Meliá’s Struggles in Cuba: Half of Hotels Closed, Profits Down 68% Amid Energy Crisis and Sanctions

Meliá Hotels International, a leading Spanish hotel chain, is currently facing a severe downturn in its Cuban operations, directly impacting its presence on the island. The company manages 34 hotels with over 5,000 rooms, but reports revealing a drastic reduction of 50% of its capacity in early 2026 indicate a worrying trend. This closure, triggered mainly by an ongoing energy crisis further compounded by U.S. sanctions, has severely crippled the local tourism industry, resulting in diminishing international demand.

Meliá’s Operational Challenges in Cuba

The operational landscape for Meliá in Cuba has taken a turn for the worse since the beginning of 2026. By February, in response to acute fuel shortages and reduced tourist influx, Meliá had to shut down three hotels. As the situation deteriorated by March, the company was forced to close down half of its hotel capacity, translating to more than 5,000 rooms going offline. Those that remain operational have struggled, with an occupancy rate plummeting to an average of just 34.1% during the first quarter. This decline illustrates the collapse of international tourist interest, leaving locals as the primary clientele for the surviving hotel properties, but even that business has been insufficient to absorb the losses.

International Demand Drops and Financial Fallout

Meliá’s recent financial report highlights a staggering 68% drop in net profit, plummeting from 10.5 million euros in 2025 to a mere 3.3 million euros this year. The decline of revenue in its Cuban properties has resulted from the ongoing collapse of international interest in travel to Cuba, further intensified by the energy crisis and significant reductions in aviation fuel availability. With travel restrictions leading to a massive downturn in flights, including those from Canada, previously a robust source market for tourists, Meliá’s hotels have had to rely heavily on local bookings— yet this has done little to stem the drastic financial losses.

Even though Meliá has reported an increase in overall revenue of 4.4%, amounting to 460.6 million euros, largely due to thriving operations in Spain, Europe, and the Caribbean, its Cuban operations continue to weigh heavily on its financial health.

Wider Impact on Cuba’s Tourism Ecosystem

Meliá is not an isolated case; the crisis extends throughout Cuba’s tourism sector. Other hotel operators, such as Iberostar and Valentín, have also had to shut down properties due to the ongoing energy crisis and U.S. sanctions. The consequences of the plummeting tourist numbers are severe; around 300,000 tourism employees are estimated to have lost their jobs since May 2026, exacerbating the already fragile economic situation on the island.

In the first quarter of 2026, Cuba saw only 298,057 visitors, representing a staggering 48% decrease compared to the same timeframe the year prior. This drastic decline further emphasizes the dire circumstances facing Cuba’s tourism infrastructure and the cascading economic impact on workers and businesses reliant on tourism.

Effects of U.S. Sanctions on Hotel Operations

The current U.S. sanctions are a significant player in the grim situation affecting Meliá and other companies operating in Cuba. Just recently, U.S. Secretary of State Marco Rubio officially designated the GAESA military conglomerate under Executive Order 14404, controlling Cuba’s hotel infrastructure, including subsidiaries like Gaviota S.A.. These sanctions place tremendous pressure on foreign companies, like Meliá, facing a critical decision to either maintain operations or risk incurring secondary sanctions for continuing to work alongside state-controlled entities.

Foreign businesses have been given a deadline of June 5, 2026, to sever ties with GAESA, which poses a difficult dilemma for hotel chains wondering how to balance their presence in Cuba against adhering to international regulations.

Future Prospects for Meliá in Cuba

Looking forward, Meliá has indicated that the sustainability of its Cuban operations largely depends on the recovery of energy supplies and the revival of international tourism. Nonetheless, the outlook appears bleak, as no clear signs suggest an imminent improvement. The company is keeping a close watch on developments but recognizes that persistent energy shortages and escalating political tensions add considerable complexity to any potential recovery trajectory in Cuba.

Meliá has expressed concern that its growth prospects in Cuba are highly contingent on resolving energy shortages, particularly for aviation fuel. Until these logistics are rectified, the company faces substantial obstacles, not only within Cuba but throughout the broader Caribbean tourism market. Despite the challenges in Cuba, Meliá remains committed to a global growth strategy, continuing to excel in other, more stable regions.

A Gloomy Outlook for Cuba’s Tourism Sector

The ongoing crisis marked by energy shortages and compounded by U.S. sanctions poses severe challenges for Meliá and the broader Cuban tourism industry. With 50% of Meliá’s hotel capacity offline and an occupancy rate of merely 34.1%, the road ahead remains fraught with difficulties. The substantial decline in net profit, coupled with the sharp rise in job losses and falling international visitors, paints a grim picture for the future of tourism on the island. The reduction in third-party management fees further hampers Meliá’s recovery efforts.

While Meliá may enjoy growth in other sectors, its operations in Cuba remain tinged with uncertainty, driven by the political environment and the daunting challenges of energy shortages and dwindling tourism demand. The forthcoming decisions will be pivotal, relying heavily on the Cuban government’s capacity to resolve energy issues and the potential recovery of international tourism to the region. As it stands, the outlook for both Meliá in Cuba and the overall tourism sector is decidedly grim with significant hurdles still to overcome.

Source: The post Meliá’s Catastrophic Collapse in Cuba: 50% of Hotels Shut Down, Profits Plunge 68%, Sanctions and Energy Crisis Devastate Island’s Tourism Industry! first appeared on www.travelandtourworld.com.