US chain Starwood has signed a deal to renovate and run three Cuban hotels, returning US firms to the island more than 50 years after American hotels were taken over in Fidel Castro’s socialist revolution.
All Cuban hotels are state-owned so the deal puts a major US corporation directly in business with the Communist government under a special US licence that pushes Washington’s legal dismantling of the Cuban trade embargo further than ever before.
In a once-unimaginable arrangement, a hotel owned by the tourism arm of the Cuban military will become a Sheraton Four Points.
The deal comes on the eve of Barack Obama’s historic visit to Cuba, which will open a new era between the former Cold War foes that has American travelers and businesses eagerly eyeing opportunities on the island nation 90 miles south of Florida.
Starwood’s chief of Latin America operations, Jorge Giannattasio, said the company will invest millions to renovate and rebrand the Quinta Avenida, Santa Isabel and Inglaterra hotels, train and hire new staff and reopen the hotels by the end of the year.
The Quinta Avenida is owned by Gaviota, a military-run tourism conglomerate. The Santa Isabel and Inglaterra, which are run by other state agencies, will be operated as part of Starwood’s Luxury Collection brand.
It’s unclear, however, how long Starwood can be called an American company.
On Friday, Starwood called off a $12.2 billion buyout agreement with Marriott in favour of an offer from a group of investors led by the Chinese insurance company Anbang.
Cuban hotels are notorious for their ramshackle furnishings and poor service. Giannattasio said the Cuban Starwood hotels would be refitted with everything from new mattresses to improved kitchen equipment and safety measures.
Cuban law prevents widespread direct hiring of Cuban workers by foreign firms. International companies complain that their inability to directly hire Cuban employees, and if necessary demote or fire underperforming staff, hinders their ability to provide satisfactory customer service.
Giannattasio said he was confident that Starwood would have enough flexibility and control to maintain the company’s standards in Cuba, although he declined to comment on details of the firm’s arrangement with the Cuban government.
Starwood will receive a fee for its branding and management services.