22 February 2008

Cuba viewed as potential new cruise destination

Fidel Castro's resignation has raised speculation about US travel to Cuba but the most likely impact may be on the cruise business, according to a leading industry analyst.

Cruise lines that cater to Americans could be calling on Cuba within months of getting the go-ahead from US lawmakers.

That's what industry watchers such as Robin Farley of UBS suggest, noting that major lines such as Carnival are ready to jump on Cuba as a destination should the US lift its economic embargo on the Caribbean nation.

While the move does not mean that the US will end its economic embargo in the near future, "new leadership could be a positive event for the cruise industry if diplomatic relations resulted in the opening of Cuba to American tourism," Farley wrote in a research note.

Cuba would represent a new itinerary with significant pent-up demand from American tourists and a lack of developed hotel infrastructure, favouring cruise ships as a way to visit the island.

"Cuba is the largest island in the Caribbean and only 230 miles from Miami, allowing for it to be part of a variety of itineraries and has long been in the cross-hairs of the American cruise lines," Farley wrote.

"Havana is a natural deep-water port and we believe operators could build dockside infrastructure on a much faster timeline than it would take to build US branded hotel.'

Few industry watchers expect the US to lift its embargo on Cuba soon. But the move has raised the possibility that changes in the country - and in the US's relationship with it - could be coming.

So far the major cruise lines are not talking much about future plans.

A spokesperson for Royal Caribbean told USA TODAY that while the line hopes to have its ships visiting Cuba in the future, "it's premature to judge how events will unfold there, and (we) don't have anything to say at this time".

Report by David Wilkening