For two generations, Cuba has been tantalizingly out of reach of American investment. U.S. companies have watched their European, Latin American and Asian competitors establish beachheads on an island that used to be dominated by American interests.
Now, with full diplomatic relations in the works, U.S. firms can again look at Cuban opportunities. Many companies have had Cuban development plans stashed away for years, waiting for the day when they'll be able to explore Cuban investments.
On Wednesday, Presidents Barack Obama and Raul Castro took the first steps toward ending the Cuban embargo, whose discontinuation requires congressional approval. The announcement came as part of a prisoner exchange that was negotiated with the assistance of Pope Francis and the government of Canada.
It's important to remember that Cuba remains a communist country, and that there will be significant legal entanglements before CEOs can start signing deals with the Cuban government. But, here are five industries that stand to be big winners in a U.S.-Cuba thaw.
Tourism. Until now, Americans who wanted to visit Cuba had to line up for expensive charter flights, or travel through Canada, the Caribbean and Mexico. It has been difficult to get visas to visit. When I visited for USA Today in the late 1990s, I had to purchase a visa through the Cuban Interests Section of the Swiss Embassy in Washington, then pay $800 round trip for a 30 minute flight each way from Miami to Havana.
Obama's announcement that Americans will be able to use debit and credit cards in Cuba will be a huge boost to tourism. I was able to use dollars when I traveled, but not my credit cards, so I had to have a big stash of cash with me. Cuba holds an enormous fascination for Americans, least of all Cuban-Americans who've heard generations of their elders talk about life before the 1959 revolution.
Cuba will be an attractive stop for architecture buffs, food lovers, music lovers, and those interested in literature and the arts. Eco tourists will be another key market, since Cuba is not yet as developed as its Caribbean cousins. And of course, expect a boom in sales to tourists of Cuban cigars and Havana Club rum.
Aviation. The two major airlines that served Cuba -- Eastern and Pam Am -- are long gone. But it's likely that American carriers serving the Caribbean will vie for the ability to serve Havana and some other key Cuban spots. Some possibilities include JetBlue Airways,
Hotels. Cuba actually has a number of attractive hotel properties, including resorts in Varadero, a couple hours' drive from Havana. These have been developed by European and South American hotel companies. Now, watch for American firms like Hilton, Marriott and Starwood to scope out locations in Havana and elsewhere. Actually, the towering Havana Libre hotel, whose shops boast a wide selection of Cuban cigars, was previously the Havana Hilton. Its rooftop deck offers one of the most sweeping views of the city.
Agriculture. Cuba has long been known for its sugar and tobacco crops. At certain points in history, Cuba was the world's largest sugar producer, although its production was threatened over the years by various military juntas and uprisings.
When Castro led the Communist revolution in Cuba in 1959, U.S. direct investment was $359 million, more than three times the amount in the rest of Latin America, and U.S. companies operated 85 percent of the arable land there. (That amount would be worth $2.8 billion today). Castro quickly nationalized U.S. and other foreign owned businesses, leading President Dwight Eisenhower to end American subsidies of Cuban agriculture.
Certainly, U.S. agriculture companies will be careful in treading back into Cuba until legal determinations have been made. But Cuba is potentially an attractive area investment for fruit growers and other producers.
Automobiles. Most likely, you've seen photographs of classic 1950s cars cruising the streets of Havana. The reality is that people use those cars primarily to transport tourists, or for display. Cubans for decades have been limited in the number of types of cars they can buy. The government routinely chooses official automotive supplier, meaning if you have the means to own a car, you can buy a vehicle from that company. I saw Nissans, Toyotas and rusty Russian Ladas on the streets when I was there.
Cuba could be a destination for a car company that wants to assemble vehicles from kits -- essentially crates of parts that are shipped to a factory simply to be put together. Cuba's warm relationship with Venezuela has meant a steady supply of gasoline, even after Cuba was cut off by the Russians during the early 1990s Special Period. Cuba has had its own problems with energy exploration, leading to speculation that U.S. energy companies might come calling.
