The impact of easing the US travel restrictions against Cuba on tourism in the OECS

The US authorities announced in December 2014 an intention to normalize relations with Cuba, including measures to ease economic sanctions and the ban on US citizens’ travel to Cuba. The impact of the easing of US travel restrictions against Cuba on the tourism sector of the OECS countries is potentially positive. The analysis was conducted in two steps. The Bank team first estimated the level of restrictiveness caused by the US travel restrictions on Cuban tourism performances; second, the team simulated, through a global computable general equilibrium (CGE) model, the impact of the removal of restrictions on Cuban tourism. The results show that all the Organization of Eastern Caribbean States (OECS) countries would experience a reduction in arrivals from the United States, while the overall effect of the removal of the travel restrictions would not be negative. In fact, those that have many non-US tourists, will see a surge in these, as they are driven away from Cuba by the rising cost of tourism to Cuba by the rising tide of new American arrivals to that destination. The OECS, considered as a whole, would enjoy a modest increase in tourist arrivals following the removal of the US restrictions. Except for St. Kitts and Nevis and Anguilla, the overall effect is either negligible or significantly positive for the OECS countries that depend more on Canadian and other Caribbean countries for their tourism.