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Posted June 03, 2003 by publisher in Business In Cuba

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With U.S. on sidelines, Cuba’s entrepreneurs quietly blossom

Jane Meinhardt | Staff Writer | [url=http://www.bizjournals.com]http://www.bizjournals.com[/url]

Editor’s Note: Jane Meinhardt spent eight days in late April touring Cuba. She has visited the island each year, except three, since 1994. She offers this view of the tremendous change in the business climate on the island since her first visit, when use of U.S. currency, now a standard, was first permitted.
HAVANA—Hovering above the skyline like giant insects, construction cranes assist in giving La Habana Vieja a major facelift and help hoist spirits about the future of Cuba’s tourism industry.
In an apartment on the city’s outskirts, a man who earned about $8 a month as a government security guard 10 years ago now operates a restaurant with his girlfriend, offering pork and chicken dishes.

Operators of “cyber” cafes around Havana busy themselves with foreign visitors who also can find facsimile and Internet services at business centers in Havana’s hotels.

Customers jam the sidewalks of open-air markets where artists selling paintings now can keep most of their earnings. Student artists hang graphics inside a government-sponsored gallery and print shop that caters to collectors.

At a shopping center, Cubans with cell phones plastered against their ears peruse Adidas-brand shoes and Sony Corp. electronics, while canine aficionados parade their show dogs in a nearby stadium.

These glimpses of the financial and cultural hub of Cuba reflect great changes in the decade since Fidel Castro made the American dollar legal currency.

Foreign investment in the city’s restoration, flourishing tourism and some capitalism—Cuban-style—are signs of an improved and slightly less-regulated business atmosphere.

But one in which the United States for the most part is left out.

Old havana restored

The most visible change is the restoration of La Habana Vieja, or Old Havana, which was named a UNESCO World Heritage Site in 1982.

Cathedrals, palaces, hotels and other buildings crumbed into the streets, so deteriorated they were uninhabitable. A decade ago, visitors skirted piles of rubble from collapsing buildings.

Eusebia Leal, city historian, oversees restoration and runs Habaguanex, which negotiates agreements with foreign investors from Spain, Italy, Israel, the Netherlands and other countries to restore historic buildings for tourism use.

Ten years ago, it was difficult to find a restaurant with anything but coffee, beer, bottled water and a sausage sandwich—if bread was available. Today, tourists jam restored cafes ordering lobster, chicken, pork and shrimp with Cuban cocktails.

Profits from these ventures, in which the Cuban government usually holds 51 percent ownership, help pay for more restoration.

Cuban government officials say this joint venture system produced profits of more than $70 million.

Hotel Parque Central, Hotel Telegrafo, the Partagas Cigar Factory, museums and palaces join the list of completed projects.

Restored hotels have business centers and rooms with satellite television. Rates vary but can run as high as $265 for a suite.

Homes and buildings along the Malecon, Havana’s historic waterfront boulevard, have been added to the restoration plan with some financial assistance from Spain.

Enrique Suarez, a supervisor in the city historian’s office, said through a translator that some families participate in restoring their homes. Construction crews are organized according to ages and abilities, given equipment and materials and led by supervisors.

It is a way to restore pride in Cuba’s history and attract tourists, he said.

Tourism gains momentum

Air-conditioned buses vie for parking and unload thousands of tourists daily in Havana, the most popular Cuban destination outside of Veradero, a Miami Beach-style resort east of the city.

Travel industry groups and the Cuban Ministry of Tourism estimate 1.7 million people visit the island annually, mostly from Europe and Canada, and contribute about $1 billion to the economy.

Cuba offers approximately 40,000 rooms, government statistics state. A European Union study showed foreign investment in Cuba, which is mostly tourism related, hit a high of $488 million in 2000.

Sol Melia, the Spanish hotel chain, is a major investor and a partner in more than 20 hotel properties.

Cuba’s marinas also boost tourism.

Yachts from England, France, Germany, Tahiti and Spain dock at Marina Hemingway.

Ten years ago, the power supply came courtesy of a line that ran atop the sidewalk. Ongoing improvements include underground utilities, bungalows, swimming pools, massage service, free buses to Havana, a chandlery and tennis courts.

The marina, run by Cubanacan Nautica, a government tour agency, is considered a gem in Cuba’s marine and tourism industries. The marina, located just west of Havana, hosts three international billfishing tournaments with entry fees as high as $450 per team.

“We are making the marina as nice as possible with improvements for all the many tourists and boaters who come here,” said Isaura Perez, head of the marina’s tourism services. “This is a very popular place for tourists from everywhere.”

However, the number of American tourists has dwindled because of increased enforcement of the U.S. embargo, she said.

In 2000, the U.S. Treasury Department’s Office of Foreign Assets Control sent 188 letters threatening fines of Americans suspected of visiting Cuba illegally. The number of letters threatening fines increased to 697 in 2001. Figures for 2002 were unavailable.

Hermes Rodriguez, a guide at the Jardin Botanica in Cienfuegos, pulls a handful of visitors’ business cards from his pocket. Only a few offer American organizations, mostly from scientists and educators.

“Mostly we have big groups from Europe,” he said. “They are coming more and more.”

Tourism at the attraction means tips for Rodriguez, a botanist. Tapping into what is Cuba’s premier industry far exceeds his government income of $10 monthly.

where there’s a will ...

Government jobs provided Juan Hernandez (not his real name) linguistic and trade skills.

During the past 10 years, he worked—officially—as a security guard, a bartender and a restaurant server. He now calls himself an entrepreneur.

He and his girlfriend recently transformed part of their apartment into a two-table restaurant, or paladare. They serve simple Cuban meals for as little as $3.

Paladares must be licensed by the government, and operators pay fees as high as $100 a month. Law allows seating for only 12 people at a time.

Operators of clandestine paladares risk huge fines and possibly jail, he said.

Hernandez supplements the profit from the paladare by working as an interpreter, tour guide and taxi driver—also without government approval.

“I can make as much as $50 a week if I work hard,” he said. “We are comfortable with life. It is not easy, but it is getting better for many Cubans.”

To reach Jane Meinhardt, call (813) 342-2476 or send your e-mail to .(JavaScript must be enabled to view this email address)

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