Potential Business Opportunities in Cuba
by Bonnie Janzen Kenoly
After a recent visit to Cuba I began thinking about possible business opportunities there.
Now that U.S. travel restrictions have been eased, Americans are joining the mix of Canadians and Europeans who visit Cuba every year. The most obvious opportunity is the one for companies in the travel and tourism industries to serve customers eager to visit Cuba for the first time. Cuba’s proximity to the U.S., its natural beauty, and the ideal weather make it a great destination. The country has much more to offer that will appeal to American travelers: beaches, diverse architecture, baseball, cigars, rum, unique dining experiences, and exciting nightlife.
More cruise lines are beginning to sail into Havana. The ships have all the luxuries to which Americans are accustomed. Tourists can experience all the city has to offer and return to comfortable surroundings. Though Havana has luxury hotels, they’re not the brand names with which most Americans are familiar; so the opportunity exists for some of these brands to expand into the Cuban market to serve Americans who might prefer to stay at well-known brands or family of hotels.
According to a July 2016 estimate from the CIA World Factbook, there are 11.2 million Cubans living in Cuba. GDP for 2013 was $77.15 billion in USD. A 2013 Pew Research poll showed about 8.6% of Cubans reported being self-employed. Many of them work in the tourism industry as guesthouse owners, restaurant owners, taxi drivers, and even artists. Growth in Cuba’s tourism industry will strengthen the economy and grow the GDP. This growth means the average family will have more spending power, which will likely lead to an increased demand for a wide variety of products: automobiles, appliances, electronics, and other lower-priced consumer goods. Companies will have an opportunity to be a part of meeting that increased demand.
While the U.S. modified the terms of its trade embargo with Cuba in 2000 to allow the sale of certain commodities (such as agricultural products, medicines, and medical devices), restrictions still exist.. Americans who travel to Cuba must do so as part of a cultural or educational person-to-person exchange. They must also navigate a cash-only economy, converting U.S. dollars or euros to CUC$ (Cuban convertible pesos), as the embargo still prohibits the use of U.S.-based credit, debit, and ATM cards.
But as Cuban political powers open up to some commerce and capitalism, there is a sense of hope and an entrepreneurial spirit. Cuba has made its own reforms allowing for private ownership and the sale of real estate and new vehicles. Private farmers can now sell their crops directly to hotels and restaurants, which ties into the potential for growth in tourism. U.S.-based companies can start thinking about this emerging market so they’ll be ready if and when restrictions are further eased, leading to opportunities to compete with companies in other countries already doing business in Cuba.
To help companies with their strategy to break into the Cuban market, understanding consumer insights will be critical. There are a few things to consider about doing market research in Cuba. Access to Internet service is limited, and connections are slow and spotty. This means surveys should be conducted on paper. Intercepting Cubans or tourists in public places would generally be the best approach. Having someone who speaks Cuban Spanish and understands the effect the Creole dialect has on the language would be best for translations.
Taking all of this into account, you can see that Cuba is an important emerging market for consumer goods. Market research companies have the opportunity to be at the forefront of helping prepare American companies to capitalize on the exciting opportunities presenting themselves in Cuba.
About the Author
Bonnie Janzen Kenoly (firstname.lastname@example.org) is Executive Vice President at Decision Analyst. She may be reached at 1-800-262-5974 or 1-817-640-6166.
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