Cuba is ‘huge opportunity’ for US travel companies: Study

US travel to Cuba has already surged, albeit from very low levels, in the last two years since the former Cold War allies announced a detente and the Obama administration eased travel restrictions to the island. (Reuters)
Updated 10 May 2017

Cuba is ‘huge opportunity’ for US travel companies: Study

HAVANA: Cuba represents a “huge” but challenging opportunity for US cruise, airline and hotel companies as American visitors to the Caribbean island could increase as much as sevenfold by 2025, according to a report by the Boston Consulting Group (BCG).
As many as 2 million Americans could visit up from 285,000 last year, excluding Cuban Americans, the BCG study published on Wednesday estimated.
Given tourism infrastructure is already creaking, that means there are business opportunities aplenty but US companies must learn to navigate a centrally planned economy with its quirks.
US travel to Cuba has already surged, albeit from very low levels, in the last two years since the former Cold War allies announced a detente and the Obama administration eased travel restrictions to the island.
“The reality is that US travel to Cuba is in its nascent stages and all the players are still learning how to make it work,” the report read. “Success, as with most things Cuban, will require unusual — and often unorthodox — approaches.”
BCG did not address the uncertainty cast by the election of US President Donald Trump who has threatened to row back on the normalization of relations.
The Cuban government aims to double hotel capacity by 2030 through partnerships with foreign companies, it pointed out. So far, Starwood is the only US hotel company operating in Cuba.
Instilling a hospitality mindset in tourism workers who were mostly state employees, even at US-owned companies, on low wages could be challenging, it noted.
Poor service sat particularly badly when rooms were “extremely expensive for the region.”
“The risk is that US travelers who visit Cuba and stay at a hotel that is part of a brand they trust will experience prices much higher than usual …” the report read.
Meanwhile, there was also an opportunity for expanding cruise lines to Cuba, BCG said. Nearly two-thirds of 500 US travelers surveyed would consider one to Cuba. Several US cruise operators have started offering lines to Cuba in the past year.
They have to deal with different challenges such as including a cultural element to their trips to comply with US government rules on travel to Cuba, BCG noted.
US companies should work together with the Cuban government to resolve some of these issues.
As for airlines, they needed to deal with the excess demand for flights to Havana. They could carry out campaigns to lure Americans to other Cuban cities, BCG advised, and tap into Cuban demand for flights to the US.


ADB to invest $2 billion in Pakistan’s energy sector

Updated 32 min 38 sec ago

ADB to invest $2 billion in Pakistan’s energy sector

  • Pakistan’s energy sector is facing a cash shortfall of Rs12 billion per month, down from Rs39 billion
  • ADB is interested in facilitating technical studies for gas storage facilities

KARACHI: The Asian Development Bank (ADB) plans to invest $2 billion in Pakistan’s energy sector within the next three years, as the South Asian nation’s power supply chain is paralyzed by Rs12 billion a month in circular debt, the Ministry of Energy said in a statement.
After a Wednesday meeting with Energy Minister Omar Ayub Khan and Special Assistant to the Prime Minister on Petroleum Nadeem Babar, the ADB’s team, headed by its director for Central and West Asia, Werner Liepach, also expressed interest in facilitating technical studies for gas storage, as Pakistan is facing a gas deficit.
The Asian lender this week released $1 billion to shore up the Pakistan’s public finances and help strengthen its slowing economy, while another $300 million were released to help the government address financial sustainability, governance, and energy infrastructure policy constraints in the energy sector.
In July, the International Monetary Fund (IMF) approved a three-year $6 billion extended fund facility (EFF) to finance the government’s economic reform program that aims to put Pakistan’s economy on the path of sustainable and inclusive growth. The bailout program is expected to catalyze at least $38 billion in financing from Pakistan’s development partners.
The ADB, Pakistan’s top energy sector partner with a $2.1 billion portfolio discussed energy sector projects with the ministry’s Power Division, and it was decided that a comprehensive portfolio review meeting will be held by the end of this month.
The ADB team was apprised of the New Renewable Energy Policy, which will be placed before Pakistan’s Council of Common Interest (CCI) in its scheduled meeting by the end of the month. The team was briefed on various steps that have been undertaken to boost the efficiency of the system and campaign against power theft, the ministry’s statement said, adding that the government’s circular debt capping plan has reduced the debt’s growth from Rs39 billion a month to Rs12 billion. 
On Dec. 6, Liepach observed that Pakistan’s “is a longstanding chronic issue ailing the country’s power sector.”
“A comprehensive and realistic Circular Debt Reduction Plan, assisted by ADB in close coordination with other development partners, is the cornerstone of this subprogram. The plan aims to drastically cut the new flows of circular debt and provides policy directions on addressing accumulated circular debt,” he said.