Monthly Archives: March 2010

Cuba Boom?

Posted on by
Reply

Where are the Americans? (photo: José Porras)

I have long held, and so have my friends in the travel industry, that the biggest tourism boom in history will be touched off when the United States ends its embargo on trade and investment with Cuba.  Notice I said “when”.  Normalization will happen, but that’s like saying that the stock market rises in the long term.  We can’t know when it is going to happen.

In a New York Times article on Monday, those of us who see this coming are described as “dreamers”.  And the article itself is headlined “Dreaming of Cuban Profits In A Post-Embargo World”.  The big dreamers attended a conference last week in Cancún that attracted both Cuban tourism officials and potential U.S. investors, among many others.  Part of the message is that everybody is in Cuba except the Americans, with one speaker saying that 500 international companies have offices in Havana.  I’m not sure that means that business is being done, however, reflecting on the conference I attended last November where a figure of 150 foreign firms was used.

Cuba’s tourism minister, Manuel Marrero Cruz, told the attendees in Cancún, “We are not waiting for the Americans. We’re developing tourism for others around the world.”  Like Cuba doesn’t need a market of millions of people only an hour or so away.

And some Americans are getting to see Cuba for themselves.  the Obama Administration loosened travel restrictions for Cuban-Americans, a quarter a million of whom visited Cuba last year.  This is an increase of 80,000 from the previous year.  One wonders when it will dawn on both sides of the Florida Straits that other Americans might be interested, too.

What concerns me is that Congress could open up travel to Cuba without also opening up investment.  That will provide huge tourism revenue to Cuba, but will exclude U.S. travel and tourism companies, other than airlines and tour packagers, from participating.  What’s the sense of opening things up if we only guarantee profits for non-U.S. hotels and others who will be on the ground in Cuba to service the  avalanche of Americans?

Travel For Your Health

Posted on by
Reply

Medical tourism has gotten a lot of play lately, and has a surprisingly long history in Hawaii.  Before we ever knew the term, Hawaii’s hospitals were making money from patients that were coming from Japan and Taiwan for rehabilitation programs in the tropical sun.  This was back in the early 1980s, when I did some work with Honolulu’s Rehabilitation Hospital of the Pacific.  They were attracting patients from Asian societies that traditionally shunned handicapped patients and kept them hidden away from all eyes.  These patients prospered in Hawaii in a program that not only provided the rehab therapies they needed, but spent half the day getting them out to beaches, parks, shopping centers and in touch with humanity.  Worked miracles.

Medical tourism then started to go the other way.  Famously, Hawaii’s singer Don Ho made several trips to Bangkok to receive stem-cell treatments that he could not obtain in the United States.  Many other Americans ventured overseas to find either treatments they could not get at home or prices lower than those prevailing in the U.S. market.  (Americans aren’t alone in this.  My cardiologist in Singapore had patients from at least thirteen other Asian countries who flew in to see him.  In Austria, there were regular tours across the border with Hungary that featured dental work at lower prices.)

Bangkok's Bumrungrad - Healthy Business

Asia’s ascendancy in supplying the medical tourism trade may be about to hit a bump in the road.  And that bump is the new health care reform in the United States.  By covering millions of Americans who were not insured or under-insured in the past, there may be less incentive for Americans to venture overseas for treatment.  And, to the extent, that the reforms put a lid on prices (if they do), financial incentives for outbound medical tourism may diminish.  Couple this with a more open attitude by the Obama Administration towards stem cell therapies, and Americans may have more reason than ever to stay at home.  So who gets hurt by this?

Asian and Latin American hospitals and clinics that have made a specialty of attracting U.S. patients, that’s who.  Muhammad Cohen interviewed officials at Bangkok’s Bumrungrad Hospital for Asia Times.  Bumrungrad attracted 420,000 overseas patients last year, and they see pros and cons from America’s health reforms.  Obviously, they don’t rely exclusively on the U.S. market for patients and Bumrungrad will likely kick up their marketing in other countries.  Also, they see possibilities that some Americans may decide that the penalties for not buying insurance are less costly than the insurance they need, so they will continue to go overseas for treatment.  And health care reform should have only a marginal impact on U.S. patients going abroad for cosmetic surgery or installation of medical devices, both of which can be substantially less expensive elsewhere.  They also will continue to attract some of the six million Americans who live overseas.

Mongolian Hot Pot

Posted on by
Reply

I have a friend in Mongolia who occasionally blogs about trade issues.  Jargal Dambadarjaa and I met years ago at a Rotary Club in Denver, where he was studying and doing business.  (Did you know that Colorado has the largest Mongolian population in America!)

Tuvan Customers

Jargal’s latest post is about trade between Mongolia and Russia and transhipments from China to Russia across Mongolia.  He tells about a border crossing between northwestern Mongolia and the Tuva Republic that is part of Russia.  Apparently, Tuva has no access to the rest of Russia by train, so most of what they purchase comes from China, passing through Mongolia.  Despite the lack of a rail connection, the Tuvans are merrily selling Chinese goods to the rest of Russia, transporting them by truck.  Jargal says the Tuvan side of the border crossing features a couple of food markets and 3-4 cafes that seem to get much of their business from the Russian customs officers.

It’s the Chinese goods that sustain business.  While Mongolia imports wheat, flour, gasoline and energy from Russia, there is relatively little that is not Chinese moving in the opposite direction.  Mongolia would like to sell more meat and live animals to the Tuvans, but the Russians are limiting imports for health reasons.  Recently, shipments of 2,000 breeding animals from Mongolia were stopped at the border, while – at virtually the same time – Tuvan authorities said they wanted to buy up to 65,000 animals from Mongolia.

Jargal points to price differences on meat between Mongolia and Russia as something that should drive the trade and give Mongolia an export industry.  He says that boneless beef that costs US$8 in Kyzyl, Tuva’s capitol, costs only $3 in Mongolia’s capitol, Ulaanbaatar.  The same beef purchased in Ulaangom, where it comes from, runs only $.80.  The key will be working with the Russians to make sure that Mongolian animals and their products meet the European health standards that Russia is increasingly adopting.  Jargal says there is scope for investment in a new meat processing plant in Mongolia to supply this trade.

Another sign of potential for business, says Jargal, is the popularity among the Tuvans of trade fairs that have been run on the Mongolian side of the border, featuring both Mongolian and Chinese goods.  He says that one recent fair resulted in a traffic jam at the border when more than 4,000 Tuvan vehicles tried to cross the border to get to it.