MercoPress. South Atlantic News Agency

Obama’s Cuba policy triggers strong hopes from cruise operators

Shares of Miami-based cruise operator Royal Caribbean jumped on Monday on news that the administration of President Barack Obama was allowing Cuban Americans to travel more freely to the Castro-family ruled island.

The news stoked hopes that the number 2 cruise ship operator and rival Carnival could sail to an attractive destination, just 90 miles from the United States.

“Cuba has a high amount of mystique for Americans given that Cuba has been a forbidden destination for so long,” said Sharon Zackfia, analyst for William Blair & Company. She added that because hotels and resorts will take years to develop in Cuba, cruises will become a primary option for travellers.

“If Cuba opens to American visitors, I am certain that both Royal and Carnival will find ways to sail to Cuba,” she said.

Royal Caribbean shares gained 8.7% to 10.96 US dollars, while Carnival Corp, the world's largest cruise ship operator, added 2% to 26.11 US dollars.

Thomas Herzfeld, president and founder of Thomas J. Herzfeld Advisors Inc is also optimistic about the Obama administration relaxation policy. He said cruise operators Royal Caribbean and Carnival could see a double benefit if they were allowed to set sail for Cuba.

“Half of the revenues of Royal and Carnival come from the Caribbean. We believe the opening of Cuba could actually double their business in the Caribbean because not only will people travel to Cuba, but they'll combine it with a trip to the eastern Caribbean or western Caribbean,” Herzfeld said.

The Herzfeld fund has its largest investment in Seaboard Corporation, which, along with a large pork business, runs a containerized shipping service between the United States, the Caribbean Basin and Central and South America.

Another company set to win is Western Union, the world's largest payment transfer company, as Cuban Americans send more money home to their families.

But Herzfeld noted that Cuba is going to have to make efforts to implement long demanded democratic reforms before the trade embargo is banished altogether, “the first major announcement from Cuba I would like to see would be the release of political prisoners. That would really break the logjam”.