Cuba's tourism sector is facing the ruins of its recent development and is experiencing its worst crisis in decades. A decree issued by the United States government, effective June 5th, forces the most important international hotel companies to cease all operations in the socialist island nation with immediate effect.
US President Donald Trump's signed Executive Order No. 14404 threatens foreign companies cooperating with the Cuban military conglomerate Gaesa with draconian penalties. These range from the total freezing and confiscation of assets on American territory to complete exclusion from the SWIFT international banking payment system. Since the military's tourism subsidiary, Gaviota, owns the majority of the country's hotel infrastructure, European and Asian hotel chains have no choice but to terminate their contracts to avoid jeopardizing their own global business. This forced withdrawal comes amid a devastating period of persistent fuel shortages, a collapsing energy supply, and a massive drop in international passenger numbers for the Cuban economy.
The fiscal thumbscrew system of the new Executive Order
The legal and economic implications of the new American regulation lie in its extraterritorial nature. The decades-long US embargo against Cuba has been intensified by Executive Order 14404 in a way that directly targets third-country companies. The US Treasury Department has been authorized to take action against any foreign company that maintains business relationships with entities under the control of the Cuban Ministry of Defense. At the heart of this structure is the Grupo de Administracion Empresarial SA, better known as Gaesa.
This military economic conglomerate is estimated to control up to eighty percent of Cuba's foreign exchange market. Through its subsidiary Gaviota, the military is the island's largest hotel owner, possessing more than one hundred hotel complexes with approximately fifty thousand rooms. Since Cuban law prohibits foreign hotel chains from directly acquiring land and property, the existing tourism model was based almost exclusively on management and marketing agreements. These were generally structured as joint ventures, with Gaviota holding at least fifty-one percent of the shares and the foreign hotel chains contributing a maximum of forty-nine percent. The only notable exception was the Iberostar Origin Laguna Azul hotel in Varadero, for which a pure lease agreement was negotiated in 2025. By linking these agreements to Gaviota, the international chains now fall directly under US sanctions. Continuing to operate the resorts would mean that corporations like the Spanish Melia Group or Iberostar would lose all access to the US market, to American banks and to their assets there.
The radical downsizing at market leaders Melia and Iberostar
The economic consequences for Cuba's tourism landscape are immediately apparent. The Spanish hotel group Melia, considered the second-largest player on the island with 33 hotels, announced the immediate termination of contracts for nearly half of its portfolio. A total of 15 hotels under the Paradisus, Melia, and Sol brands will be removed from the system with immediate effect. These include renowned luxury resorts in the popular tourist areas of Varadero, Cayo Santa Maria, and Holguin. Prominent city hotels in the capital, Havana, are also affected, such as the recently opened Innside Catedral Habana and the historic Gran Hotel Bristol Habana Vieja, located near the Capitol. In an official statement, the group's management cited the untenable geopolitical and legal conditions, while simultaneously acknowledging that many of these establishments were already barely profitable due to the precarious energy crisis and weak demand.
The Iberostar hotel chain is undergoing a similarly drastic reduction. Of the nineteen hotels it once managed, only six remain available on the company's official booking platforms. The remaining properties include the Parque Central and the Marques del Torre in Havana, as well as the Grand Trinidad in the UNESCO World Heritage city of the same name. The Canadian company Blue Diamond Resorts, in which the German tourism group TUI holds a 49 percent stake and which operated 62 hotels in Cuba, also confirmed the complete withdrawal of its Royalton, Memories, Starfish, and Mystique brands. The Asian chain Archipelago is also withdrawing with its Aston brand. Smaller Spanish providers such as Valentin and Blau have also quietly shut down their booking systems for Cuban destinations without yet issuing any formal statements.
Collapse of passenger numbers and transport infrastructure
The wave of sanctions is hitting a Cuban economy already in a state of advanced disarray. The country is suffering from a chronic energy crisis stemming from aging thermal power plants and a lack of maintenance, resulting in widespread, hours-long power outages. These outages are increasingly affecting tourist areas, as hotel generators can no longer be continuously supplied with diesel due to extreme fuel shortages. The dilapidated infrastructure for water and food supplies further complicates hotel operations.
These conditions have led to a drastic decline in interest from international travelers. In the first four months of 2026, Cuba saw a drop in foreign visitors of more than half compared to the same period the previous year. Between January and April, only about 329,000 international tourists traveled to the island. This is a severe blow to the national budget, as tourism is the country's most important source of foreign currency. At the same time, international flight connections have drastically decreased. Currently, scheduled flights between Europe and Havana from Madrid are essentially only maintained by Air Europa and Air China. While smaller carriers such as the Italian airline Neos are planning new routes from Rome to Havana and Holguin for early summer, industry insiders doubt whether these routes can be profitable given the massive closure of hotel capacity.
Sharp criticism from Havana of the blockade policy
The Cuban leadership reacted with strong condemnation to the measures from Washington. In an official statement, the Cuban Tourism Authority criticized the Executive Order as being illegal under international law and extraterritorial. The US government's aim, they asserted, was to deliberately strangle the country's economy and deter third-party states and their companies from legitimate trade relations through intimidation and economic deterrence. No other tourist destination in the world faces such asymmetrical political and economic barriers.
The forced withdrawal of foreign expertise and international marketing channels presents Cuba with the challenge of taking over the complete management of the affected hotels under state or military control. Experts doubt, however, that without the logistical networks and brand names of European corporations, the country will be able to maintain quality standards and attract a sufficient number of international guests. This threatens Cuba with continued isolation in the international travel market, while competing Caribbean destinations such as the Dominican Republic and Mexico's Riviera Maya are likely to further erode Cuba's market share.