With the U.S. and Cuban embassies expected to reopen this month, a wave of optimism is flooding Miami’s business community. But a new report by real estate firm JLL is encouraging companies to take pause. While the embassy openings are politically significant, Cuba is just not there yet, economically-speaking.
As the report – Navigating the Uncharted Waters of Doing Business in Cuba – concludes, normal business relations with Cuba will take decades once the current embargo is lifted. Instead, the report recommends U.S. companies should hedge their bets by seeking investments in more economically sustainable and transparent countries.
Think about it: Cuba’s business and legal infrastructure is outdated and without greater transparency laws or an upgraded legal, logistics and banking infrastructure, doing business in Cuba today is analogous to doing business in the 1960’s.
Steven Medwin, managing director of JLL in South Florida, put it this way in a recent Miami Herald story: “There is still a lot of risk involved. There is not a solid banking system, the physical infrastructure of the country is a challenge and with the current embargo… there are a lot of impediments in the way. We do not mean that there won’t be opportunities in the future but right now there are so many hurdles that it is rather a wait and see where things shake out. It’s like a double-edged sword: There are opportunities but with a very high risk.”
One particular bright spot in the report: immediate and long-term opportunities in the tourism and hospitality industry. With a number of companies already staking their claim in Cuba’s tourism market — including Airbnb, Carnival Cruise Lines and a number of ferry services — the travel sector is already buzzing with new opportunity. South Florida seems to be well-positioned as the tourism gateway to the island.
Despite an ease in travel restrictions, widespread tourism will not become the norm until the embargo is officially lifted and companies invest in building an infrastructure that supports a tourism product that can meet the expectations of US travelers and handle high volumes of travelers. In other words, excitement aside, the reality is that Cuba still faces hurdles en route to becoming a top-tier Caribbean destination.
Want a sneak peek of the island? Take a spin through our photo gallery below.
Craving the real thing? There are plenty of ways to travel to the island now, according to a recent article by Miami Herald editor Jane Wooldridge. “With the thaw between the U.S. and Cuba, traveling to the island has become far easier — and legal — for many Americans. Though pure tourism is still prohibited, traveling for cultural, educational and people-to-people purposes is now as simple as booking a flight and filling out a form attesting that your trip qualifies,” she writes.