2016.

From Sept. 1, 2016, to Feb. 21 this year, total passengers coming or
going to Cuba through MIA increased from 466,213 during the previous
year to 620,592. The totals also include charter passengers.

620,592 passengers traveled through MIA coming or going to Cuba
The hotel price reductions are welcome.

On eight people-to-people tours planned by insightCuba for May through
October, prices will drop by $500 per couple, Popper said.

Other tour operators also have cut prices for trips during the latter
part of the year.

The League of Women Voters of Florida, which is organizing its 28th
people-to-people visit to Cuba since 2011, also recently reduced the
price of its May 22-28 trip by $400. Former state Rep. Annie Betancourt,
who will lead the trip, said the price reduction came from the tour
operator and she was unsure if it was related to lower hotel prices.

But she said travelers can still find accommodations in the $150 price
range at hotels such as the Sevilla, Presidente, Vedado and Florida. "We
usually plan these trips 6 to 8 months ahead of time," Betancourt said.
But demand is still such, she said, "that the hardest thing is getting
bookings for hotels."

Betancourt said she plans to recommend that the League consider putting
its travelers in casas particulares, private homes that offer rooms for
rent, on future trips. The casas generally cost from 20 CUC to 40 CUC
per night. For those exchanging U.S. dollars, that's about from $23 to
$46. Hotel accommodations outside the capital also are generally far
more economical than in Havana.

"Demand is still high," Laverty said. "However, travelers have started
to discover private homes, hostels, travel outside of Havana and other
ways to save money by not staying in overpriced hotels."

Private taxi drivers also jacked up prices, doubling fares for shorter
rides and charging 120 CUCs ($138) for an eight-hour shift.

But in early February the government imposed ceilings on fares for some
of the more popular fixed routes in Havana and said those who charged
more were in danger of losing their licenses.

Instead of improving the situation, it created traffic chaos, with some
drivers taking their cars off the road in protest and others saying they
could no longer earn a living with the price caps. Gasoline is in short
supply, and some of the drivers had been relying on higher-priced black
market gas and passing that increase on to their customers.

The result of the price caps: fewer taxis on the road and longer waits.
Some drivers also have refused to pick up passengers unless they want to
travel entire routes.

"This doesn't really affect tourists, who don't take route taxis on a
regular basis, but it has certainly made it difficult for Cubans who are
accustomed to taking shared taxis," Laverty said. "Not only did they put
price controls on that are below market rates, but they restricted
drivers that don't have Havana addresses from working in Havana, further
limiting supply."

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Source: Overheated hotel prices in Cuba start to come down | Miami
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