BY MARC
FRANK
Starwood
Hotels & Resorts Worldwide (HOT.N)
on Saturday became the first U.S. hotel company to sign a deal with Cuba since
the 1959 revolution, announcing a multimillion-dollar investment a day before
U.S. President Barack Obama was due to visit Havana.
Starwood
will manage and market two properties in Havana and signed a letter of intent
to operate a third.
Such deals
would normally be prohibited under the U.S. economic embargo of Cuba, but
Starwood received special permission from the U.S. Treasury Department last
week.
Jorge
Giannattasio, chief of Latin American operations, said the deals included a
"multimillion-dollar investment to bring the hotels up to our
standards," making Starwood the first U.S. company to commit major money
to Cuba since Fidel Castro and his bearded rebels overthrew a pro-American
government on Jan. 1, 1959.
Castro quickly
nationalized the tourism industry and made the Habana Hilton the new government
headquarters for months.
Cuba's tourism
industry has boomed since the December 2014 rapprochement with the United
States. International visitors rose 17 percent to a record 3.5 million in 2015,
including a 77 percent increase in American visitors to 161,000.
Cuba expects a similar increase in American
visitors this year when scheduled airline service will resume despite a
continued ban on tourism. Americans are allowed to travel to Cuba for 12
authorized purposes.
"The amount of travelers will
skyrocket with direct flights," Giannattasio said.
Obama relaxed restrictions further this week.
Americans no longer need special permission to travel, or use guides, but must
self-police their activities and keep records for five years.
Obama has called for Congress to do away
with the 54-year-old embargo but has been opposed by the leadership of the
Republican majority.
Starwood will operate the military-owned
Gaviota 5th Avenue Hotel under its Four Points Sheraton brand, and the
state-owned Gran Caribe Inglaterra Hotel under its Luxury Collection brand.
The deal could help Obama use his historic
trip to showcase what he sees as the benefits of Washington's diplomatic
opening with the former Cold War foe after decades of hostility.
But Starwood, which is subject to a
takeover battle, may not be American for long.
China's Anbang Insurance Group Co made a
$13-billion cash offer for Starwood on Friday, surpassing by nearly 15 percent
a previous cash and stock offer by Marriott International Inc.
"We do not comment until a deal is
executed," Giannattasio said.
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