Wednesday, October 9, 2013

Reform of Tourism Sector

Cuba allows tourism industry to hire private contractors

    * Move should stimulate small business

   * Latest step in market-oriented reforms

   By Marc Frank

   HAVANA, Oct 9 (Reuters) - Cuba has authorized its state-run tourism industry to contract out lodgings, meals, excursions and other activities to private businesses in a boost to a growing "non-state" sector.

   While the government has allowed some state contracting to private businesses since 2012, up until now the tourism industry was off limits.

   Tourism is the country's largest industry, attracting 2.8 million visitors in 2012 with revenues approaching $3 billion.

   The new regulations, published on Wednesday in the official gazette (, authorize state-run tourism agencies to use the more than 5,000 bed and breakfasts and 1,700 private restaurants now operating in the communist-run country, as well as private entertainment and transportation.

   Further, hotels and other tourism facilities can now contract with private businesses to provide meals for workers, gardening and other services.

   "Cuba's tourism has been stuck in a 'state provides all' framework for years," said Paul Webster Hare, former British ambassador to Cuba, who currently lectures on international relations at Boston University.

   "As a service industry small and imaginative often attracts tourists better than the 'one size fits all,' which has been a feature of the way the big Cuban state- and military- owned companies have run the sector," he said.

   Tania Rodriguez, who rents out rooms in the Colonial district of Havana, applauded the measure as key to continued growth of the tourism industry and as a way to improve quality and variety.

   "The private sector has provided quality and comfort for tourists who have visited for many years," she said. "I think we are essential if Cuba is going to continue to attract tourists."

   Cuban President Raul Castro, who took over for his ailing brother Fidel in 2008, has opened up retail services to small entrepreneurs as part of a larger reform effort aimed at modernizing a Soviet-style economy where the state up until 2010 administered just about everything down to shoe shining.

   Castro is encouraging private sector growth to create jobs for the 1 million employees he hopes to slash from bloated government payrolls over the next few years. His goal is to strengthen Cuban communism to assure its future.

   There are currently more than 450,000 people operating or working in small businesses or are self-employed in the building trades, transportation, entertainment and other sectors, as well as more than 200 cooperatives.

   State-run tourism agencies have been sounding out the owners of restaurants and small lodgings throughout the year, and many, at least in Havana, have expressed little interest, according to industry sources. They point out that individuals visiting the Caribbean island are already free to rent rooms and eat at private establishments.

   However, Cuban economists said the opening of the tourism industry was sure to be viewed by some as a business opportunity.

   "During the tourism season the good restaurants and bed and breakfasts are usually booked solid, without having to sign a contract with the state," one of the economists said, wishing to remain anonymous.

   "But now, if you are thinking of venturing into the private sector, this could be an opportunity to get started," he said.

(Reporting by Marc Frank; Additional reporting by Nelson Acosta; Editing by David Adams and Eric Beech) ((

Cuba OKs law letting state tourism entities deal with private renters, restaurants, guides

By Associated Press, Published: October 9

HAVANA — The Cuban government has authorized state-run tourism concerns to do business with the small but growing private sector.

The measure could be a boon for Cuban entrepreneurs who rent rooms in their homes, run restaurants or offer guided tours

Previously, state-run tour operators were supposed to deal only with government hotels, guides and eateries.

The new law stands to increase independent operators’ ability to tap into the flow of coveted hard currency carried by travelers.

It was published Tuesday in the government’s Official Gazette. It is the latest step in President Raul Castro’s economic and social reform program begun in 2010.

Cuba makes room for private initiative in tourism sector

Havana, Oct 10 (EFE).- Cuba's state-owned travel agencies and tourist entities will be able to book private lodgings and restaurants, the government said Thursday.

In a resolution published in the Official Gazette, the Tourism Ministry gives the green light for individuals who rent out homes and rooms or operate restaurants, known as "paladares," to offer their services to the state tourism sector.

In like manner, tourist agencies and entities will be able to book the services of private individuals or the self-employed to organize excursions for groups of visitors such as rides on horseback, in carriages or in classic or antique automobiles that are still in wide use on the island.

The tourist sector will pay for these services in convertible pesos, or CUCs, the value of which is maintained at parity with the U.S. dollar.

This new ruling is part of the set of reforms undertaken by the government of President Raul Castro to "update" the communist island's economic model.

One of the main measures included in the adjustment plan has been a controlled opening of the economy to private initiative.

More than 436,000 Cubans are self-employed in one of the roughly 200 authorized activities or professions.

Since the move toward private enterprise began in 2010 that sector has grown by 18 percent, although it still only represents 2 percent of the Cuban economy.

One of the most visible effects of the phenomenon has been the proliferation of non-state restaurants and private lodgings licensed to rent out rooms.

It is calculated that there are more than 2,200 paladares on the island, along with 6,200 available rooms and 950 homes that are properly licensed to be rented out to the public.

Copyright EFE, 2013.

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