Forbidden Fruit.

US. companies jockey for the planet's hottest new destination.

The Bush administration can talk tough about keeping Cuba off limits, but U.S. hoteliers, airline executives and travel operators are watching for the tiniest chink in the sugar cane curtain -- and with good reason. If Cuba opened to U.S. citizens tomorrow, U.S. tourism to the Caribbean island would explode into a billion-dollar industry.

Already U.S. airlines have lined up rights to fly to the island, cruise lines have worked out Cuban itineraries and hotel chains are gearing up to shove their collective foot in the door once the Trading With the Enemies Act is repealed. "I'm not going to get into a national debate," says Gordon Bethune, CEO of Continental Airlines, "but Americans want to go to Cuba and I want to take them there. Cuba Si!"

The World Tourism Organization says an embargo-free Cuba would be one of the planet's fastest-growing tourism destinations over the next two decades. A recent report estimates Cuba will see an average 9.2% growth in tourism annually to hit 6.7 million visitors -- 2.3 million of them from the United States -- by 2020. The report assumes "travel restrictions from the United States will be lifted in the next few years."

Cuban officials themselves acknowledge the importance of the coveted U.S. market. The island's foreign office estimates that 1.45 million U.S. vacationers will visit the island annually, alone generating at least US$800 million to $900 million in tourism revenue, shortly after the 40-year embargo is ended.

Cuba's attractions are already well known: sun-kissed beaches, crystalline waters, superb deep-sea fishing, astonishing Spanish colonial architecture and a cultural scene replete with music, dance and theater. Tourism, along with nickel mining, overtook sugar as Cuba's main foreign-currency earner several years ago; currently, more than 40% of Cuba's dollar revenues come from tourism. The island for the last decade has drawn South Americans, Canadians, Italians and, increasingly, Eastern Europeans seeking sun and sand at a discount price. And their numbers are rising.

Cuban authorities expect at least 2 million travelers to pass through the country in 2001. By comparison, 1.6 million visitors traveled to the island in 1999, generating $1.8 billion in revenues. Still, that's significantly below much smaller tourist-luring neighbors like Puerto Rico, which generates $2.3 billion in tourism income annually. But Cuba has not been allowed to tap travelers from the United States, one of the largest markets in the world, just 90 miles away. In the pre-embargo days of the 1950s, 80% of U.S. travelers who went to the Caribbean made a stop in Cuba.

Poised for action. U.S. travel industry executives may be barred from pumping money into Cuba, but that hasn't kept them from making plans. American Airlines, which purchased fly-rights to Cuba from now-defunct Eastern Airlines, could handle as many as 10 flights daily to Havana. Since 1962, Delta Air Lines and United Airlines have hung onto their fly-rights to Cuba.

"We'd like to run daily service from Cuba to New York," says Continental's Bethune, who joined a business group that traveled to the island earlier this year. "I met with the tourism minister and the president of the Senate on how we could expand there."

Giora Israel, vice president of strategic planning at Miami-based Carnival Corp., says an end to travel restrictions would be "like winning the lottery for the cruise industry." Although Carnival does not operate in Cuba, Israel can easily reel off the list of reasons why it should: attractions that include nearly 100 isles and cays off the north coast, the "colonially magnificent" capital of Havana, the beach resort of Varadero, the coral-ringed Isle of Youth and historic Santiago de Cuba.

Cuba's port facilities are still limited, despite upgrading, but Havana can accommodate large vessels; cruises would allow the island to receive visitors even if hotels were in short supply. Kees Aerts, the Dutch manager of the new SuperClubs Breezes hotel in the eastern Cuba's resort of Guadalavaca, says a new and modern tourism infrastructure is Cuba's advantage. "The disadvantage can be the bureaucracy, ensuring that we can deliver the services we promise," he adds. Since some profits are plowed back into the country, he says, Cuban authorities are often keen to help.

The island in the last decade has seen the addition of 22,400 hotel rooms, bringing its guest room total to 35,300. At least 65% of the new hotels fall in the three and four-star category--and there's more to come. Spanish hotel chain Sol Melia next year will add three more hotels to the 22 it already operates in Cuba. Jamaica's SuperClubs Breezes chain is already working on three more hotels in Cuba and the Chinese government is a partner on a huge waterfront complex in Havana. Leisure Canada, a developer of luxury resorts, has several projects in the works. British investors recently signed a deal for a series of golf courses to join the two currently in operation.

The newest projects, aimed at well-heeled vacationers, signal a shift away from mass market charters and toward the more lucrative upscale travel market. While not reported in the state-run media, stories are circulating about budget hotels that have been removed from the market. As Fidel Castro's government turns its attention to deep-pocketed tourists, it has become increasingly difficult for Cubans to rent private rooms to budget travelers. Government inspectors recently began cracking down to make sure bed-and-breakfast operations pay taxes.

Winners and losers. Because of the size of the U.S. tourism machine some foreign investors expect to be pushed out by U.S. competitors. "We're here while the going is good," says a diplomat from one of the countries now heavily involved in Cuba. 'And we'll provide a useful bridgehead once the Americans come rushing in. But then, unless we have specialist skills that U.S. companies can't provide, we'll be gone.

In the scramble before the U.S. onslaught, companies like Spain's Sol Melia, the biggest foreign hotel chain on the island, are strengthening their toehold. "If we can build 20 hotels in 10 years, we should be able to build at least another 20 in the next 10 years:' says Sol Melia's Cuban division director, Gabriel Canaves.

At the same time, competing destinations like Puerto Rico and Mexico are sweating it. Both rely on U.S. vacationers, and Cuba's opening would swipe a significant chunk of those travelers. Both have been working on strategies for diversifying their beach-destination reputations with promotions aimed at niche markets such as cultural travel, ecotourism or business conferences.

"We are already going up against Cuba in the international market," says Jose Corujo, former executive director of the public Puerto Rico Tourism Co. Corujo, who visited Cuba last year, says Puerto Rico will have to respond to Cuban tourism much as it does that of the Dominican Republic: by emphasizing its connection with the United States, English as an official language and legal use of the U.S. dollar. Some 80% of Puerto Rico's tourists originate in the United States.

The debate whether to loosen restrictions on travel continues, but there have already been other signs of softening. The U.S. Congress last year eased the embargo for the first time in four years by permitting limited sales of food and medicine to Cuba. This year, President George W Bush mimicked his predecessor by blocking U.S. exiles from suing over properties seized by the Cuban government. Although Bush has indicated he will not unlock the travel door, recent polls show that three of every four U.S. residents want travel restrictions ended. The tourism door is starting to crack open-and U.S. companies are lining up to get inside.