Trump Administration Cuba Restrictions May Scuttle Cruise Ship Calls

Recently announced Trump administration restrictions on U.S. travel to Cuba could bring an unceremonious end to American cruise-line voyages and group travel to the Caribbean nation, said Engage Cuba president James Williams in Thursday briefing with media.

Elimination of the specific license for group people-to-people travel, now used by the wide majority of U.S. cruise passengers and organized tour groups, would also dramatically diminish American travel to Cuba, Williams said. Cuban cruise arrivals grew 48 percent year-over-year in 2018, according to Ministry of Tourism official Michel Bernal.

“There’s been criticism from hard-liners [who say] this is not meaningful interaction with the Cuban people,” said Williams, “but tourism dressed up as a people-to-people exchange.” As a result, the Trump administration is seeking to “severely limit or totally eliminate” the category.

If enacted, the restrictions would create “an immediate cost to current companies and a chilling environment” on potential businesses including tourism and hospitality firms, Williams said. The regulations would also have a “significant impact for U.S. travel and the U.S. travel industry, particularly the cruise lines,” he added.

Williams disputed the assertion that people-to-people travel is tourism disguised as education. “It is not veiled tourism if [suppliers] are doing what they’re supposed to be doing under the law,” he said.

“People-to-people trips to Cuba offer fully immersive and authentic educational experiences,” added Martha Honey, Executive Director of the Center of Responsible Travel, in a statement issued earlier this year.

U.S. Secretary of State Michael Pompeo announced the activation of Titles III and IV of the Helms-Burton Act In an April 17 address. The same day, U.S. National Security Advisor John Bolton, announced changes to the Cuba policy, including a cap on the number of remittances U.S. nationals can send to the island nation.

Title Bout

Titles III and IV of the Cuban Liberty and Democratic Solidarity Act (LIBERTAD Act), commonly known as the Helms-Burton Act, are closely tied to the U.S. embargo on Cuba. Title III enables U.S. nationals whose property was seized by Cuba’s government after 1959 to sue for damages in U.S. courts.

In what Williams termed “a departure from the norms of sovereignty and in opposition to international law,” Title III also affords claimant rights in U.S. courts to Cuban-Americans who were Cuban citizens when their property was confiscated.

Passed in 1996, the legislation “has never been implemented before” and “was always seen by [previous administrations] as an extreme step that was reviled by America’s closest allies,” Williams said. “With the new regime in charge, they decided to move forward with it.”

Title III also impacts companies currently operating on confiscated Cuban property and companies that indirectly profit from such relationships. U.S. companies are not exempt from Title III suits and may face “a slew of lawsuits,” said Williams, leaving them unlikely to expand operations in Cuba.

In fact, earlier this month two U.S. citizens sued Miami-based Carnival Corp. for restitution for property they say was seized after the Cuban Revolution. In response, Carnival Corp. officials said the company has a U.S. Treasury license to do business in Cuba and its cruise schedule remains unchanged.

Title IV directs the U.S. State Department to deny visas to foreign nationals who traffic in confiscated property or are corporate officers or shareholders of involved entities. The legislation has never been suspended, but the Trump Administration has stated it will increase the number of such investigations for potential visa denials.

Cash on Hand

While the travel-related restrictions have not yet been enforced, the Trump administration has successfully reinstated a cap on Americans’ ability to send cash remittances to the island. U.S. nationals may now send up to $1,000 per quarter, per person, to people living in Cuba.

Remittances surged after President Obama removed remittance caps 2015 after lifting limits on family remittances in 2009. Williams said the Havana Consulting Group estimates between $1.4 and $4 billion is sent to Cuba from the United States annually since the U.S. removed remittance amount limits.

Because many Cuban private sector entrepreneurs (“cuentapropistas”) depend on remittances from relatives and friends in the United States, the policy change will compel the entrepreneurs to find other ways to generate capital “at a time when reduced U.S. travel has already dealt a huge blow to Cuban private sector revenue,” Williams said.

Williams said a 2018 report found that after President Trump’s tightening of restrictions on travel to Cuba in 2017, occupancy in private bed-and-breakfast establishments dropped to 44 percent, while some of Havana’s top private restaurants saw revenue fall by up to 40 percent.

By the Numbers

In fact, U.S. land-based travel to Cuba declined 33 percent decline between 2017 and 2018, according to a recent survey by travel insurance provider Allianz Global Assistance.

The survey also found 63.3 percent of Americans do not understand current Cuba travel restrictions, likely a factor in the decline in overnight, land-based visits between 2017 and 2018. Ironically, this year Cuba celebrates the 500th birthday of its capital city, Havana, and the country expects to host 5.1 million visitors.

Conversely, some tour operators reported Cuba bookings increased following Bolton’s speech. Insight Cuba CEO Tom Popper said his company experienced a 23 percent week-over-week increase in traffic to its website following the speech, with bookings up 18 percent.

Overall, Cuba hosted 4.75 million international visitor arrivals in 2018, up from 4.5 million in 2017 according to the country’s Ministry of Tourism. Canada, the U.S. and Cuban residents abroad represent the country’s top three markets.

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