Disclaimer: This document and the content on it has nothing to do with the brand. The content is the opinion of the author and was created as part of a class assignment American Hotel Investors for Cuban Economic Growth I. BACKGROUND Cuba is a communist country in the Caribbean, known for its sugar, tobacco and coffee exports. In 1962, the U.S. extended an existing embargo on Cuba to ban all imports from Cuba due to the Cuban refusal of democratization and general respect for human rights. This embargo, including a ban on all imports, prohibited U.S. citizens from doing business in or with Cuba and banned tourism. While the embargo is still in effect today, during the Obama administration, the U.S. eased certain restrictions. In 2009, President Obama eased the travel ban by allowing Cuban-Americans to travel freely to Cuba and, in 2011, Obama further extended this to allow students and missionaries to travel to the country under certain restrictions. As of 2015, the Obama administration further reduced restrictions, to authorize U.S. citizens to travel to Cuba for the following reasons: family visits, official business on behalf of the U.S. government, journalistic activity, professional research and meetings, educational or religious activities, public performances, clinics, workshops and athletic events, support for the Cuban people, humanitarian projects, activities of private foundations, research or educational institutes, exportation, importation, or transmission of information or informational materials and certain authorized export transactions. While tourism is not allowed, visitors have traveled to Cuba in support for the Cuban people as a way to visit the country and spend foreign money to stimulate its economy. Despite these restrictions, over 140,000 U.S. citizens traveled to Cuba in 2016, accounting for about 10%
of Cuba s tourism. The number of U.S. tourists to Cuba is estimated to grow this year, and the government has announced that it is expecting 10 million visitors by 2030. Although there is a rise in tourism and travel to Cuba, the hotel infrastructure is unable to service the growing number of tourists annually due to several decades of neglect following the U.S. embargo in 1962. In response, the Cuban government is now allowing hotels to invest in Cuba contingent upon a partnership with a state-owned tourism company. II. MISSION STATEMENT/BUSINESS GOAL The Cuban government does not have an official mission statement, however for the purpose of this SPM the mission of the Cuban government is considered: To ensure economic growth and sustainability in Cuba by developing jobs III. STATEMENT OF OPPORTUNITY and infrastructure in support of the Cuban people. Cuban tourism has grown over 16% in 2015 and is expected to rise from 3.5 million to 10 million visitors by 2030, but the country currently does not have the infrastructure to accommodate them. This trend has created a demand for hotels and lodging in Cuba. While the country offers Airbnb-style lodging with private citizens and accommodations at small Cuban-owned hotels, there are few foreign-owned hotels that can service foreigners visiting Cuba. The hotel industry in Cuba will need to grow to accommodate for the increase in travel. Growth in the hotel industry will facilitate the growing trend of tourism and travel to Cuba while 1
creating jobs for thousands people and improving infrastructure, meeting the requirements of supporting the Cuban people. The Cuban government is seeking hotel investors that are willing to partner with Cuban-owned tourist companies and build new hotels and restore existing properties. IV. RESEARCH GOALS & METHODS Prior to the launch of the campaign, research would largely need to be conducted to understand the current economic environment in Cuba regarding tourism, in order to shape the upcoming campaign and identify what will help attract US hotel investors. A mix of primary and secondary research would need to be conducted to inform the following goals: Goal 1: To better understand the type of accommodations visitors would prefer to stay at during their visits to Cuba Goal 2: To gauge the interest in U.S. hotels investing in Cuba Goal 3: To gauge the economic impact of tourism in the region (i.e. Caribbean countries) A.Primary Research Focus Group - We will conduct focus groups by selecting random sets of individuals with various demographics who have potential to travel to Cuba. Participants would range from male and female millennials who are prone to travel to male and female top level executives who would most likely travel for work. These participants will be asked questions regarding their interests in Cuba and what type of accommodations they would prefer while visiting. A sample question may be: During a visit to Cuba, what accommodations would you prefer? For example, a Bed and Breakfast provided by host 2
country nationals or a brand-recognized hotel chain? Based on participants responses, patterns, trends and perceptions will be identified to grasp the group's overall perspective on travelling to Cuba and expected or desired accommodations. Survey - Insights from the focus group would then allow us to develop a 10-15 question survey focused on gathering more significant quantitative data regarding travelers desires to visit Cuba and the lodging they prefer. With the survey, questions would be more specific and quantitative in nature, for example, asking participants to rank on a scale of most desirable to least desirable, the type of accommodation they would prefer. Some options could be: Bed and Breakfast reserved through a Cuban agency, Bed and Breakfast reserved through AirBnB, Hostel, Local Motel, Brand-recognized Motel (i.e. Motel 6), Brand-recognized Luxery Hotel (i.e. Four Seasons). Answers to the survey questions would allow us to present specific desires of customers to the potential investors, allowing them insights to make better investments. Interview - Interviews will be conducted to gauge the wants and needs of hotel investors and when investing in developing countries, as well as potential partners to the investors. We will interview specialists, such as managers of Cuban-owned tourism companies and financial analysts in the travel and hotel industry. We would ask them questions regarding their opinions on the potential for hotel investments in Cuba and what their specific needs are when investing in new property. Social Media Monitoring - Lastly, we will turn to all major social media platforms such as Facebook, Twitter and Instagram, to monitor the positive and negative comments that are posted in regards to traveling to Cuba, Cuban infrastructure and accommodations. We 3
will use this data to analyze and compare to the survey findings to better construct a visitor-friendly campaign. B. Secondary Research According to the World Travel and Tourism Economic Impact Report of 2015, travel and tourism contributions in the Caribbean are set to increase significantly between 2015 and 2025. It contributed a total of $51.9 billion in 2014 and is projected to contribute up to $73.6 billion by 2025 to the overall Caribbean GDP. Employment within the travel and tourism sector accounted for 2.2 million jobs in 2014 and is projected to account for 2.7 million by 2025. In 2014 investment in Travel and Tourism in the Caribbean contributed to $6.2 billion of total investments and is projected to grow 3.5% to $9.1 billion by the end of 2025. When broken down, leisure spending accounts for 90.6% of all spending, while 9.6% is business spending. Additionally, 70.4% of spending is from foreigners, while 29.6% is domestic. The Caribbean is ranked 12th in overall contribution to travel and tourism GDP meaning there is room for growth within the industry. With the lifted U.S. embargo on Cuba, travel and tourism organizations can begin expanding their portfolios and further investing in the Caribbean market. There are currently only 63,000 hotel rooms available in Cuba which can not accommodate the current boom of tourists to the country. As of December 2016, only one American-owned hotel chain has bought and restored a current hotel property. Additionally, AirBnB has seen record growth in Cuba in part because Cubans were allowed to host foreigners in their homes during the communist dictatorship, and AirBnB allows a more reliable network to accommodate those visitors in a manner Cubans are accustomed. Hosting travelers in-home is not a foreign subject and matches up with Cuban customs of hospitality and small business 4
development. Due to the ease of transition to AirBnB from current bed and breakfast websites, AirBnB is currently the greatest contributor to improving the Cuban infrastructure and travel-related economy. V. SITUATION ANALYSIS (SWOTS) Strengths: Since the U.S. has dramatically lifted restrictions on the embargo, Cuba has opened its doors to travelers and businesses from outside countries. Additionally, Cuba is attractive to American tourists because it has a strong, hospitable culture and is known for its sugar cane and tobacco production, and pristine beaches. Due to the increased travel trend and attraction to Cuba, the hotel industry is growing and Cuban citizens are trying to invest in building up the infrastructure to accommodate and capitalize on foreign visitors, and lower unemployment rates. Weakness: While the embargo restrictions have been lifted, ome concerns arise when noting that Cuba is still a communist country and tourism is still technically not allowed unless visitors come for the purpose of supporting the Cuban people. Additionally, the property infrastructure has severely deteriorated and needs to be renovated to accommodate visitors. Opportunities: Opportunities include lifted travel restrictions allowing for travel to Cuba to boom and investments in the Caribbean countries are increasing. The Caribbean is also seeing increased employments rates as well as 3.5% growth in investments. 5
Threats: The biggest threat lies in the booming market for AirBnB. The shortage of adequate accommodations in Cuban hotels has benefited AirBnB, a direct competitor to hotel chains that might be interested in expanding into Cuba. Additionally, visitors may question the infrastructure, quality of services, ethics of touring Cuba and their individual safety. Strategic Implications Current trends support growth of the tourism industry in Cuba since the embargo was lifted, leaving an opportunity for large hotel investors to expand into the country. Investing will provide jobs showing support to the Cuban people, which will contribute to better relations with the government eventually leading to opportunities for pure tourism, long term, allowing investors to say they contributed to the opportunity for tourism growth in Cuba and giving them a foothold on the Cuban market. VI. COMMUNICATIONS GOALS To attract U.S. hotel investors to Cuba to accommodate for the increased tourism trend following the lifted travel ban To convince U.S. hotel investors to support of the Cuban people through the creation of jobs in the hotel industry To garner support from Financial Analysts and Cuban-owned tourism companies for foreign hotels to invest in properties. 6
VII. OBJECTIVES 1. Within one month of the campaign launch, three large hotel investors will be aware of the opportunity to invest in Cuban hotel properties. 2. Financial Advisors opinions on investing in Cuba will positively increase by 10% after three months. 3. Six months after campaign launch, the top three hotel investors will be knowledgeable of regulations required to invest in Cuba. 4. Six months after campaign launch, 10% of all Cuban-owned tourism companies will be aware of partnership opportunities. 5. One year after campaign launch, the top three hotel investors will begin purchasing Cuban properties 6. Post campaign, we will see a 15% increase in hotel investment for the fiscal year. VIII. TARGET AUDIENCES American Hotel Investors: The first step towards attracting more hotel investors for Cuba Tourism Board is targeting and addressing the American hotel investors. Among the American hotels, we will mainly target the large boutique hotels with international chains and headquartered in the United States such as Marriott, Hyatt, Hilton, Carlson, etc. These international boutique hotels will be interested in investing in Cuba because doing so will help the corporations achieve its business goals. For example, Marriott is maintaining a sustainable strategy to become the world s favorite travel company. Through the power of travel, Marriott aims to create jobs, supports local businesses and grow the local 7
socioeconomic and infrastructure needs of the areas they are located, therefore by investing in Cuban property they are supporting the Cuban people and meeting their strategic goals. State-Owned Tourism Company: In 2014, the Cuban Government passed the Foreign Investment Law (FIL) offering foreign companies a number of opportunities to build and commercialize hotel development in joint ventures with a Cuban partner. In other words, if an American hotel wants to entre the Cuban market, it should be in conjunction with a Cuban state partner. We will target these Cuban-owned tourism companies to develop a pool of potential partners for the investors to work with. Financial Analysts: We regard the financial analysts as the targeted influencers who can encourage the American hotel investors to invest in Cuba. It is also one of the most effective ways to communicate with active groups and inform the investors of the financial benefits of investing in Cuba. IX. KEY MESSAGES Overarching message: Cuba aims to continue its current unprecedented tourism boom and boost foreign investment in the hotel sector, as part of making the island one of the most hospital tourism destinations in the Caribbean. 8
The message highlights the continued increase of U.S. visitors and the government's confidence to develop the tourism industry. It also shows a welcome to the foreign investors. Message to American Hotel Investors: Due to the tourism boom and the current ease on the United States embargo on Cuba, increased interaction and business dealings with the Cuban people and companies has important economic benefits. We welcome American investors. This message points out the fact that hotel investing in Cuba could garner high financial return for the American hotel investors. It also reinforces the positive attitude of the Cuban Government. Message to State-Owned Tourism Company: Since American tourists and companies are investing to support the Cuban people, partnering with the American hotel investors could have high financial benefits and perpetuate the exchange of ideas and knowledge to offer greater success for the Cuban people. This message is to explain the situation and benefits of partnering with hotels investors to the state-owned tourism organizations. Message to Financial Analysts: The tourist boom in Cuba is boosting hotel business, creating an opportunity in the Cuban hotel industry. The message is to convince the financial influencers that investing in Cuba is a good choice for the American companies. 9
X. STRATEGIES & TACTICS Strategy: Convince investors that Cuban Hotel Industry has high ROI and follows government regulations of supporting the Cuban people Tactic: Develop Cuban Tourism Board as a point of contact for those interested in investing. Tactic: Invite hotel investors to a Potential Investor's Meeting in Havana to showcase potential properties and inform Hotel executives of the opportunities of investing in Cuban properties Tactic: Create Investor Kit with all relevant information to investing in Cuba. Some items may include: Cuban Economic Growth Fact Sheet/Infographic Investing in Cuba FAQ Cultural background Cost of investing vs. potential profit fact sheet Map and descriptions of potential properties for investment Strategy: Create a digital media campaign to emphasize how investment will impact the CSR strategies of the American hotels by supporting Cuban people and employees. Tactic: Own #InvestInCuba on Facebook, Twitter and Instagram Tactic: Develop short videos highlighting the Cuban people and how working with and for international hotels has helped support them Videos will be posted to Facebook and Instagram 10
Tactic: Develop photographic stories for Instagram highlighting rags to riches stories of Cuban people Tactic: Showcase potential properties for investment on Twitter Tactic: Develop website for Cuban Tourism Board to host social media network posts and expand upon the updates with blogs and long-form videos. Strategy: Create partnerships with Cuban-owned tourism companies Tactic: Facilitate partnership meetings with Cuban-owned tourism companies to inform them of investments Hotels interested in partnering with them to expand development and Tactic: Develop information kit for Cuban-owned tourism companies to inform them of partnership opportunities Tactic: Visit individual organizations to better match potential partnerships Strategy: Convince financial analysts of growing trends in travel to Cuba Tactic: Contact financial analysts in the hotel and tourism industries and provide them with statistics surrounding the potential for investment in Cuba Strategy: Steer financial press coverage of the story toward a positive direction through proactive media outreach. Tactic: Develop press releases announcing investor and partner meetings Pitch stories to both Cuban and American media Tactic: Announce partnerships between Cuban-owned business and Hotel investors Tactic: Announce hotels who have committed to investing in Cuba in support of the Cuban people. 11
XI. EVALUATION In order to measure the success of our communications campaign, we would employ the following methods of evaluation: Investment monitoring A comparative analysis would be done using the Cuban Government s financial statistics regarding to the hotel industry prior to and after the implementation of our communications strategy to determine any apparent investment patterns. A 15% increase in investment in a fiscal year will indicate the success of this campaign. Pre and post hotel investors perception interviews The results of our initial interviews from the primary research will be compared with the findings from some new interviews conducted at the end of campaign. A 20% increase in overall positive perception of supporting of the Cuban people among the American hotel investors will suggest a successful campaign. Online and social media monitoring A 15% increase in the daily number of positive engagement on social media with the hashtag #investincuba will mark this campaign as a success. Media coverage massaging A 10% increase in positive media coverage of investing in Cuba by national and local media outlets will make this a successful campaign. XII. TIMELINE The campaign will run from May 2017 to December 2018 to develop Cuban Tourism Board, to develop partnerships with Cuban-owned companies and attract U.S. hotel investors 12
May 2017: Develop Cuban Tourism Board June 2017: Begin research phase (surveys, focus groups, interviews, etc.) Develop information kit for Cuban-owned tourism companies to inform them of partnership opportunities Create investor media kit materials and begin coordinating Potential Investors Meeting Create informational materials for financial analysts based off trends and research results July 2017- Ongoing: Begin coordinating partnership meetings with Cuban-owned businesses and securing potential partnerships Coordinate potential investors meetings with U.S. investors and meetings with financial analysts December 2018 - Ongoing: Announce partnerships between U.S. and Cuban hotel businesses and Summer 2018 development plans Launch digital campaign on social media sites (Facebook, Instagram, Twitter) 13
XIII. BUDGET Tactic Estimated Cost Description Cuban Tourism Board $3,000 Investors Meeting $2,250 $8,748 (Above average yearly income = $1,000/year x 3 employees responsible for managing investor relations and content creation) Flight from LAX to Havannah = $375x 6 hotel representatives (2 per 3 hotels) Hotel accommodations for best rated hotel in Havana = $486/night x 3 nights x 6 people Investor Kit $10 10 Custom USB drives with Investor Kit Digital Media Campaign $300 Video $100 Estimated Total Cost: $14,408 for sponsored posts on Facebook, Twitter and Instagram Above average monthly wage for freelance Cuban video-maker 14
XIV. TACTICS 15
#InvestInCuba = Available Locations 16
XV. SOURCES http://traveltips.usatoday.com/effects-tourism-caribbean-63368.html https://www.wttc.org/-/media/files/reports/economic%20impact%20research/regional%202015/c aribbean2015.pdf http://abcnews.go.com/travel/story?id=118859&page=1 http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.330.6563&rep=rep1&type=pdf http://www.caribjournal.com/2013/09/30/tourism-and-the-caribbean-economy/# http://www.pbs.org/newshour/bb/cuba-american-tourists-increase-demand-hotels/ https://www.forbes.com/sites/miguelhelft/2015/09/06/inside-airbnbs-cuba/#bdd87f6bc2d2 https://www.brookings.edu/research/tourism-in-cuba/ https://www.brookings.edu/wp-content/uploads/2016/11/fp_20161202_tourism_cuba_feinberg_n ewfarmer.pdf 17