Travel Costs Falling in Cuba

Travel Costs Falling in Cuba
TOUR OPERATOR DAVID COGSWELL FEBRUARY 15, 2017

Prices for travel in Cuba have gone down for the first time in a very
long time, as we've been used to constant—and sometimes steep—increases.
"Prices in Cuba have been going up, up, up, up, up and up and up and
up," said Tom Popper, president of InsightCuba. "But like everything,
there is a ceiling. We got used to hotels being sold out 12 months of
the year. Now things are starting to balance out a little."
As prices have lowered on the ground in Cuba, InsightCuba has been able
to re-price its Cuba tours to incorporate savings of $250 per person on
eight of its tour packages scheduled for travel in the coming spring,
summer and fall.
Popper told TravelPulse that prices in Cuba have risen at rates from 100
to 400 percent since former President Obama's announcement on Dec. 17,
2014, that his administration was reducing restrictions for Americans
traveling to Cuba.
Obama's announcement set off what Popper calls "a mad rush" for tours to
Cuba. Demand went through the roof, reaching its peak in summer 2016.
"In years past we were used to seeing hotels from May to December at
40-50 percent occupancy," said Popper. "For the last two years, they
have been pretty much full."
The Cuban Minister of Tourism told Popper and other tour operators in
February 2015 that hotel prices would be jumping 100 percent in response
to the overwhelming demand that followed the announcement of normalization.
Hotel prices continued to leap periodically since then, rising 15-20
percent each time throughout 2015 and 2016. Standard room rates for some
top Havana hotels rose from $150 to $650 per night. Taxi fares also rose
steeply.
"One of my directors was taking his daughter on a classic car ride and
discovered that the price, which had been $20 for an hour, had gone up
to $60," said Popper.
Now, all of the prices have shown downward motion for the first time in
years.
The industry can only guess at the causes. The hotel capacity issue was
relieved a little by the entrance of cruise ships, which provide
off-shore lodging, to the market, but that additional capacity only
helped to accommodate some of the additional demand.
The rise of private inns in Cuba could have also accommodated some of
the additional demand, but would not have been enough to greatly change
the supply/demand ratio in the face of vigorously rising post-détente
demand.
In February 2016 InsightCuba was booking 100 passengers a week. After
summer demand started to wane. Then three weeks ago, about the time of
President Trump's inauguration, bookings spiked again to the 100/week
rate. The next week they dropped again.
"There wasn't any particular reason that we could see," said Popper. "It
didn't correspond to any news cycle. It just seemed to happen."
President Trump's election introduced a new element of uncertainty into
the Cuba market because of his campaign pledges to renegotiate travel
and trade restrictions with Cuba, but that uncertainty might have been
expected to stimulate demand for people who saw that the opportunity
might be closing.
Trump's travel ban introduced a second element of uncertainty to the
travel market, but its possible effect on the Cuba travel market cannot
be ascertained.
"The travel ban has had an impact on buying behavior in many
industries," said Popper. "I think people are evaluating the situation.
There are trepidations about traveling internationally. We see it in
phone calls and emails as people are making their decisions."
Typically, the diverse market forces interact in such complex ways that
no one can fully explain the results on the ground except to attribute
them to the mysterious, invisible hand of the market.
Two things are certain, though: Prices are down for travel in spring,
summer and fall, and, as always in the Cuba travel market, nothing in
the future is certain. For Popper, it always comes back to this: now is
the time to travel to Cuba. The future is unknown. We never know if or
when the door may close again.
"Now is the best time," he said. "As far as choosing a destination, Cuba
is a great choice. There are no safety concerns. It is easy to get there."
Plus, prices are as low as they are likely to ever be again.

Source: Travel Costs Falling in Cuba | TravelPulse -
http://www.travelpulse.com/news/tour-operators/travel-costs-falling-in-cuba.html