Starwood Hotels & Resorts inked deals in Cuba on Saturday night that will give it the management of three prestigious hotels in Havana, the first foray by a U.S. hospitality company into Cuba in nearly six decades.
Coinciding with the arrival of President Obama for his historic visit to Cuba, the Starwood agreements mark the further erosion of the U.S. trade embargo and a step toward normalizing relations between the two longtime foes.
Starwood has already won approval from the Treasury Department for two of the three agreements, a breakthrough in the loosening of the sanctions that will allow Starwood to do business, upgrade facilities, hire local workers and artisans, and conduct transactions in U.S. dollars through American financial institutions.
Starwood chief executive Thomas B. Mangas said in an interview that “it has been great to be at the forefront of this diplomacy” and that “we are very proud to bring our experience and to be a first mover” into Cuba.
The deals include the Hotel Inglaterra, a Havana icon that will become part of Starwood’s Luxury Collection, and Hotel Quinta Avenida, which will become a Four Points by Sheraton hotel. Both will undergo renovations before opening under their new brands later this year.
Starwood also announced that it has signed a letter of intent, pending a license approval from Treasury, to convert the Hotel Santa Isabel into a part of its Luxury Collection.
Mangas said that the three deals were “only the beginning” and that they leave open “the rest of the country.” He said Cuba “had huge attraction for U.S. consumers before the embargo started. I think it will have even greater attraction now.” He said the Stamford, Conn.-based Starwood already does half its business outside the United States, including a strong presence in Latin America.
The deals come amid a flurry of activity for Starwood, which is the target of two competing takeover bids. On Friday, Starwood said it would accept a $13.2 billion, $78-a-share offer from Chinese insurance company Anbang. But Marriott, which first bid for Starwood, has until March 28 to sweeten its own $68-a-share, $11 billion offer.
Marriott has also made overtures to Cuba about entering the tourism market there.
Although European hotel chains have invested in the nation, Cuban officials believe that the arrival of competitors from the United States will improve facilities and service throughout the tourism sector.
Starwood is planning to make structural as well as service changes including upgrading bathrooms, buying new air conditioning systems, upgrading fire safety systems, and adding creature comforts in renovated rooms.
But Mangas said Starwood would not alter the style of the hotels. “These are beautiful, iconic locations and buildings with a style and decor which is very indigenous,” he said. “That’s what our guests want.”
Keith Grossman, senior vice president and deputy general counsel of Starwood, said in a statement that the company plans “to cultivate local talent, provide career enriching opportunities, and locally source art, decor, food, and materials to ensure we deliver authentic experiences.”
The Inglaterra, which opened in 1875, is a national landmark near the historic district of Old Havana in the heart of downtown. Once the renovations are complete, the hotel will offer 83 luxury rooms.
The Cuban partner is Gran Caribe, which also owns the Hotel National, once a home to American mobsters and celebrities and designed by the same architect who designed the Breakers Hotel in Florida.
Starwood will turn the Hotel Quinta Avenida in Havana’s Miramar district into a Four Points by Sheraton Havana hotel later this year. The hotel will cater to business travelers with about 186 rooms and state-of-the-art meeting facilities.
The Cuban partner is Grupo Hotelero Gaviota. The Cuban military owns a large stake in the Gaviota group, an issue that gave the Obama administration pause. But the Cuban military has broad holdings, and avoiding it would severely limit U.S. investment and engagement.
Starwood also has signed a letter of intent with the Cuban company Habaguanex to convert the 19th century, colonial-style Hotel Santa Isabel, to a member of its Luxury Collection line. Overlooking Havana Harbor, the Santa Isabel lies in the heart of Havana’s historic city center, with 27 rooms, including 11 suites. Former President Jimmy Carter has stayed there twice since leaving office.
Because Cubans live, work and go to school within the historic preservation neighborhood, the Santa Isabel and Hotel Inglaterra both contribute a small portion of their revenues to support clinics, schools and restoration projects. Habaguanex, the owner of Santa Isabel, falls under the umbrella of the office of the historian of the city of Havana.