How Tourism is Taking Cuba Out of the Red

Ever since the collapse of the Soviet Union, Cub has been inching towards capitalism -mostly in the form of tourism. Can Havana once again become "the Latin Las Vegas"?

Communist countries aren't known for being vacation hot spots, and for good reason. To have a thriving tourist sector, you need luxuries to offer and visitors willing to spend money on them. That's the stuff of capitalism. And yet, Cuba attracts about 2 million sightseers every year, mostly from Europe and Canada. That number is especially remarkable considering that two decades ago, Cuba's tourism industry was not only nonexistent, it was outlawed.


Cuban tourism was banned in 1960 as part of the Communist Revolution. Shortly after Fidel Castro came to power, his regime closed the island's internationally renowned hotels. He also cracked down on prostitution, gambling, and illicit drugs -trades that had made the country a den of hedonism. As Castro saw it, tourism was a form of capitalist exploitation in which the rich pleasured themselves on the backs of the poor. He felt that Americans used the island as a playground with little concern for the welfare of those who lived there. In his new country, Cuban citizens would be equal; no one would stay at luxury hotels until everyone could stay at luxury hotels.

(Image credit: Flickr user Tom Graham)

Cuba got by without tourism for nearly 30 years, mostly by exporting sugar to its top trading partner, the Soviet Union. But after the Soviet Union collapsed in 1991, billions of dollars disappeared from Cuba's coffers overnight. To keep the country from going bankrupt, Castro announced a five-year era of austerity, which he dubbed the "special period." Never in the history of politics has the word "special" been used more euphemistically. Castro cut mass transit and food rations by 80 percent -moves so drastic that they caused the average Cuban to lose 20 pounds. But cutting costs alone wouldn't make the country solvent again; Cuba needed new trading partners and new industries. So, very reluctantly, Castro re-opened the tourism sector.


During the 1990s, the Cuban government poured $3.5 billion into rebuilding the tourism industry, restoring old hotels, nightclubs, beach resorts, and churches, some of which date back 500 years to the Spanish colonial era. Still, because tourism is antithetical to the communist ethos, Castro tried to keep the sector as separate from most Cubans as possible. Cuban citizens weren't allowed to enter tourist establishments, and by the same token, tourists weren't allowed into areas designated for regular Cubans. To further distance citizens from foreigners, Castro's regime created two separate currencies: the peso for Cubans, and convertible pesos, or CUCs (pronounced "kooks"), for tourists.  Most businesses in Cuba accepted one currency or the other, but not both.

In effect, Castro had blocked contact between tourists and the vast majority of the population, Suddenly, Cubans were second-class citizens in their own country, just as they had been before the Revolution. The new system became known as "tourism apartheid."

(Image credit: Flickr user somebody_)

But the creation of the tourism sector in Cuba had some progressive aspects to it, as well. As vice-president during the 1990s, Raul Castro ushered in some small but significant reforms that allowed for limited private enterprise. For example, in 1995, Cuba legalized paladeres -privately owned, family-run restaurants. Two years later, the country started allowing citizens to turn their homes into casas particulares -bed-and-breakfast hotels open to Cubans and foreigners alike.

Tourism has also brought back the capitalist practice of tipping. Taxi drivers, musicians, tour guides, waiters, bartenders, and bellboys are coveted occupations because they receive tips, one of the few ways to get ahead on the island. A Cuban guitarist earning just $200 a month in tips makes 10 times the average government wage -far more than most Cuban doctors.


Since assuming the office of president full-time in 2008, Raul Castro has continued to make small changes to foster free enterprise. Aside from ending tourist apartheid, he's also granted hundreds of thousands of new licenses to family businesses. Outside the tourism sector, he's passed massive agrarian reform, allowing farmers to sell their produce directly to consumers. And now that a few people in Cuba have disposable income, Raul has made it easier for them to spend it. In the past three years, he's made it legal for Cubans to rent cars, renovate their homes, and buy computers, cell phones, DVD players, and other electronics -all of which had previously been banned. Although Cuba is still not a market economy, it's impossible to deny that times are changing.

The American government has been responsive to the expanding freedoms. In 2009, president Obama made it easier for Cuban-Americans to send money to their families back in Cuba. Then, in January of 2011, Obama made it legal for any American to send up to $500 every three months, so long as the money goes toward funding private enterprise in Cuba. In other words, if you have a friend in Havana, and you want to help him start a restaurant, all you have to do is write him a check. The embargo may soon come to an end, and not because Americans renounced the Cuban economy, but because they helped rebuild it, one small business at a time.

(Image credit: Flickr user Frans Persoon)


Yes, they can, and it's getting easier to do all the time. Although it's still illegal for Americans to visit Cuba simply for pleasure, since 1999 the United States has allowed Americans to travel to Cuba for journalistic and educational purposes. If you're a reporter on assignment or a doctor attending a medical conference, it's perfectly legal to fly there. Also, as of 2009, Cuban-Americans are allowed to visit their relatives in Cuba as frequently as they'd like. Under the old rule, they were only permitted once every three years. In fact, today, there are nonstop flights to Havana from New York, Los Angeles, and Miami, and that list stands to expand.

There are plenty of ways to visit Cuba illegally, too. Tourists simply fly to Mexico or Canada and then catch another plane there. The Cuban government won't stamp your passport anymore; they know that some Americans have gotten into trouble when they returned to the United States with a Cuban seal on their books. These days, Cuban officials at customs simply hand you a tourist visa, which gets stamped instead. So unless you try to smuggle a carton of cigars back in your suitcase, odds are, the government will never know you were there. An estimated 20,000 to 60,000 Americans travel illegally to Cuba every year.


The article above, written by Jennifer Drapkin, is reprinted with permission from the July-August 2011 issue of mental_floss magazine. Get a subscription to mental_floss and never miss an issue!

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Great. A lot of the tourism is sex tourism, as many smart young Cubans of both sexes can make more as prostitutes than they can working. The government turns a blind eye to this. There is also a lot of teenage prostitution.

Looks like Cuba in the fifties. Talk about progress!
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Isn't China a holiday destination? Don't 'capitalists' spend billions there?

And turn the blind eye on how cleverly China fights 'capitalist' countries by making them increasingly dependent on China?
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A Cuban hooker? So many levels of yucky.

Yes, Canadians have no problem travelling to Cuba. It's a popular destination. Did you know people pack all sorts of stuff to give to the people because they have nothing? Clothing, etc... it's like tipping people with material goods.
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Actually, there is no U.S. law that says Americans can't go to Cuba. Our government has implemented a trade embargo. This means that U.S. citizens can't legally spend money in Cuba...but there is no law that says we can't visit. The law is enforced through the Office of Foreign Asset Control, which is part of the U.S. Treasury. I know this because I sailed my boat there in 2001 from Florida...which is perfectly legal. I did need "permission" from the US Coast Guard to leave Florida waters during escalated tensions between our countries (imposed after Cuba shot down a U.S.-based Cessna airplane over international waters in the mid-90's). Anyway, I sailed to Hemingway Marina and, officially, didn't spend any money whatsoever! All the receipts that I was given by my Cuban marina hosts clearly showed that I was a guest of the marina and wasn't charged any money for dockage, fuel, water, or hookers. ;-)
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