Hotel companies operating in Cuba are getting the message: Leave Cuba or face the threat of U.S. sanctions.
Spain's Iberostar Hotels & Resorts is the latest hotel company to cease managing resorts and hotels in Cuba owned by Havana-based, state-owned Grupo de Turismo Gaviota.
Publicly traded Meliá Hotels International — also based in Spain — said earlier this week it would cease operations at the 15 hotels in its portfolio owned by Gaviota. Iberostar and Meliá are the largest foreign-owned hotel operators in Cuba, and these exits follow similar ones made this week by Canada's Blue Diamond and Indonesia's Archipelago International.
Companies were required to exit Cuba before the June 5 deadline set by the U.S. government or face sanctions. In May, U.S. President Donald Trump expanded sanctions against the island nation, primarily targeting Gaviota's larger organization, Grupo de Administración Empresarial S.A, which is owned by the Cuban military, calling it a threat to U.S. national security.
The last few months since Trump's expanded activity in Cuba have led to economic malaise, an energy crisis and dwindling hotel demand in Cuba.
Military ownership chain
Gaviota, which owns 121 hotels in Cuba, is a division of Grupo de Administración Empresarial S.A, which itself is owned by the Cuban military.
Under Cuban law, hotel land, bricks and mortar must be owned domestically, although government officials might have to admit that the country now has no option but to open up to private-public ownership deals.
“The thing which is hard for many people to understand is that the hotel sector is not managed by the government of Cuba, it is managed by the army, specifically GAESA,” said James Hepple, managing director of Aruba-based consultancy Tourism Analytics. “It is thought GAESA is sitting on millions of dollars which the government cannot access and that GAESA is essentially a law unto itself.”
The U.S. government is increasing pressure through potential sanctions on parties doing business with Cuban state-owned companies, said Nicolas Cousin, Christie & Co’s managing director for Spain and Portugal. He agreed that GAESA is the power behind Cuba’s hotel industry.
“GAESA [is] …a military-linked state-owned conglomerate. Several Spanish hotel chains such as Iberostar, Meliá, Valentín, Vila Galé and Axel have been operating assets for Gaviota, whereas Barceló’s assets in Cuba are owned by different partners,” Cousin said.
Barceló — founded in 1962 and also based in Spain's Balearic Islands like Iberostar and Meliá — has one hotel in Cuba, the 525-room Barceló Solymar.
Family office Iberostar ceased managing 12 Gaviota-owned hotels and resorts but will continue to manage six hotels in Cuba that are outside of Gaviota's ownership; these properties are owned by Cubanacán and Gran Caribe, both affiliated with Cuban state ownership.
The Iberostar hotel portfolio affected includes the Iberostar Coral Esmeralda; Iberostar Coral Holguín; Iberostar Coral Ensenachos; Iberostar Grand Packard; Iberostar Selection Emerald; Iberostar Selection Ensenachos; Iberostar Selection Havana; Iberostar Selection Holguín; Iberostar Origin Bella Vista Varadero; Iberostar Origin Laguna Azul; Iberostar Origin Playa Pilar and Iberostar Origin Playa Alameda.
Meliá has exited 15 resorts and hotels in Cuba — five in its Meliá brand, four in its Paradisus brand, four in its Sol brand, one in its INNSiDE brand and one in its Meliá Collection soft brand. The hotels include the Gran Hotel Bristol Habana Vieja, Meliá Collection; INNSiDE Catedral Habana; Meliá Buena Vista; Meliá Cayo Santa María; Meliá Jardines del Rey; Meliá Las Dunas; Meliá Península Varadero; Paradisus Los Cayos; Paradisus Princesa Mar; Paradisus Río de Oro; Paradisus Varadero; Sol Caribe Beach; Sol Cayo Santa María; Sol Río de Luna y Mares; and Sol Varadero Beach.
In terms of Europe-based hotel companies, Iberostar and Meliá — both founded in 1956 — hold the top two spots in total hotel count on the island. Meliá has operated in Cuba since 1990 while Iberostar entered the market in 1993. Neither hotel firm currently lists Cuban hotels on its website.
Meliá and other hotel firms also are aware of their exposure in U.S. law from the Helms-Burton/Libertad Act (Cuban Liberty and Democratic Solidarity Act of 1996), which permits U.S. nationals and Cuban-Americans who have since become U.S. nationals to claim assets they state were expropriated in 1959 when the Cuban Revolution took power in the country.
In a news release, Meliá officials said, “the overall impact of this decision is limited, as the majority of the hotels listed are currently non-operational due to ongoing energy constraints and reduced demand affecting the Cuban market. Notwithstanding this, [we are] implementing specific action plans to ensure an orderly and structured disengagement process.”
Upon exiting its former Cuba hotels, Meliá now has a global portfolio of 375 hotels, plus a development pipeline of 80 hotels and 17,109 rooms.
Spain-based news site CubaHeadlines.com reports Spanish hotel firms are particularly vulnerable from these developments, stating that “Meliá … operating between 32 and 35 hotels in Cuba, a market historically contributing 8% to 15% of its earnings before interest, taxes, depreciation and amortization. Meliá now faces a second wave of sanctions on top of nearly 6,000 claims under Title III of the Helms-Burton Act, valued at approximately €8 billion.
“With [Meliá having] 12 hotels in the U.S., mostly in Florida, and Iberostar having a presence in Miami, losing their ability to handle dollar transactions could be devastating for these chains,” the news site added.
U.S. hotel and lodging companies made management and operational moves in the years following former president Barack Obama’s decision to forge closer relations with Cuba 10 years or so ago, a period that saw Airbnb also having a presence.
A few other European concerns operate hotels in Cuba, including Geneva-based Kempinski and Milano-based Domina Hotels Group.
Domina manages two hotels in Cuba, although one of those hotels, the 771-room Domina Marina Varadero, part of Meliá until January 2025, is temporarily closed, according to CoStar.
US muscle
Sanctions or the threats of sanctions from the U.S. regarding Cuba are not entirely new, said Christie & Co’s Cousin. But he added there is more clarity today in terms of enforcement and the risks associated.
U.S. action earlier this year in Venezuela — one of the world’s largest oil producers and a country that has traditionally had a strong relationship with Cuba — has exacerbated the situation in Cuba.
“Beyond the geopolitical aspect, the economic and business environment in Cuba has become increasingly challenging,” Cousin said. “Ongoing power cuts and shortages of basic supplies make operations difficult and can ultimately impact both performance and brand perception for operators. In that context, I would not be surprised to see some players adopting a more cautious approach, including putting certain operations on hold.
“If U.S. sanctions are further enforced in the near term, there is also a risk that additional entities could be added to restricted lists, which would increase pressure on operators,” he added.
A lack of jet fuel is a major cause of the lack of international arrivals in Cuba, Hepple said.
“And with these secondary sanctions, the two main Spanish operating companies really have little choice but to pull back. … It’s a mess," Hepple said. "For international visitors for the fourth quarter of 2025, [hotel occupancy] was 18.9%. That was when Canadians and Russians were traveling. Without those two markets, the average room occupancy has now got to be in single digits.”
Hepple said new rental models devised by Cuba have transitioned Iberostar’s simple management contracts to direct, long-term property leases. This has increased their exposure to secondary U.S. sanctions by making them more like a direct owner-operator of embargoed military assets.
The entire situation in Cuba is exceedingly complicated and could get worse, Hepple said.
“I think the tourism sector will just shut down completely until there is some kind of regime change," he said. “Without fuel the planes can’t fly, and without fuel the electricity grid can’t function. Without U.S. dollars, Cuba cannot import the food it needs, which is crazy for such a fertile country. I would not begin to speculate how it will all end, but whatever happens it won’t be pleasant.”
Meliá directed a request for comment to its initial news release on its Cuba portfolio. Iberostar did not respond to requests for comment.