Tourism sweetens Cuba's cash flow as sugar fields give way to resorts

Posted: Thursday, June 07, 2001

GUARDALAVACA, Cuba (AP) -- Steel skeletons of more hotels are rising along a coastal strip of northeastern Cuba, flanked by white sands on one side and sugar cane on the other.

While bathing-suited Canadians and Europeans sun themselves in lounge chairs facing the Atlantic, Cuban sugar workers a few miles away slice through green stalks with their machetes.

Here in the heart of Cuba's sugar country -- and around the island -- hotel building now overshadows the once all-important cane harvest as communist officials bet on tourism to save the struggling economy.

''Priority is being given to development of this area for tourism,'' said Kees Aerts, the Dutch manager of Superclubs' new Breezes Costa Verde resort for families with children. ''Even here, tourism is beginning to bypass what was once the most important industry.''

For centuries, Cuba's economic fortunes depended on the annual sugar harvest. But when the Soviet Union collapsed a decade ago, Cuba lost its socialist financial partners and preferential trade, including cheap petroleum, fertilizer and machinery for harvesting sugar.

Oxen replaced machines in the cane fields as fuel dried up, along with parts for combines and other equipment. Fertilizer and pesticide disappeared.

Throughout the 1990s, the sugar harvest regularly yielded less than half the record 8.5 million metric tons collected in 1970. Officials project a yield of 3.7 million metric tons for the current harvest, compared with the 1999-2000 harvest of 4 million.

In years past, such disappointing production was cause for government alarm, with detailed coverage of the harvest plastering the front page of the Communist Party newspaper Granma. But the harvest's progress is now covered by occasional reports on inside pages.

Sugar remains important to Cuba, but tourism is now the island's No. 1 source of foreign currency.

''I think that in five years the sugar industry will shrink so much that it will not be recognizable,'' said John Kavulich of the U.S.-Cuba Trade and Economic Council, an educational organization that studies the island's economy.

He said sugar is ''an increasing drain on the economy,'' while tourism is producing a year-round flow of the foreign currency Cuba needs to pay for social services and other needs.

Cuban officials say tourism generates $2 billion in annual revenue, followed by sugar at $550 million. Nickel production brings in about $300 million a year, according to government figures.

Almost as important, tourism is creating jobs in a socialist country with a stated commitment to providing for its people's economic welfare.

While the official unemployment rate is 4 percent, independent economists put the figure at more than 20 percent.

Even before communism began toppling across eastern Europe, Cuban officials were looking at reviving tourism -- a key industry before the 1959 revolution that brought Fidel Castro to power.

When the Berlin Wall fell in 1990, the island had 13,664 hotel rooms. Officials say there will be about 38,000 by the end of this year.

Some 329,000 tourists were recorded visiting Cuba in 1990. This year, industry officials are projecting 2 million visitors, up from 1.7 million last year.

About a third of the hotel rooms are operated by Spain's Grupo Sol Melia, which manages 19 hotels in Cuba. Others are owned and operated by government companies like Cubanacan or Habaguanex. A few are government-owned but operated under management contracts with foreign companies such as Jamaica's Superclubs or Germany's LTI.

Still, while tourism has become what officials call the ''locomotive'' of Cuba's financial recovery, there is no sign it is causing any movement toward further reforms in Cuba's centrally planned economy.

Much of the toruism development is coming in areas outside Cuba's two best-known destinations -- Havana and Varadero beach to the capital's east.

Ambitious development is under way on Cayo Coco off Cuba's central-northern coast, as well as on the chain of adjoining keys stretching eastward.

Guardalavaca, in the eastern province of Holguin, now has more than 2,300 hotel rooms, and Sol Melia is building a 980-room hotel and Club Med a 550-room resort. The international airport nearby has been renovated and there are now two flights each week from Canada and Europe.

The boom is appreciated by many young people whose parents work in Holguin's sugar industry. They want tourism jobs for the tips in U.S. dollars that buy much more than the national currency.

Government provided housing for tourism workers is a sign of the benefits. While modest by American standards, a two-story, cement-block complex for tourism employees with families is a step up from the small wooden houses where sugar workers live.

''Sugar is still an important sector for Cuba, but not like tourism,'' said Juan Carlos Pendas, a Tourism Ministry official. ''Tourism is a very important source of income.''

End Adv for Monday, June 11

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