Viñales, Cuba: where tourism is creating a private business boom

Think tourism doesn’t drive private sector growth? Just travel to Viñales—a world transformed.


Viñales is a typical rural town in western Cuba, with horse-drawn carriages and roving vendors shouting from house to house announcing their fresh produce of the day. But the city of 17,000 is more than just country quaintness. Surrounded by a verdant valley with unique geology where hundreds of private farmers grow Cuba’s best tobacco on small plots, in 1999 Viñales was named a UNESCO World Heritage Site. As a result it has become a major tourist attraction and a laboratory for tourism’s impact on a local economy and its private sector.

On Viñales’ side streets, it’s common to see tourists wheeling their luggage to the bed-and-breakfasts they booked on TripAdvisor or Airbnb. In the central plaza, tourists and locals plop down at all hours on park benches, a statue’s pedestal and a church’s steps to use the public WiFi signal—the latest and most effective expansion of access to Cuba’s internet. The main drag, Avenida Salvador Cisneros, boasts 28 private restaurants, some offering vegetarian and European fare that was a world away before a tourism boom hit this place that time forgot.

There are three modest state-owned hotels in Viñales with a combined total of 193 rooms. But most visitors stay with families in the town’s 1,107 private bed-and-breakfasts, many with two or three rooms. Private capacity has exploded since 2010 when a new business law made licensing easier.

Simply put, tourism in Viñales would grind to a halt without the services supplied by Cuba’s burgeoning private sector.

Tourism’s benefits reach beyond families running food and lodging businesses. Bed-and-breakfasts connect guests to farmers who show their tobacco crop, sell their home-rolled cigars, and lead slow tours of the valley on horseback. A salon, equipped by the owner’s Miami relatives, offers high-quality services at very low prices, according to a U.S. customer who spent a pleasant morning there. A family runs a backyard botanic garden. Private vendors sell crafts at a street market, and they band together to pay a municipal worker 1.6 times his government salary to spend an hour sweeping up each morning.

Extra income is driving a boom in private home construction—last year more than 1,000 construction permits were issued, a local official says, and at the end of January 176 were active. Tradesmen can’t keep up with the work, and homeowners complain about the fees they charge in a seller’s market.

It’s no wonder that a farmer’s wife counsels her 15-year-old daughter, a straight-A student, to choose any career she wants as long as it connects her with tourism.

Bed-and-breakfast operators worry that “everyone is renting” and that over-supply will pinch their revenues during the low season. They complain about taxes that range from $45 to $70 per room per month, plus sales and social security tax—but most can pay the tax bill with four nights’ rental fees.

President Raul Castro’s exhortation for communists to drop “stigmas and prejudices” against entrepreneurship has clearly caught on in Viñales. A local planning official just opened her own bed and breakfast. A block committee chief runs a private parking lot across from city hall and shows off the photography training certificate that will launch his second business. An official for the state-Sports Institute sells his paintings to tourists and will start renting rooms as soon as he completes a home addition. To him, tourism’s only drawback is occasional drug use; the “different kinds of ideas” that foreigners bring do not concern him.

Cuban state enterprises make money in Viñales, and the government collects plenty of taxes from its private businesses. But the myths that Cuban citizens gain no benefit from tourism, that their businesses are not really private, and that tourists don’t connect with Cubans, are dispelled in a half-hour there.

In fact, they are dispelled all across Cuba. In towns like Baracoa and Trinidad, as in Viñales, private lodging capacity dwarfs that of the hotel industry. Even in Havana, many visitors opt to stay with families in private homes instead of the city’s many hotels. These bed-and-breakfasts generate jobs that pay hard currency wages to maids, repairmen, laundry services, and other private businesses. Private restaurants, cafes, and ice cream shops are filled with tourists. Car services, guides, artists, dance studios, and other businesses are in the black thanks to the euros and dollars they earn from foreign visitors.

Cuba’s state-run tour operators used to keep the private sector at arm’s length. But today they have contracts with private restaurants, bed-and-breakfasts, car services, and other businesses, and they regularly send customers their way.

Government-operated hotels, some managed or jointly owned by foreign companies, offer jobs that Cubans covet for their hard-currency pay, and for incentive pay and profit-sharing that comes on top of basic wages.

Tips are pooled so that they reach all employees. Ironically these state-owned hotels have become customers of the private sector; nearly 600 are buying produce from private farmers and cooperatives, and many are contracting for the services of painters and tradesmen to perform repairs and renovations.

The tourist industry that has grown in Cuba in the past 25 years began entirely as a state operation—but now it is a blend of the public and private sectors. Cuban citizens benefit whether they work in state enterprises or private businesses, and the average American visitor has contact with both. When Americans travel on their own, not as part of organized groups with structured agendas as U.S. regulations used to require, they are far more likely to be customers of Cuba’s private sector.

These realities are ignored by Senator Marco Rubio and others who have opposed President Obama’s deregulation of travel to Cuba, and who now urge President Donald J. Trump to reinstate old regulations that police Americans’ travel and restrict their activities.

Senator Rubio, who has trekked 7,000 miles to Communist China, has never had the benefit of traveling to Cuba to see how its citizens live and its private businesses operate, or how American visitors get around.

As a hotel developer, President Trump had the good sense to send teams to Cuba to gather first-hand information about business opportunities. If he gathers more first-hand information now, he will see that the growth of Cuba’s private sector is a positive development by any measure – good for human rights, good for Cuban entrepreneurs and their families, good for Cuba’s future, and good for anyone who believes in the spread of private enterprise.

The private sector accounts for more than one fourth of Cuba’s labor force and is still growing, due both to Cuban policies and to U.S. policies that allow greater travel and allow Cuban families in Miami to send seed capital to help launch family businesses in Cuba.

Now that the open-door immigration policy for Cubans has ended—thanks to President Obama—Cuban Americans have even more reason to help their families on the island to improve their livelihoods there. Will this administration deny them that familial right?

President Trump should stick with the policies that are helping private businesses all across Cuba. And if he wants the United States to “shine as an example,” as he stated in his inaugural address, he should support unfettered travel and contact between the American and Cuban people. In Viñales and all across Cuba, the benefits are there for all to see. Trust me.

The author is president of the Cuba Research Center in Alexandria, Va. and works as a consultant to U.S. businesses in Cuba. He is a long-time analyst of Cuba’s economy and U.S.-Cuba relations, and published his first study of Cuba’s small entrepreneurs in 1996.

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