Five topical questions about Cuban tourism today

Some of the greatest challenges identified nowadays for the development and sustainability of one of the most important economic spheres for Cuba, international tourism, deal with competitiveness, risks, investments, the development of human capital, quality and business autonomy.

1- Is the Cuban tourist product losing competitiveness?

 

Some facts with a certain amount of reliability confirm this is the case. Cuba is not a young but rather a mature destination. Experience comes with maturity, but also fatigue, which is normal. Every year the FutureBrand consultancy company applies a survey of 3,500 travellers from 14 large markets and 12 Focus Groups of different world cities to assess their country image. In the report of the 2010-2012 three year period Cuba appears in 14th place of the 20 first Latin American destinations. In 2010 it ranked 50th and in 2012 it went down to 57th. The survey distributes a group of attributes in five measurements: tourism, heritage, culture, business climate, quality of life and system of values. The results are surprising and, in some aspects, not very reliable. For example, in terms of safety, Cuba appears after Chile, Uruguay and Costa Rica. It only ranks first in the health and education system (of course).

Almost everything that has to do with tourism is of a complex nature since it is an intensive activity in interpersonal relations that, as is known, has a high subjective component and in which intangible assets decide, like confidence, satisfaction, commitment and motivation. In recent months there has been a rather significant increase in arrivals (17 per cent). I believe it has a circumstantial character for two reasons: first, because of the opening of relations with the United States; second, because of Cuba’s impressive work in the battle against the global threat of the Ebola virus. The two events, practically simultaneous, created a synergy. Friends coming from a recent stay in Europe assured me that Cuba’s image has notably improved. They have stopped seeing us as the ugly and defenceless duckling, up to our necks in problems, struggling without much success against poverty. Proof of this is the visit to Cuba by top-ranking personalities, like French President Francois Hollande or Germen Foreign Minister Frank-Walter Steinmeier.

 

The matter of competitiveness is, above all, a question of quality. To my knowledge, in the last decades there have been 17 generations of models of that concept; the latter of them, presented leadership as a key variable. That is, if the leadership of the organisation lacks the suitable requirements, due to incompetence or an excess of authoritarianism, there cannot exist a quality product. But the new international trend, which is now gaining force to focus on this matter, is that of sustainability, which is already included as a variable. And it is a wider vision, whose base is the development of the qualification of the human capital. The principal idea is that the quality of persons is the foundation of the product’s quality. An in-depth analysis must be made of the concept of sustainability, after Cuban President Raúl Castro launched the slogan of building a prosperous and sustainable socialism.

 

Since 2011, the Tourism Ministry started a series of quality and analysis workshops compared to the competition’s countries, which is why it is rather well-known what is happening. Some critical points are repeated, like the lack of variety and quality of the food and the transportation difficulties,just to mention two examples. In this point it is convenient to recall the principle defended by the world founder of the quality movement, Japanese professor Kaoru Ishikawa (1915-1989): “Quality begins with training and ends with training.” There is some weakening in the training programmes for workers, and those for management personnel are still insufficient. We are also facing the serious problem of the significant amount of trained young people who refuse to assume management posts, fundamentally for two reasons: the constant pressures of inspections, controls and anonymous complaints, on the one hand, and on the other due to the fact that their subordinates, with less responsibility, earn between eight and 10 times more and go home to rest at 5 pm. I see a slow, but perceivable, decrease in the competition of the management potential.

 

Cuba could try to use its influence in the Caribbean to contain the price war and the competition that the Economic Commission for Latin America and the Caribbean (ECLAC) calls “spurious.” We would have to seek new spaces for the consumption of the Cuban product in areas without price confrontation. For example, priority should be given to the variant of the Blue Ocean tactic, according to which empty spaces – new products – should be found that do not have competition.

 

2- Are we managing risks in the intensive programme of investments up to 2030?

 

The government leadership has called on the State agencies to draw up a strategic plan up to 2030. This implies having a country vision that is being made and that implicitly is found in the guidelines of the Sixth Congress of the Communist Party of Cuba. It is also a difficult and complex task, much more so when the U.S. government’s harassment obliges us to seek fast and pragmatic solutions…. The long-term thinking habits do not cover the different levels ofmanagement. Some modules for the creation of forecast plans and techniques have been introduced in the country. I would feel more at ease if I knew that all the State officials have studied in depth the subject. I am not sure that we have created the critical mass of strategic thinking we need, the tourism sector included. I know for a fact that in the marketing area a qualitative leap has been taken, but it is necessary to do the same in the remaining areas with a view to creating an adequate foundation for the projection of the future.

 

Information has circulated about the plans to build 200,000 rooms in the next 15 years, but the majority will not be built by the Tourism Ministry, but rather Gaviota, a hotel chain linked to the Armed Forces which has certain advantages of greater autonomy. Tourism has the possibilities of absorbing a wide volume of workforce, but it must be increasingly more qualified. If we apply the ratio – approved in the country – of one worker per every room, 200,000 workers would be needed, of which between eight and 10 per cent would have management posts. The gross of the previewed investments correspond to sun and beach tourism, in the group of cays to the north of the central provinces, zones that are not densely populated and with relatively high emigration indices. The problem lies in from where to attract that labour force. It would be necessary to build dormitory cities on the coastal areas and take there persons of other provinces, not to make the mistake of the Ciego de Avila cays, where the majority of the workers are from Morón and Ciego, which need to invest between five and seven hours in the to and fro trip. This has a negative repercussion on the family structure – especially in overburdening the mothers – and on the health of the workers, whose damages inevitably appear with the years. The presentations made in their moment to create, for example, a dormitory city in Turiguanó, were not heeded. The emergency conditions, in full special period, thus left no alternatives; but a high price has had to be paid.

 

The other problem is related to the type of beach mode and investment, which it seems shouldn’t be the model of Cayo Largo del Sur, with traditional hotel installations. The accommodations mode on islets has been developed in the Indian Ocean and the Greek archipelago. We should study in depth those experiences. Let us mention two: one known as island experiences, which is very associated to the marketing of experiences – a contribution by the sector to international marketing. That model defines, in advance and in detail, a group of “experiences to be lived.” In its catalogues it promotes idyllic islands, full of sensations and adventures, like excursions through virgin forests, seeing turtles or iguanas in their environment, collecting fruit from trees, cooking charcoal-grilled fish, sleeping in rustic cabanas and being awakened by the call from a shell. The offers are limited to a dozen persons, but with a high per capita spending.

 

The other mode is for five-star-plus tourism; islets with luxurious mansions, relatively isolated, with landing strips for small and medium-size aircraft. In the case of Cuba this mode should be mixed with yachting, considering that every year 50,000 vessels of this type travel every year through the zone. This type of incomes would be much bigger.

 

The advantage of both modalities is that they absorb a smaller amount of labour force, which will be relatively scarce, and the attack on the environment is much less. It would be necessary to avoid an excess of investments. The big investors in hotels put pressure on the South countries to build many rooms: the more the better; so they can be cheaper and their profit margin increases. A European tour operator, in his small office with internet, sells a room for 140 dollars and Cuba is left with half or less.

 

The United Nations World Tourism Organisation (UNWTO), in its forecast for 2020, suggests a decline in the sun and beach product. First, because it does not allow for establishing differences; and second, because of the world increase in diseases related to solar radiation. It would be necessary to add a third aspect: Japan and other countries have started to build artificial tropical beaches. I believe that, based on the computer science resources, the new product called “intelligent destination” must be studied, which Mexico has already started to introduce. The amount of tourists traveling with smartphones, tablets and the need for WiFi, which is rapidly changing the way of appreciating the tourist product, is increasingly growing. We must have information to prevent on time that our destinations become ignorant destinations. I wouldn’t like to be in our planners’the shoes.

 

3- Is a relaunching of the human capital development programmes necessary?

 

In the 1980s, the National Institute of Tourism and Cubanacán created a network of hospitality schools in almost all the provinces. Thanks to that foresight, we were able to absorb the investments of the 1990s in Ciego de Avila, first, and Holguín afterwards. It was one of the factors promoted by foreign investment: a qualified labour force distributed in almost all the provinces and with low wages. In other area countries engineers and other specialists have to be imported and they have to be paid between 3,000 and 5,000 dollars. Here we find them in any municipality and the salary is even 15 times lower.

 

A new series of investments is approaching, now with the direct investment mode with total foreign property. History repeats itself, but at another level. It is necessary to raise the amount of investment in human capital to a level higher than the present one. Though programmes for the training of personnel and executives have been activated, these remain, in my opinion, below the possibilities. It would be necessary to retake the experiences of the hotel schools, which was abandoned. Finding good economic or human resources assistant directors –key posts – is becoming very difficult.

 

A few years ago the foreign companies sent mature and experienced managers; the tendency now is to send them young, so they learn from our more experienced managers and, while they learn, they earn between 3,000 and 5,000 dollars a month. The effects of the inverted pyramid in the tourism sector are devastating.

 

There are hotels in Havana at whose doors the staff in charge of parking cars wash three or four of them and earn three times more than the executives of that same hotel during the same period of time. The sector of the biopharmaceutical industry has successfully applied the principle of making the money flow towards posts that guarantee results; that is, the socialist principle of “to each according to their work,” but in tourism this is impossible. Every day I hear of cases, in different provinces, of experienced managers who are transferring to the private sector or to foreign companies with an eightfold increase in their salary. But resolving the problem is not in the hands of the Tourism Ministry. It is necessary to make a qualitative and quantitative relaunching of the human capital, placing emphasis on training and moral and material recognition. I have suggested the intensive introduction of business ethics courses – the workshops on values are insufficient -, taking into account the advent of U.S. tourism. The idea is to prepare for this, since I consider that the ethical capital in tourism is above average. An indicator of this is that on the Friday page of the newspaper Granma, which publishes the population’s letters, complaints and suggestions, there has been only one case referring to tourism and it was of minor importance. In any case, if we do not take the necessary measures, great risks await us. If not, the future will be threatened.

 

The training programmes still don’t satisfactorily adapt to the demands for training of Decree Law 281 on business improvement in its article 17 – continued training, systematic programmes and others. The premises to take the leap we need are given. One of the most important is the existence of tourism faculties in several of the country’s provinces, which guarantees the entrance of a talented and prepared young workforce. The tourist training system (Formatur) was recently restructured and the new prospects make it possible for us to feel optimistic.

 

4- How does business autonomy work in tourism?

 

Before I present an in-depth comment on this issue, I need to explain why this is a critical matter in the sector, especially in the hotel industry. In this business situations change rapidly, for example, you have a great deal of wine stored, to the point that the expiry date is approaching. You request permission from higher up to lower the price, taking advantage that a group of Spaniards is coming. The permission takes too long and, when it comes, the Spaniards have already left and the Mexicans, who don’t drink wine, come in. The announcement of an epidemiological outbreak or the fall of a plane in the territory is enough for the demand to drop in hours. The central government insists on the need for decentralisation and “controlled” autonomy to take the decision making as close as possible to the point where the problem lies. But the intermediate levels put up resistance.

 

In my talks with dozens of managers in the country, I find among them three tendencies: the sceptic, who do not believe the enterprises are really getting the autonomy they need; the indifferent, who do not care if they are or are not given autonomy, since it’s easier and safer to continue with the “consulting” and the culture of waiting; and a few – frequently the youngest – who are willing to run the risks that autonomy implies.

 

Now then, to my knowledge, managers have to ask permission to buy a flash memory, just like to replace a defective blender, with delays that could take more than a year. The higher ups are not the only ones who hinder the activities of the enterprise. Much more is done by the external agencies – other state-run organisations –, which every month carry out15 or 17 inspections or controls. Every 36 hours, on average, a group of inspectors arrives. A hotel can send a cheque to the bank to buy a bunch of flowers and the latter sends it back demanding to know for what they want it.

 

All these system records have a negative double effect: on the one hand, they act as mechanisms that hinder the business dynamics and, on the other, they steal the dynamism and time the management personnel need to guarantee the client satisfaction and keep up the quality standards. They represent leaks in efficiency and competitiveness to the detriment of the final result. The majority of these onslaughts come from the surrounding areas and the Tourism Ministry suffers the consequences silently and with discipline. This can only be resolved through an effective and precise action from the central government. My Spanish and Mexican friends have told me that that also happened in their respective countries; therefore, it’s not just a Cuban phenomenon.

 

5- Are we prepared to face the challenge that U.S. tourism represents?

 

Tourism’s boom in the first semester of 2015 almost left Havana without mineral water. This is a symptom of what could happen if there isn’t a control over the flow of visitors. As we previously pointed out, this increase is not due to the quality of the product, but rather to a halo of transitory attraction. The percentage of U.S. visitors was high and, though some consider that there won’t be an avalanche from that market, it is necessary to be prepared.

 

The issue is in a wide unpredictable zone, of uncertainty. In the first place, because we lack our own studies on the market structure and sufficient experience in the treatment of this type of visitors. Though in the last 25 years a million U.S. tourists have come to Cuba, we cannot say that we are prepared as a system to face the challenge.

 

Only the Hotel Nacional has significant experience, but it is not generalised. There are doubts about whether they will be interested in the sun and beach tourism. What seems most reasonable is that we make a serious effort to be able to actively manage that demand. A passive attitude would have disastrous consequences. It is necessary to find the balance between demand and our ability to assimilate it; all excess that surpasses it will have a boomerang effect on the Cuba destination. If we receive a demand above our possibilities and we place thousands of U.S. visitors face to face to the “experience” of deficient buffet tables, difficulties with the air conditioning, humid rooms, excursions in which transport arrives late or doesn’t arrive, those thousands of visitors will go back home disappointed, they will massively spread their discontent on the internet and a shadow will be cast over the future.

 

I would suggest that we ally ourselves to the most reliable and prepared tour operators so they can help us manage that market which we do not know well. Or we will have to face the “Alka-Seltzer” effect: a sparkling but momentary fizzle. We can also study more systematically the experiences of other destinations in the area – Cancun, Dominican Republic and Jamaica – that know that market in order to speed up our learning process. Our adaptation to the new realities cannot be slow. Which of our new products can be adapted to the segments we will prioritise have to be defined as soon as possible. Some of them are predatory. We must wait for the private houses to receive a large amount of U.S. visitors, which is why the social fibre of the country will be deeply touched. The Tourism Ministry knows it and has no objections. The average U.S. tourist is not dry and distant like some Europeans we know, but rather pleasant, communicative and easily moved when managing their pocket economies.

 

To conclude, I want to say that Cuban tourism has been successful, that it contributed to mitigating the damages of the severe economic crisis of the 1990s and to boosting other sectors of the economy, as it still does. But its great merit is not only economic or that it has allowed many Cuban families to realize their life project – in the style, for example of entities like ETECSA and BIOCUBAFARMA, which in addition to salaries pay for other services, like safe transportation, food and other benefits. Its great achievement lies, in my opinion, in having counteracted the world campaign of demonising the country. Reactionary groups from Miami, for example, hired a large New York publicity house to discredit us, something unprecedented in the history of publicity. Thus, for example, one day we surprisingly find on the internet that Catherine Deneuvespoke against Cuba or that a U.S. second-rank actor also did the same, not to mention feature stories on Spanish television about the trafficking in persons and “child prostitution” in Cuba. It’s like seeing the mote in one’s neighbour’s eye, because in many of these other countries they can’t give lessons to anyone and those evils that do not exist Cuba are present there. The 42 million persons who have visited Cuba – of which 1.5 million are from the United States – have been able to confirm the true intentions of those lies. They found a people like the others from the South – with their limitations and achievements -, cultured, healthy, ready to have fun with one of the best music in the world and happy to receive those who want to dance with them. (2015)

 

*The author is a Doctor in Economic Science from the University of Berlin, was an advisor to the Executive Committee of the Council of Ministers between 1980 and 1993 and participated in the design of the Cuban tourist model since the late 1980s.

 

 

 

* The author is a Doctor in Economic Science from the University of Berlin, was an advisor to the Executive Committee of the Council of Ministers between 1980 and 1993 and participated in the design of the Cuban tourist model since the late 1980s.

 

 

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