As published in the Cayman Compass: WEDNESDAY 11 MARCH, 2015
Cuba's impact not for some time yet
The Cuban Capitol building in Havana is undergoing a major renovation. The American government's recent easing of restrictions on Cuba is likely to create huge interest from curious American travelers. – Photo: The Washington Post The Washington Post
I’ve been a regular visitor to Cuba over the years, its proximity to the Cayman Islands making it an easy and popular destination for locals here to enjoy some unique culture, history and architecture. While I have not visited the country in the last five years, I view Cuba as an emerging market, from both a tourism and real estate perspective. A quick read of current TripAdvisor postings reinforces the same views I held every time I visited, in that Cuba is still about 15 years away from having the necessary infrastructure to compete on a level with first-world tourism destinations such as the Cayman Islands.
While nearly all TripAdvisor reviews speak of the warmth and hospitality of the Cuban people, issues still remain about constant electricity blackouts, the outdated and faded décor of hotel rooms, poor food quality, etc., even in so-called five-star accommodations.
That said, I have no doubt that as soon as Cuba opens up to the U.S. it will create huge interest from curious American travelers keen to see what all the fuss is about. While European and Canadian visitors have been visiting Cuba for years now, for many Americans it will be their first opportunity to experience this once forbidden destination.
But once that initial excitement wears off, I believe that Cuba’s lack of high-level infrastructure, such as decent quality roads, airport, electricity supply, telecommunications and connectivity, water and sewage systems, all taken for granted by most American visitors, will create an issue for many would-be tourists and real estate investors. When looking at the real estate product available in Cuba, it also lacks anything that the typical North American looking for a vacation property would be interested in.
Infrastructure and product aside, from a real estate investment perspective, I view Cuba as a high-risk market. Who do you ask for advice? Who do you trust? Should you be told that you can buy property there, is it legitimate? Cayman, on the other hand, is a low-risk market. While you may not see the quick return of a high-risk market, you know that your property ownership is legitimate and secure in the Cayman Islands.
The "wow" factor
Cayman has first-world facilities and infrastructure that puts us on a par with the mainland U.S., an important distinction when assessing the two jurisdictions as holiday destinations and real estate investment. I don’t believe that Cayman should be worried in the short term about competition. However, I do believe that countries such as the Dominican Republic, Mexico, Honduras and Jamaica, which all compete at a similar price point and with a similar product, should be very much aware of this new competitor in their midst. This certainly does not mean that Cayman should be complacent or think that it does not need to be vigilant.
I do not believe that Cayman is a competitor in this market as it sets itself above the cut-price, all-inclusive-type vacation that these destinations tend to offer. But with these types of inexpensive vacations, you really get what you pay for. In Cayman, you can get just about anything you want, fine restaurants, high quality and an exceptional variety of goods and services.
Which brings me to a very important point: Cayman is a higher priced destination, so if we are to sell ourselves on our service and safety levels, we must excel at both. Customer service must be second to none if we are to offer more expensive vacations over nearby competitors, and crime levels absolutely must be kept low.
If you ever want to see a pivotal shift in Cayman’s fortunes, whether they are tourism or financial services-related, just allow crime rates to increase and you will see an immediate downturn in the success of these islands. And by crime, I refer not just to burglaries and crimes against persons, but also to white collar crime. That’s why I believe it is absolutely crucial to ensure that everyone on island, not just those specifically in a client-facing position, should ensure that we show our visitors every courtesy possible so they have a great time. Likewise, we must do everything in our power so that the islands remain a safe and secure location, not just for our visitors but for local residents also.
We need to create and maintain that “wow” factor. To maintain our leading edge above the emerging Cuba, we need our visitors and real estate investors to enjoy their time in Cayman and keep coming back, and most importantly, to tell the rest of the world how great Cayman is.
In this way, we can then rest assured that Cayman will be poised for the slow development of our neighbor Cuba and able to deal with the competition in a successful and forward-thinking manner, as we have always managed to do over the years, helping Cayman grow into the success story that it is today.