The Spanish hotel chain, Meliá Hotels International, has reported a substantial decline in its operations in Cuba during the first quarter of 2025, as revealed in their "First Quarter Results 2025" report. While the company experienced positive performance across other regions, Cuba stood out for its negative impact on overall company revenue.
The report shows that, excluding capital gains, the group's consolidated revenue increased by 0.8% compared to the same period the previous year. However, this improvement was overshadowed by a drop in revenue from their management model, particularly in Cuba. The downturn in the island nation is attributed to several factors:
Supply and Energy Shortages: The ongoing issues remain complex, with no clear signs of improvement.
Reduced Tourism Demand: Negative media coverage has tarnished Cuba's image, leading to decreased tourist arrivals from key markets during peak season.
Decreased Air Operations: Flight operations to Cuba dropped by about 12%, with some connections being canceled.
Lower Occupancy and Rates: Hotel occupancy in Cuba fell to 40.5%, down 6.4 percentage points from the previous year. Revenue per available room (RevPAR) plummeted by 20.8%, landing at 37.6 euros.
The report further explains that countries like the UK, Belgium, and Argentina have canceled their air connections with Cuba. Other regions have significantly reduced their flight capacity, exacerbating the island's tourism woes. The report warns that resolving the air travel issue, which has seen a 20% reduction compared to the same period last year, is crucial for reversing this trend.
Financially, Meliá experienced a reduction of approximately 5 million euros in third-party fee income from their management model, directly due to the poor performance in Cuba. The company acknowledges that the situation in Cuba remains challenging, with no clear signs of short-term recovery.
Contrasting the grim outlook reported by Meliá, the official Cuban media outlet Granma recently published that several hotels in Cuba, including some managed by the Spanish company, have been recognized among the best in the Caribbean. This recognition, highlighted by the specialized website Tripadvisor, contrasts with the international perception and the difficulties reported by the companies operating on the island.
In a 2024 interview, Gabriel Escarrer, president of Meliá Hotels International, stated that the company was committed to its operations in Cuba and must endure both "good and bad times." He acknowledged the complexities of the Cuban market, where factors such as supply shortages, energy scarcities, and economic restrictions have significantly complicated operations.
"Cuba is a strategic destination for us, but we know that we must remain here through both prosperous and challenging times. This has always been our philosophy," Escarrer declared, emphasizing that the group would continue operating on the island while adjusting strategies to adapt to changing circumstances.
Recently, Meliá celebrated 35 years of operations in Cuba amidst a backdrop of criticism. The company has faced scrutiny for its partnership with the Cuban government, particularly from organizations highlighting employee working conditions and the lack of transparency in commercial relations. Meliá continues to operate numerous hotels on the island, managing significant properties in destinations like Varadero, Havana, and Cayo Coco.
Understanding Meliá's Challenges in Cuba
What factors contributed to Meliá's decline in Cuba?
Meliá's decline in Cuba is attributed to supply and energy shortages, reduced tourism demand due to negative media coverage, decreased air operations, and lower hotel occupancy and rates.
How has the decrease in air operations affected Meliá's business in Cuba?
The decrease in air operations, with a 12% drop and some canceled connections, has severely impacted tourist arrivals, further worsening Meliá's business prospects in Cuba.
What is Meliá's strategic approach to its operations in Cuba despite current challenges?
Meliá is committed to continuing its operations in Cuba, adjusting strategies to adapt to the challenging market conditions, and maintaining its presence through both prosperous and difficult times.