Cuba on horizon but U.S. travel industry cautious

By Deepa Seetharaman and Kyle Peterson

NEW YORK/CHICAGO (Reuters) - The U.S. leisure industry could reap rich rewards if lawmakers relax Cuban travel bans, but industry experts warn that several hurdles still block a potentially huge payday for cruise companies, hotels and airlines.

Earlier this week, President Barack Obama opened a crack in the decades-old U.S. embargo against Cuba, allowing American telecommunications firms to start providing service for Cubans and lifting restrictions on family ties to the island.

The move marked a major shift from the prior approach to Havana, as Obama ended limits on family travel and money transfers by Cubans in the United States to their homeland and spurred hopes that loosened travel restrictions could be next.

But experts warn there is little clarity on if and when limits on commercial trade will be lifted. Some expressed doubts about Cuba's ability to handle the potential deluge of thousands of U.S. tourists.

"The hype about U.S. tourism in Cuba far exceeds the existing infrastructure," said John Kavulich, senior policy adviser for the U.S.-Cuba Trade and Economic Council.

The travel industry has long eyed Cuba as a desirable destination for American tourists. The country's capital city, Havana, is little more than 200 miles from Miami, the home base of two of the world's largest cruise ship operators: Royal Caribbean and Carnival Corp.

A port in Cuba would be a boon for these companies as they can offer new trips at minimal fuel costs and jump-start demand for more cruises to the Caribbean, a key market.

Americans "have not seen Cuba in 50 years," said Jay Lewis, president of the Miami-based cruise consultancy Passenger & Shipping Institute. "There is a great allure of the unknown."

European cruise operators have offered trips to Cuba for years and Kavulich said 2 million tourists journey to the island nation each year.

In the past decade, both Royal Caribbean and Carnival have bought European companies that have at one point offered routes to Cuba. In 2000, Carnival bought Italian company Costa Cruises, and Royal Caribbean acquired Spanish cruise ship operator Pullmantur in 2006. Both businesses stopped offering Cuban trips when they were bought.

"We have a pretty good idea about the infrastructure there because of the European lines that we acquired previously," said Tim Gallagher, Carnival spokesman.

Cruise lines will likely benefit first, some experts said, because it can take years to build up resort-style hotels on shore. Even so, capacity questions remain.

"If you have a 2,000-passenger cruise vessel at the port of Havana, at some point they're going to want to have lunch," Kavulich said.

"There are three restaurants -- how are you going to feed 2,000 people at one time?"

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