Starwood Hotels The 1st US Company To Invest in Cuba

Starwood Hotels The 1st US Company To Invest in Cuba

$HOT, $MAR

Saturday Starwood Hotels & Resorts Worldwide (NYSE:HOT) became the 1st US hotel company to sign a deal with Cuba since the Y 1959 Revolution, announcing a multimillion-dollar investment a day before US President Barack Hussein Obama was due to visit Havana.

Starwood Hotels will manage and market 2 properties in Havana and signed a LOI (letter of intent) to operate a 3rd.

Such deals would normally be prohibited under the US economic embargo of Cuba, but Starwood received special permission from the US Treasury Department last week.

Jorge Giannattasio, Chief of Latin American operations, said the deals included a “multimillion-dollar investment to bring the hotels up to our standards,” making Starwood the 1st US company to commit major money to Cuba since Fidel Castro and his rebels overthrew a pro-American government on 1 January 1959.

Cuba’s tourism industry has boomed since the December 2014 rapprochement with the United States.

International visitors rose 17% to a record 3.5-M in Y 2015, including a 77% increase in American visitors to 161,000. By contrast about 100-M people visited Florida in that frame.

Cuba expects a similar increase in American visitors this year when scheduled airline service will resume despite a continued ban on tourism. Americans are allowed to travel to Cuba for 12 authorized purposes.

“The amount of travelers will skyrocket with direct flights,” Mr. Giannattasio said.

Mr. Obama relaxed restrictions further this week.

Americans no longer need special permission to travel, or use guides, but must self-police their activities and keep records for 5 years.

Mr. Obama has called for Congress to do away with the 54-year-old embargo, but has been opposed by the leadership of the Republican majority.

Starwood will operate the military-owned Gaviota 5th Avenue Hotel under its Four Points Sheraton brand, and the state-owned Gran Caribe Inglaterra Hotel under its Luxury Collection brand.

The deal could help Mr. Obama use his historic trip to showcase what he sees as the benefits of Washington’s diplomatic opening with the former Cold War foe after decades of hostility.

Starwood, which is subject to a takeover battle, may not be American for long.

China’s Anbang Insurance Group Co made a $13-B cash offer for Starwood Friday, surpassing by nearly 15% a previous cash and stock offer by Marriott International Inc. (NYSE:MAR). Marriott has until 28 March to make a counteroffer.

“We do not comment until a deal is executed,” Mr. Giannattasio said.

Have a terrific weekend.

Paul Ebeling

HeffX-LTN

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