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With shift on Cuba, Trump could undercut his company’s hotel-industry rivals

By rolling back Obama-era policies that allowed more private business investment in Cuba, President Trump would be leveraging the power of his office, like others who came before him, to shift Washington’s approach to the communist island.

But as the owner of a real estate company with a big stake in hotels and resorts, Trump brings an added element to an issue that is unique to his presidency — the ability, through his official actions, to undermine a growth area for his industry rivals who have raced in recent years to establish a foothold in a lucrative new market.

Starwood Hotels and Resorts, which merged with Marriott International to form the world’s largest hotel chain, last year debuted the first Cuban hotel managed by a U.S. company in nearly 60 years, taking advantage of President Barack Obama’s 2014 move to normalize relations with Cuba and lighten regulations enforcing the U.S. embargo on the island.

Trump is expected to announce in Miami on Friday his intention to ban certain financial transactions between U.S. businesses and the Cuban military, whose companies control much of the island’s economy and a significant share of the tourism and hotel sector.

Trump set to unveil new Cuba policy after promising to reverse Obama’s ‘bad deal’

Boisterous celebrations continued in Miami’s Little Havana neighborhood days after the death of Fidel Castro. Many Cuban exiles also looked ahead to how the new Trump administration would handle relations with Cuba. (Video: Jorge Ribas/The Washington Post)

That directive could undercut efforts by the U.S. hotel industry, which hopes to use the Starwood deal as a template as it continues to push Congress to lift the ongoing U.S. embargo completely.

The issue offers a reminder of Trump’s dual roles, public and private, as a result of his decision to retain his sizable ownership stake in his company.

Although Obama’s policies were popular with some Cuban Americans who have welcomed the chance to travel to the island and send more money to family, Trump’s new directive is likely to satisfy others in the community who argued that Obama went too far in appeasing the Castro regime without securing human rights concessions. Trump has criticized the Obama normalization with Cuba as a “bad deal.”

Nonetheless, as a businessman whose properties include golf resorts and luxury hotels from Florida to Scotland to Dubai, Trump in the past has signaled his interest in the potential financial opportunities in Cuba.

What’s changing – and not changing – in Trump’s new Cuba policy plan

He told CNN last year that he would like to open a hotel in Cuba “at the right time, when we’re allowed to do it.”

As part of an ethics pledge, Trump’s company has vowed to pursue no new foreign deals during his presidency, making a potential foray into Cuba off limits for now. Yet, according to one industry expert, a presidential directive restricting efforts there by Starwood or other hotel chains would, in effect, neutralize a chief rival’s ability to gain an early advantage.

“What’s the president going to say? That the largest hotel company in the world, a competitor, is not allowed to renew its license” to operate in the country? asked Julia Sweig, a longtime Cuba scholar and former adviser to Starwood who has called for normalizing relations with the island. “That could be interpreted as the president is going to hold things up for the competition until the Trump Organization is ready to go down there.”

An administration official who briefed reporters Thursday on the Cuba plan said that the president’s intent is “not to disrupt existing transactions that have [already] occurred” and that the fate of Starwood’s Cuba deals would be handled by regulations to be written by the Treasury and Commerce departments. The official said no changes would take effect until new regulations are completed.

Trump Hotels spokeswoman Christine Da Silva said the company “is not doing any deals internationally” and declined to address any past interest in Cuba. The company is planning to expand across the United States with a chain of midpriced hotels under the brands Scion and American Idea.

Asked how Trump’s past business interest in Cuba could affect his thinking on U.S. policy, the White House referred comment to the Trump company.

Starwood’s parent company, Bethesda, Md.-based Marriott International, declined to comment in response to questions about Trump’s business interests.

But Arne Sorenson, Marriott’s president and chief executive, issued a statement Thursday saying it would be “exceedingly disappointing to see the progress that has been made in the last two years halted and reversed by the administration.”

“We urge the Trump administration to recognize and utilize travel as a strategic tool in its efforts to improve relations with Cuba, allowing us to be part of a promising future, as opposed to reverting to the policies of the past,” Sorenson said.

The travel industry has been bullish on the Cuba market since Obama loosened the rules, noting that Americans tend to spend heavily on vacations and would be eager to explore a newly accessible tropical getaway famous for rum and cigars.

About 4 million visitors traveled to Cuba last year, including 614,000 Americans and Cuban Americans, a 34 percent increase over 2015, Cuban tourism ministry data shows. Boston Consulting Group, a research consultancy, projected the island could see up to 2 million American travelers by 2025.

Bloomberg reported last July that Trump Organization executives had visited Cuba on several occasions in recent years, including to visit a golf course, despite U.S. restrictions on commercial ventures.

Eric Trump, who along with his brother Donald Trump Jr. is managing the business while their father is president, told Bloomberg in a statement: “While we are not sure whether Cuba represents an opportunity for us, it is important for us to understand the dynamics of the markets that our competitors are exploring.” Eric Trump declined to comment to The Washington Post.

The Obama administration’s easing of sanctions allowed approved American hospitality companies such as Starwood to, in effect, rent out rooms, upgrade facilities, hire local workers and conduct business in U.S. dollars through American banks.

In March 2016, Starwood signed deals in Cuba that would allow the company to manage three Havana hotels. Airbnb, the home-rental service that has become one of the industry’s chief rivals, said that month that it also had been authorized by the Treasury Department to expand onto the island.

Starwood’s property interests included the Hotel Inglaterra and the Hotel Santa Isabel, which were to be refurbished into Starwood luxury hotels, and the Hotel Quinta Avenida, which became a Four Points by Sheraton hotel. The state-owned Inglaterra opened in 1875 and became a national landmark near the historic district of Old Havana.

The company’s Cuban partner in the Quinta Avenida deal is Gaviota, a tourism company owned by the Cuban military. The military’s business arm owns vast real estate and financial holdings touching nearly every corner of Cuba’s economy, making deals with them hard to avoid.

The 186-room Four Points by Sheraton Havana opened last summer in the upscale Miramar neighborhood. The other two have been delayed, with the re-branded Inglaterra hotel listed on Starwood's website as opening Dec. 31, 2019.

Karen DeYoung contributed to this report.