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Canada-Cuba tourism industry braces for change

The United States started scheduled commercial flights to Havana this week, the first set of regular trips that are expected to drive up costs for Canadians vacationing in Cuba.

Canadians have increasingly been spending more to visit the island as resorts switched pricing to U.S. dollars in preparation for a flood of American tourists.

"The tour operators, hotels changed their pricing last year at the start of the winter season, just over a year ago," said Allison Wallace, spokeswoman for Flight Centre Travel Group. "Prices have gone up by approximately 15 per cent to 20 per cent based on the currency difference," she said.

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Although President Barack Obama has taken steps to improve relations with the communist country – reopening the U.S. embassy in Cuba and easing some travel restrictions – it is unknown whether U.S. president-elect Donald Trump will overturn the Obama administration's policies. So far, his rhetoric suggests a more hostile relationship.

"If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal," Mr. Trump said in a tweet after the death of former Cuban president Fidel Castro.

Ms. Wallace said that if Mr. Trump reverses U.S. policy, "it will effectively be good news for Canadians as it will mean a lack of competition. Less demand equals better availability and pricing."

Travel company Transat AT, which has been active in Cuba for about three decades, said it is too early to say how the direct flights between the United States and Cuba would affect costs. But the company did say it has also seen higher prices for some hotels because of the increased demand.

A good chunk of that demand came from Canadians. More than 1.3 million Canadians travelled to Cuba in 2015, a 10-per-cent jump over the previous year, according to the Cuban government.

Canadians now make up 40 per cent of Cuba's visitors, dwarfing all other countries.

"If you combine all of Europe, it doesn't equal Canada," said Eloy Govea, director with the Cuba Tourist Board in Canada. "Every single year, we have seen an increase in the number of arrivals from Canada."

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Regardless of the top Canadian vacation spot, few Canadian businesses are involved in the country's tourism infrastructure.

"Cubans would say 'we are mystified'" about the lack of direct investment, said Mark Entwistle, a former ambassador to Cuba.

Mr. Entwistle, who now advises U.S. and Canadian firms hoping to do business in Cuba, recalls his conversations with Cuban tourism officials this way: "We love you, Canada. You have these assets. You can come through any door and Cuba will receive you. … But where are your hotel companies, where are your hotel developers, where are your investors?"

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Economics Reporter

Rachelle Younglai is The Globe and Mail's economics reporter. More

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