The formal designation of GAESA under Executive Order 14404, signed by Trump on May 1, 2026, and executed by the State Department at the behest of Secretary Marco Rubio, has positioned the Cuban tourism sector as the main arena in the financial stranglehold on the Havana regime.
Many foreign analysts overlook a critical structural issue: Cuba lacks a large-scale civilian tourism sector. What is referred to as "Cuban tourism" is essentially a branch of the military conglomerate GAESA (Grupo de Administración Empresarial S.A.). Through its subsidiary Gaviota S.A., GAESA controls around 110 hotels with approximately 50,000 rooms, predominantly located in popular destinations such as Varadero, the northern keys, northern Holguín, and Trinidad/Cayo Largo.
Broader Impact of Sanctions
The expanded definition of “Government of Cuba” in Section 7(b) of E.O. 14404 also implicates ostensibly civilian hotel chains like Cubanacán, Gran Caribe, and Islazul. This effectively places nearly the entire Cuban hotel inventory at risk of sanctions, not just Gaviota properties.
Spain is particularly vulnerable, with companies like Meliá Hotels International operating between 32 and 35 hotels in Cuba, a market historically contributing 8% to 15% of its EBITDA. Meliá now faces a second wave of sanctions on top of nearly 6,000 claims under Title III of the Helms-Burton Act, valued at approximately 8 billion euros. With 12 hotels in the United States, mostly in Florida, and Iberostar having a presence in Miami, losing their ability to handle dollar transactions could be devastating for these chains.
Strategic Dilemmas for Foreign Companies
Foreign firms are left with two primary strategic options: a complete withdrawal, incurring significant financial losses, or a partial exit, arguing that some hotels are not directly linked to GAESA, a stance that the expanded presidential order could easily invalidate.
Meanwhile, Canada, the largest source of tourists with 900,000 to 1.1 million annual visitors in peak years—accounting for 40% to 45% of the total—faces a different challenge. The cessation of Visa and Mastercard processing at Gaviota hotel point-of-sale terminals could undermine the all-inclusive packages crucial to this market. Canadian tourist numbers already fell by 54.2% in the first quarter of 2026, with just 124,794 visitors compared to 272,319 in the same period in 2025. Post-E.O. 14404 projections indicate a further decline of 50% to 70% within 12 months.
The payment system is where sanctions have the most immediate and effective impact. Fincimex, the card and remittance processor controlled by GAESA, has been on the Office of Foreign Assets Control (OFAC) blocked entities list since 2020. Platforms like Booking, Expedia, and Hotelbeds, all of which operate in the U.S., must now consider whether to sever ties with Gaviota's inventory.
Tourism Industry's Grim Outlook
The Cuban tourism sector was already in decline before this order: only 1.81 million international tourists visited in 2025, a 62% drop from the record 4.7 million in 2018, with hotel occupancy at a decades-low 18.9%. Projections for 2026-2027 forecast a further decrease in total visitors to between 700,000 and one million, with foreign exchange earnings from tourism plummeting from about 1.8 billion dollars to between 400 and 600 million dollars, directly affecting over 300,000 Cuban workers in the sector.
Tourism contributes between 10% and 15% of Cuba’s GDP and 25% to 35% of fresh foreign currency not derived from remittances, making this financial squeeze a severe liquidity crisis for the regime.
Foreign companies have until June 5, 2026—thirty days—to complete orderly closure transactions with GAESA or any entities where the military conglomerate holds 50% or more ownership.
FAQ on U.S. Sanctions and Cuban Tourism
How do U.S. sanctions affect the Cuban tourism industry?
The U.S. sanctions, particularly targeting GAESA, severely restrict financial transactions and partnerships with Cuban hotels, nearly all of which are tied to the military conglomerate. This limits international business operations and deters foreign visitors, exacerbating the economic crisis.
What is the significance of Executive Order 14404 for foreign businesses in Cuba?
Executive Order 14404 broadens the definition of the "Government of Cuba" to include civilian hotel chains, increasing the risk of sanctions for businesses like Meliá and Iberostar, which face potential financial and operational disruptions in both Cuba and the U.S.