Starwood expands into Cuba in historic deal

The Quinta Avenida hotel in Havana, one of three Cuban hotels that Starwood will renovate and run.
The Quinta Avenida hotel in Havana, one of three Cuban hotels that Starwood will renovate and run.

Starwood Hotels & Resorts Worldwide reached an agreement Saturday to renovate and operate three hotels in Cuba, marking the U.S. hotel industry’s return to the island more than 50 years after Fidel Castro’s revolutionary government seized American hotels there.

The agreement puts Starwood in business with Cuba’s communist government under a special U.S. license because all hotels in Cuba are state-owned. The agreement preceded President Obama’s historic visit to Cuba starting today.

Jorge Giannattasio, head of Starwood’s  Latin American operations, told the Associated Press that the company will renovate and rebrand the Inglaterra, Santa Isabel and Quinta Avenida hotels.

Gaviota, a tourism conglomerate run by the Cuban military,  runs the Quita Avenida, and other state agencies run the Santa Isabel and Inglaterra hotels. Starwood will operate all three hotels as part of its Luxury Collection brand.

Direct hiring of Cuban workers by foreign companies is prohibited by Cuban law. Foreign companies have complained that their service in Cuban is compromised by their inability to directly hire, demote or fire Cuban employees.

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But Giannattasio told the Associated Press he was confident that Starwood would have be able to maintain high standards of service. He declined to specify details of Starwood’s agreement with the Cuban government.

The number of visitors to Cuba jumped almost 20 percent last year, and the increase has focused attention on the decrepit condition and lax service at Cuban hotels.

Tourism is likely to increase further this year as up to 110 commercial flights from the United States to Cuba begin, part of an ongoing effort by the Obama administration to normalize relations with Cuba.

Starwood may not be an American hotel company for long. Starwood on Friday terminated a plan to sell itself to Marriott in order to accept a competing bid by an investor group led by Chinese insurance company Anbang. [Associated Press]— Mike Seemuth