Akin Gump real estate partner David Phelps and senior policy advisor Devry Boughner Vorwerk participated in a GlobeSt.com Q&A column, “Is Cuba a New Frontier for Hoteliers?” discussing the hotel industry in Cuba and how one can best break into the market there.
Phelps began by talking about the tremendous amount of interest in hotel development and investment in Cuba, though he noted it will be tempered somewhat by the pace at which development unfolds.
For those looking to break into the market, Vorwerk, who also chairs the U.S. Agriculture Coalition for Cuba, referenced a set of priority investments that investors, developers and managers should review, adding, “It is critical that investors focus on the priorities set forward by the government in initial conversations. Working with trusted partners in those conversations is important.” She also talked about the challenges of developing in Cuba, with the biggest being the sanctions that are still in place.
Starwood and Marriott have already broken into the Cuban market, Phelps said, but once the embargo is lifted, “the current supply of hotel rooms on Cuba, and especially in Havana, will be insufficient to satisfy U.S. demand.” He also offered some advice to hotel owners and operators looking to build or buy on the island nation, suggesting an initial exploratory visit to meet with potential partners, talks with the Cuban government and securing approval from the U.S. Department of Treasury.