No money? No problem. The rollout of Havana Hotels continues.

[El Presidente]

I understand hotel occupancy rates in Havana still hover around 16%.

 

Melia Just Opened a New Hotel in Havana, Cuba 

 

Spanish hotel giant has added another new hotel in the heart of Cuba’s capital of Havana: the new Sevilla Habana Affiliated by Melia Hotel. 

The new hotel, with a rooftop lounge and a pool, is set in the heart of Old Havana, overlooking the city’s famous Malecon waterfront boulevard. 

It’s the first Affiliated by Melia Hotel to open in the Caribbean. Affiliated, a new Melia brand, is a collection of “hotels with contemporary design and an authentic connection to local culture,” akin to something like Hilton’s Curio Collection or Hyatt’s Independent Collection. 

The property has 178 rooms, along with a pair of eateries, three bar-lounges and a meeting space. 

Melia has been on a rapid expansion push in Cuba since the pandemic; over the summer, the company also opened a 50-room hotel in Havana, the INNSiDE Habana Catedral hotel. 

Next year, the company will debut another property in the capital, the reimagined Hotel Plaza, with 188 rooms. 

[SCgarman]

What is the purpose of all these hotels? Sounds like tourism is non existent. 16%? If you build it, they will come!🙄

[Corylax18]

On 12/2/2023 at 8:11 AM, SCgarman said:

What is the purpose of all these hotels? Sounds like tourism is non existent. 16%? If you build it, they will come!🙄

To line the pockets of the Castro family and the families of other very high ranking political and Military figures. These people get a cut of everything. The lease, the employment contracts, the food, the liquor, Everything. 

The international companies that fund these hotels aren't allowed, by Cuban law, to hire their own staff. They pay the Cuban government for X number of House keepers, X # of Bartenders, waiters, etc. The Cuban government charges the companies international rates for these laborers, then pays them 10 or 15 bucks month, the going rate in Cuba. Each employee generates hundreds or thousands of dollars in illegal gains every month. Weather the hotel is full or not. The same goes for everything that runs through the hotels. The food, toiletries, booze, etc. has to be purchased from the government at exorbitant rates far more than the government pays. It's all one giant grift. 

The real question is why these companies continue throwing good money after bad. It made sense before the pandemic, hotels were maybe Half full, regularly and the rates through the roof. But since Cuba reopened the tourism numbers haven't recovered and haven't eve shown sign that they will. Look at rates for the Hotel Kempinksy, even during the summer. You cant get even the most basic room for less than $500 a night, larger rooms, with better views push well over 4 figures. During the Habanos festival those prices spike significantly. But you cant cover your years expenses on a single week. 

[NSXCIGAR]

On 12/2/2023 at 8:50 AM, Corylax18 said:

The real question is why these companies continue throwing good money after bad.

I also can't figure that out. In what universe can these possibly be profitable ventures? Melia already has a handful of hotels that must be sucking wind. The Cohiba wasn't even open for 2 years. And now you have the robust AirBnB market to contend with. Is this just aid to the Cuban government in disguise? 

And don't think for one second that if they were profitable the government wouldn't start taking a bigger bite out of those profits. They know exactly how much money is moving through any business. Sinking tens of millions into any fixed capital asset in Cuba is nothing short of business malpractice. 

I don't know how they do it but Cuba has an almost otherworldly ability to sucker people out of their money. I have no doubt someone somewhere is loaning them money at this very moment. 

[gillmiller]

Melia is a great chain, stayed there couple of times. With no money, no problem thing it is difficult to agree. I think when you don' have money you can't pay all your bills and here is where the problems are coming from. I've always tried to get professional advices with my finances and this time checking out Ezcorp reviews. Maybe those guys will be able to help me with the business financial dilemma. 

[ha_banos]

Everythings fine. Not seen Kirby's latest video? Hes having his guayabera tailor made by a happy chap, the partagas shop s buzzing and being seen to by the happy store manager? Hes so happy to be there. Doesnt show us the hotel, but hes so excited for his chums to arrive and smoke cigars and drink cocktails at La Floridita. Everythings fine!

 

 

[helix]

7 hours ago, NSXCIGAR said:

Is this just aid to the Cuban government in disguise? 

The only thing that can make sense.

[riderpride]

Executives might be incentivised for expansion. Financial losses might also help minimize taxes in fiscal years.

They might also be getting ready to have assets in place with the inevitable government collapse or a change in US foreign policy. Cheaper labor is available now to build.

Hard to say, but just a few thoughts. 

Cheers

[NSXCIGAR]

13 hours ago, riderpride said:

Executives might be incentivised for expansion. Financial losses might also help minimize taxes in fiscal years.

They might also be getting ready to have assets in place with the inevitable government collapse or a change in US foreign policy. Cheaper labor is available now to build.

I suppose there could be a blind mandate for expansion but I guess no one's doing the due diligence. I would not be buying Melia stock if that's the case.

And it's always better to not have losses than to have losses you can write off. 

I also don't see the government collapsing. It can't get much worse than it is now or was in 1991. Or certainly during the 2021 protests. That movement has been entirely quashed. Even if the regime did collapse it doesn't insure the emergence of Jeffersonian democracy or some free market haven. And the US isn't close to changing policy towards Cuba. It seems the warming of relations in 2014-2017 was nothing more than an isolated anomaly.

[El Presidente]

4 hours ago, NSXCIGAR said:

I suppose there could be a blind mandate for expansion but I guess no one's doing the due diligence. I would not be buying Melia stock if that's the case.

And it's always better to not have losses than to have losses you can write off. 

I also don't see the government collapsing. It can't get much worse than it is now or was in 1991. Or certainly during the 2021 protests. That movement has been entirely quashed. Even if the regime did collapse doesn't insure the emergence of Jeffersonian democracy or some free market haven. And the US isn't close to changing policy towards Cuba. It seems the warming of relations in 2014-2017 was nothing more than an isolated anomaly.

Looking at the numbers, Melia group are back to 2019 revenue levels. 

They are not a dud group by any means. There would be a legitimate strategy in play. 

The Mallorca-based group reported a net profit of 120.1 million euros (USD 127.40 million) compared to a net loss of 192.9 million euros one year ago. That was still 1.3 per cent below 2019 pre-pandemic levels, but well ahead of analysts' estimates for a 58 million euro net profit, according to Refinitiv.28 Feb 2023

[Corylax18]

They're building new ones at as fast a pace as ever before. A Chinese construction company has been working away fore the last 3+ years on what will be the tallest building in Cuba, even taller than the Jose Marti Monument. 42 Stories, 565 new rooms, its an ugly glass, steel and concrete monster in the middle of Vedado. Since the Pandemic they've literally added thousands of new/renovated rooms, despite the fact that hotels weren't full before the pandemic. 

There has to be more going on behind the scenes, because what we see in front of us just doesn't make any sense. There is no way that these hotels are profitable. 

https://www.google.com/maps/place/Hotel+en+Construcción,+Torre+K./@23.1388315,-82.3855953,210m/data=!3m1!1e3!4m6!3m5!1s0x88cd791872b962b1:0x663944b0eeb7bf68!8m2!3d23.1383993!4d-82.3842076!16s%2Fg%2F11h4k0qwz0?entry=ttu