US Cuba tour operators gird for Trump travel crackdown

CNBC-01U.S. tour operators that send Americans to Cuba are banding together to try to limit damage to business from tighter restrictions on travel to the communist-run island expected in September from the Trump administration.

U.S. President Donald Trump in June rolled back parts of Barack Obama‘s historic opening to Cuba, saying his predecessor negotiated a “terrible and misguided deal.”

The revised approach includes stricter enforcement of a longtime ban on Americans going to Cuba as tourists. Among changes are limiting visits to 12 existing categories of non-tourist travel and a ban on the use of hotels and other facilities owned by Cuba’s military.

Cruise ships are permitted, the administration said, but not independent visits by solo travelers and families under the popular people-to-people travel category which Trump charged was being used to violate the tourist ban.

Many Americans took Trump’s message to mean travel to Cuba, except on cruise ships, was again off limits, U.S. tour operators said. It is a misconception they hope to change with a trade group formed in the last month to influence the debate on Cuba and help would-be visitors navigate new rules.

“We need to share information and speak as a united voice on issues that are important to us,” said Cuba Cultural Travel’s Michael Sykes, who founded the group American Tour Operators in Cuba (ATOC) that now counts more than 30 U.S. companies.

‘Pall’ over Cuba

Trump’s move to roll back Obama policies introduced after the 2014 U.S.-Cuban detente has yet to have a significant impact on the number of U.S. travelers visiting the island, according to a survey of a dozen U.S. tour operators by Reuters.

But travel companies fear a hit on future demand from Trump’s combative tone and regulations, with some concerned it could even spook U.S. banks that help them do business with Cuba.

“We can work with the new rules with minimal changes, but a pall has been cast over the business and that has me worried going forward,” said Steven Cox, president of Alabama-based tour operator International Expeditions, an ATOC member.

“Many American travelers are not so well informed and believe that travel to Cuba is being shut off and that just isn’t true,” he added.

Some 300,000 Americans, excluding those of Cuban descent, visited Cuba in the first six months of 2017, more than twice last year’s number during the same period, according to the Cuban government. Of those, 40,000 traveled outside organized groups using online booking, tour companies estimated, the majority under the people-to-people category.

Operators said they had been inundated with inquiries from clients worried about future travel and are revising itineraries to avoid Cuban hotels operated by the military.

“We are receiving requests from a lot of small groups, families, couples’ trips, birthday parties and the like, that were already planning on going to Cuba but don’t know what to make of the new rules and how to ensure they are in compliance,” said Collin Laverty, who runs Cuba Educational Travel, another member of the trade group.

Priceline, which agreed in March 2016 to make hotel rooms in Cuba available to U.S. customers through its subsidiary, is still taking reservations “within the allowable guidelines and categories,” spokeswoman Leslie Cafferty said in an emailed statement.

Online travel agent Expedia declined to comment.

Airlines and banks

Janet Moore, owner of California-based operator Distant Horizons, said new rules could make it difficult for individual travelers to visit Cuba and force airlines to cancel flights, making her tour scheduling more complicated.

Carriers such as American Airlines announced moves late last year to cut the frequency of Cuba flights as demand lagged initially high expectations.

Moore also expressed concern about transferring payments to Cuba.

The trade embargo has always made U.S. banks nervous they could be held responsible if a client was not operating within Treasury Department rules.

Operators said a more hostile Trump administration might raise pressure on banks to ensure clients were in compliance and increase the number of regulations they had to check.

“What concerns me is if the regulations become even more complicated, the banks are going to be really, really holding on and making sure everything’s legitimate. And they may decide ‘this isn’t worth it to us,'” Moore said.

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