What’s behind the rising hotel prices?

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A car drives past the Hotel Plaza, situated next to Havana’s Parque Central. Photo by Matias J. Ocner.

For many years, the Cuban government dreamed of having U.S. tourists. Now, thanks to the policy of rapprochement that began in 2014, the United States has become–after Canada–the largest source of tourists to Cuba.

One result: The high purchasing power of American tourists has led to a near-doubling of prices for lodging in Cuba, from an average of $105.84 per night to $206.55, with much higher spikes for premier properties in Havana. For example, a room at the Saratoga—a favorite of celebrities and politicians—now goes for $700 or more a night, up from $375 just a year earlier.

Source: Havana Consulting Group

That has brought a bonanza to the state-owned hotel infrastructure managed by Cuban and foreign brands, as well as the private casas particular sector. A recent study conducted by the Havana Consulting Group on the hosting side of Cuban tourism—a sample of 230 category two- three- four- and five-star hotels operating around the country—verified the price escalation since the U.S. thaw. The study showed rising prices in all categories, with the greatest growth in the 5-star hotel chains, which jumped from an average $185.88 a night in 2014 to $362.01 this year. The next highest increase came from 4-star hotels, which climbed from $110.82 to $246.73 a night. [See Figure 1.]

Cuban entrepreneurs weren’t far behind in taking advantage of the demand. Due to a lodging shortage at state-owned hotel chains, the number of rooms at privately-owned casas particulares now surpasses those in the state-owned sector. The price hike has allowed them to grow in hosting capacity and generate more profits, which they reinvest by building new rooms.

Source: Havana Consulting Group

The tourist destination with the biggest private-sector price increase is Havana, which saw a jump from $27.54 per room per night in 2014 to $56.12 in 2017. [See Figure 2.]

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