Tourism was once the ‘economic engine’ in Cuba. Now the train is derailing

For decades, Cuba’s tourism sector has enjoyed a reputation as an “economic locomotive” – a word used by officials Who saw it as the lifeblood of the Caribbean island country’s economy.

But the industry has been in decline since its 2018 peak, and U.S. government pressure on Cuba’s oil supplies has pushed the country’s most important industry near its breaking point.

The Trump administration has threatened to impose tariffs on countries that supply fuel to Cuba – part of an effort to strangle the communist-run country. Following the collapse of its close ally and main energy supplierVenezuela, in January. As a result, canadian, Russian And european Airlines have suspended flights and resorts have suspended CloseStabilizing the flow of international visitors.

Without them, Cuba might not be able to survive. In 2024 the country 2.2 million visitorsMore than 50 percent less than the 4.7 million tourists welcomed in 2018.

Some experts say Cuba is now facing its worst economic crisis since the 1962 missile crisis, and the collapse of its tourism industry could be the death knell for the economy.

“It would be a huge blow to the Cuban economy if the tourism industry dried up,” said John Kirk, professor emeritus of Latin American studies at Dalhousie University in Halifax, in an interview with CBC News.

How tourism reshaped Cuba’s economy

Prior to the Cuban Revolution of 1959, Cuba’s tourism industry was largely privatized ownership and exploitation Considered as a gangster’s paradise by the American Mafia. According to Kirk, once the Castro-led revolution overthrew the Batista regime, the region was left on the back burner.

He said, “Nobody wanted to deal with it because it reeked of the mafia and it reeked of fat Americans, corruption and casinos.”

When the Soviet Union dissolved in the 1980s, “the Cuban government decided that sun and salsa meant nothing and as a result tourism should die out,” he explained.

Cuba welcomed visitors from many countries such as Canada, as well as Russia, Spain and Germany.

By the 2000s, Castro’s regime moved to centralize parts of Cuba’s economy, a restructuring that included placing its tourism industry under the mandate of GAESA, a military-run group that generates more than one third of Cuba’s GDP.

“Most of those investments are real estate investments more than tourism investments, which means the Cuban military has taken over prime positions in Cuba’s best tourist areas,” said the Augusta, Ga. said Paolo Spadoni, associate professor at Augusta University and co-author of the book 2025. Cuban Tourism Industry: Development, Challenges and Prospects.

The sector generated US$3.3B in 2017

After former US President Barack Obama normalized relations with the Castro government in 2015, an increase in the number of American visitors meant tourism skyrocketed.

At its pre-pandemic peak, the sector worked 10 percent of the country’s total GDP: 2017 was the best year for overnight stays, bringing US$3.3 billion to the country’s economy, according to Spadoni’s book.

Spadoni said that at the time there were approximately 100,000 to 120,000 direct jobs in Cuban tourism and approximately 500,000 workers directly and indirectly linked to tourism.

But after the arrival of Trump administration, US-Cuba relations slowed down. Banned from traveling to Cuba In 2019, global tourism came to a halt just months before the COVID-19 pandemic. A few years later, the war in Ukraine slowed tourism from Russia.

Now, according to Spadoni, Cuba’s chances of survival without a functioning tourism industry are “very unlikely”, as the sector, through cash spent at its hotels, resorts and restaurants, is a major source of liquidity for the country. already inside financial dire Straits.

He said, “Unlike other sectors, tourism provides liquidity for essential imports and investments, taking care of the most serious problems within Cuba. So not having that kind of source of revenue is definitely going to have a big impact.”

Disappointment over government mismanagement

The country’s economy is now about 15 percent smaller than during the tourism sector’s 2018 peak. according to Ricardo Torres, Cuban economist and research fellow at the American University in Washington, DC

“It’s a disaster,” Torres told CBC News, noting that Cubans have become increasingly frustrated with what they see as government mismanagement of the tourism industry.

The Cuban government invested heavily in the industry during the administration of Joe Biden, hoping that if former U.S. President arrived in Cuba with the same warmth Obama said, this will improve tourism after Covid. That didn’t come to full fruition.

Torres says that instead of investing in the country’s infrastructure, the government poured billions of dollars into a moribund industry.

“I think that’s what the Cuban people are angry about,” he said. “They had ample (time) to change course, and they didn’t. And now we’re paying the price for it – because tourism is not working, but no other part of the economy is working either.”

The sector has also done Divided the country’s economy into two parts: Workers in Cuban tourism mostly earn in “hard” currencies that are largely stable, such as US or Canadian dollars and euros; While those outside it earn in devalued Cuban pesos.

“Foreign currency is really important in economies like Cuba. If you don’t have foreign currency, the economy is paralyzed because you can’t buy fuel, you can’t buy food abroad, you can’t buy spare parts,” Torres said. “It doesn’t matter how many pesos you have.”

As protests rage across the country in 2021, some of Havana’s most luxurious hotels have become shining symbols of inequalityAs in Cuba’s electrical grid constant flat And human conditions Have gone bad.

Meanwhile, other strategic sectors of the country have been pushed to “the point of checkmate,” wrote Miami-based market expert Emilio Morales. In a report of 2024. Those sectors include electrical power generation, transportation, health, agriculture and drinking water supply. In the same report, Morales estimated that 10,000 tourism workers had left the country.

“Anybody in Cuba who is short of medicine, who is cooking with wood or coal, will be very disappointed to see these empty hotels, with the potential for tourism diminishing and therefore the economic situation becoming more dire,” Kirk said.

“The level of sub-societal frustration – it is there in Cuba and will continue to grow.”