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This post considers our activities on Day 7--Varadero and the Tourist Sector.
points to a resurgence of the all-inclusive holiday. Even as travel websites and apps have made it ever easier to book the components of a trip separately, some cost-conscious holidaymakers have re-embraced the simplicity that firms such as Club Med offer. In 2013, 12% of holidaymakers worldwide booked all-inclusive deals, up from 8% in 2010, reckons PhoCusWright, a market-research firm. In 2011 TUI, a German travel agency, responded by making its First Choice brand in Britain exclusively all-inclusive, so to speak. This year it has launched SuneoClub, a global all-inclusive brand.The road from the the Havana cultural and historical tourist sector through to Varadero provided a manifestation of the care with which the state is already seeking to maximize the value of both tourist demand for historical adventures and cultural experiences, with the well pampered isolation of an elite beach setting--and for a price. Compared to the roadway to Viñales (clearly a later or perhaps not yet as lucrative a project), the road to Varadero from Havana was remarkably well maintained, fast and efficient. Its rest stops were nicely positioned to take advantage of local beauty and to provide opportunities for tourists to spend money on trinkets, necessities, tobacco and liquor. From a marketing perspective truly well done. Indeed, one could think of that road from Havana to Varadero as a sort of tunnel through which tourists might be funneled back and forth. The largest town between Havana and Varadero was not a rest stop, of course, but offered scenic picture opportunities from any tour bus. Matanzas owes its current prosperity in some measure to the Varadero resorts (it is also an old working port city) and appears to be among the more prosperous provincial towns in Cuba. This might certainly conform the state's intuition that a well managed tourist economy in a geographically diverse state like Cuba could provide more prosperity than any more grim effort (1920s style) in creating an all around economy. Matanzas is also acquiring some spillover tourism of its own, for its history (it was founded in the late 17th century), its link to arts and music (I believe the Cuban danzón might have originated here).
Consumer tastes seem to be diverging. On the one hand, there is a “growing preference for authenticity, uniqueness, personal enrichment, deep cultural context, and a sense of environmental and social responsibility in leisure experiences,” writes Hector Medina of Alvarez & Marsal, a professional-services firm, in a recent report. “These preferences stand at a stark contrast to the ‘foreign factory enclave’ experience typical of [all-inclusive] resorts.” Yet Mr Medina goes on to note that, with the return of price-sensitive tourists to the market, holidays in which everything is paid for upfront have become the defining characteristic of many resorts, such as Cancún in Mexico and Jamaica.
Another reason for their growing popularity is that all-inclusive hotels are raising their game. They now offer more than just the bed, bar, buffet and disco of yore. Rather like budget airlines selling cheap tickets but charging extra for better seats and extra bags, they are selling more frills on top of the basic price, such as premium spirits and fancy excursions.
And then one arrives at Varadero. Varadero is both a small city at the neck of a large thin peninsula, and the peninsula itself. Its geography is perfect. It is easy to patrol and to ensure that sort of isolated fantasy tropical experience that Western tourists appear willing to pay for. Though also open to Cubans, the state uses another technique of Western capitalism to produce a soft wall between local populations and the tourists beach centers--money. The Varadero beach resort are expensive (not necessarily as a deliberate means of keeping locals out--more like an effort to extract the most from willing foreigners who can afford it). As a consequence, Cubans who flock to Varadero, and they do when they can--and freely by car or public transport--take advantage of parts of the peninsula that do not overlap the spaces foreign tourist tend to occup (at greater expense).
The tourist resorts are also nicely planned, with a capitalist's eye for price point differentiation to segment and broaden the beach market to the greatest extent possible. Thus the resorts are available at a number of different price points and amenity levels. They are designed from those with minimal activities, built during the early years of development and closer to the neck of the peninsula, through the ultra luxury compounds that come to resemble the sort of all inclusive socio-cultural pleasure dome that only money, and lots of it, can buy. Again, well done. Many of these compounds provide everything a tourist might need to satisfy needs--from food, to entertainment, to fitness and other activities. Liquor, of course, flows freely and in line with the Cuba fantasy that some might be buying within the safety of these luxury properties. But that is no criticism of the Cubans--they have merely put into practice--and well done--models that were pioneered elsewhere in the Caribbean and in Mexico.
Many of the compounds are joint ventures with Latin American and European hotel enterprises. Joint venturing extends the life cycle of money making for the Cuban state, and especially for the military controlled SOEs. The state makes money in the planning and constriction of these compounds, they also direct and approve the operating plans and to some extent the pricing. They take a cut of the profits and also provide the employees and other services (food, entertainment, maintenance, etc.) from which the state tales a cut. State owned tour companies and the state owned buses that ferry travelers to and from the resorts for extended or day trips brings revenues as well. And of course, the tour operations that take people from the Tourist zones for day trips--to other points of interest on the Island also provide multiple points for value added state revenues, for the employment of labor and the managed planning for development of tourists related resources throughout the Island. Having segmented the operations of these compounds, the Cuban state has been able to take a cut of value added everywhere. Bravo. As the sole capitalist on the Island, the owner of all of the means of production, it makes sense--and certainly is deeply embedded within Leninist notions of Marxism, that the state exploit its capital. Of course that exploitation ought to be solely in the service of the social projects with respect to which the vanguard party has a primary obligation. In the absence of transparency, however, it is not easy to see where or how these profits are used.
Varadero, in a sense, reminds me of a well managed dairy. And, indeed, sound principles of animal management are likely useful in the management of a population of foreigners whose highest and best use is their money. The compounds provide the miking machines that extract items of value without much competition from others who may seek to milk these cows. And the geography produces contented and well entertained herds which can be protected from distraction and contamination. The peninsula is itself the tourist barn where the income producing tourists may be managed. This is not unique to Cuba--Puerto Rico, the Dominican Republic and other tourist industry heavy states might learn much from the efficiency of the operations in Cuba. Their application of markets based principles of resource exploitation appear to be providing a sustainable means of income production. The test will come when the Cuban state will have to divert its income streams toward maintenance and renovation. Tourists are notoriously fickle and the need for "new and improved" can be an expensive consequence of market leadership (and therefor of the ability to extract top dollar from tourists). And of course, the cultivation of agents and media devoted to creating those tourist narratives that increase demand for particular destinations will also likely not come cheap as larger number of competitors enter these markets.