State-run news outlet Cubadebate reported Wednesday that Meliá’s withdrawal from nearly half of the 34 hotels it manages in Cuba was driven by “external factors” that had significantly affected the operation, legality and security of the establishments. The company has not publicly commented on the decision.

Sanctions Increase Pressure on Foreign Businesses

The move follows an executive order signed by U.S. President Donald Trump in May that broadened sanctions against Cuba while maintaining restrictions related to the island’s energy sector. According to U.S. authorities, many of the measures target entities connected to Grupo de Administración Empresarial S.A. (GAESA), a military-operated business conglomerate that plays a dominant role in Cuba’s economy.

Official U.S. policy describes GAESA as a national security concern and seeks to restrict foreign business dealings linked to the organization. The executive order includes measures that could freeze assets, restrict financial transactions and limit access to the U.S. financial system for affected entities and associated investors.

GAESA’s tourism subsidiary, Gaviota, serves as Meliá’s local partner in Cuba’s hotel sector.

Tourism Sector Faces Growing Strain

Meliá has long been one of the most significant foreign participants in Cuba’s tourism industry, operating approximately 14,000 hotel rooms before announcing the latest closures.

Several of the affected properties are located in major resort destinations including Varadero, Cayo Santa María and Jardines del Rey. Cubadebate reported that some of those hotels had already suspended operations because of energy shortages and declining demand.

The closures add to growing concerns about the future of tourism, one of Cuba’s most important sources of foreign currency. Government figures showed a sharp decline in international arrivals during the first quarter of the year.

Only 298,000 visitors arrived between January and March, compared with 573,300 during the same period a year earlier, representing a decline of nearly 48%, according to official data cited in the report.

Economic Challenges Extend Beyond Tourism

Industry observers said foreign investors are increasingly reassessing their operations as Cuba confronts a combination of lower tourism demand, fuel shortages and broader economic difficulties.

Lee Schlenker, a research associate at the Quincy Institute’s Global South program, said the combination of reduced international tourism and ongoing economic challenges could have consequences beyond state-owned enterprises.

He noted that thousands of Cubans rely directly or indirectly on hotel operations for employment and income.

Workers in Havana’s tourism sector expressed concern about the impact of Meliá’s decision. Employees and service providers said fewer hotel operations could affect livelihoods across a network that includes drivers, tour guides, hospitality workers and other tourism-dependent businesses.

Wider Corporate Retreat Emerges

Meliá is not the only foreign company reducing its footprint in Cuba. The report noted that hotel operators Royalton and Iberostar have recently suspended or limited some operations on the island.

Additional disruptions have emerged across the travel sector. Airlines including World2Fly, Air France and Iberia have canceled flights serving Cuba, further complicating efforts to revive international tourism.

On Wednesday, Cuba’s Central Bank announced the suspension of Visa and MasterCard operations on the island after foreign entities ended relationships with FINCIMEX S.A., a Cuban financial agency affiliated with GAESA.

Meanwhile, Canadian mining company Sherritt International disclosed a non-binding agreement to sell its stake in a Cuban mining venture, another indication of shifting foreign investment activity.

Diplomatic Tensions Continue

The latest developments come amid renewed tensions between Washington and Havana. The Trump administration has increased economic pressure on Cuba through sanctions and restrictions aimed at encouraging political change on the island.

Cuban authorities have consistently argued that decades of U.S. sanctions have contributed to chronic shortages, power outages and broader economic difficulties affecting daily life across the country.

While officials from both countries held discussions earlier this year, diplomatic relations have remained strained. Additional tensions emerged in May when former Cuban President Raúl Castro was named in a U.S. indictment connected to the 1996 downing of two civilian aircraft operated by Miami-based exile groups.

As Cuba seeks to stabilize its economy, the loss of major tourism partners and continued uncertainty surrounding sanctions present new challenges for one of the country’s most important industries.

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The dominant business angle is macro cost pressure on airline margins, with fuel once again emerging as the sector’s most immediate earnings risk. Recent volatility linked to instability around the Strait of Hormuz has lifted global jet fuel prices sharply, forcing major carriers to embed higher costs into pricing models and schedule decisions that directly affect consumers and business travelers.

Fuel Inflation Hits Airline Earnings Outlook

Fuel price volatility has become the defining variable for second-quarter airline earnings guidance.

Delta Air Lines said elevated fuel costs could add roughly $2 billion in operating expenses during the quarter, according to company executives. Meanwhile, United Airlines warned internally that persistently high fuel prices could raise annual expenses by as much as $11 billion, a figure that would materially outweigh the carrier’s historical peak annual profit performance.

According to International Air Transport Association data cited in the source material, average global jet fuel prices climbed to $209 per barrel, up from about $99 per barrel before the Middle East conflict escalated.

That near-doubling in fuel costs is materially changing sector cost assumptions, particularly for long-haul international networks where fuel remains one of the largest variable expense lines.

Pricing Power Shifts Toward Fees and Fare Segmentation

Carriers are increasingly using ancillary revenue strategies to protect margins rather than relying solely on base fare increases.

Alongside Delta and United, American Airlines, Southwest Airlines, and JetBlue have all adjusted baggage fees upward, expanding the role of non-ticket revenue in offsetting cost inflation.

United is also extending unbundled pricing into premium cabins, monetizing services such as advanced seat selection and flexible refund terms that were previously embedded in higher-fare products. American is similarly deepening segmentation within basic economy by charging more aggressively for seat selection and modifying boarding privileges.

The strategic shift reflects a broader airline industry trend: preserve demand-sensitive headline fares while increasing yield through optional services and differentiated cabin benefits.

International Carriers Mirror the Same Cost Response

The pricing response is global rather than U.S.-specific.

Cathay Pacific has raised fuel surcharges significantly across routes, while Air India introduced additional route-based fees reaching as high as $280 on some itineraries. Other major network airlines, including Emirates, Lufthansa, and KLM, are also adjusting fare structures to keep pace with volatile fuel procurement costs.

For international routes connecting Asia, Europe, and North America, these surcharges can materially affect final ticket yield and may suppress discretionary travel demand.

Capacity Discipline Returns as Margins Tighten

Beyond pricing, airlines are responding with capacity discipline, a classic profitability lever during cost shocks.

BNP Paribas estimates indicate global April schedules were reduced by roughly 5% from earlier plans, with the sharpest pullbacks concentrated in the Middle East and smaller reductions spreading into Europe, Asia, and North America.

United is cutting about 5% of planned near-term flights, focusing on weaker redeye services and historically slower travel days. Delta has also scaled back expansion plans, leaving available June seat supply roughly 3.5% below original projections.

This marks a strategic pivot toward route-level margin protection, where airlines prioritize network profitability over market share expansion.

Budget Airlines and Leisure Demand Face the Greatest Risk

The macroeconomic impact is likely to be felt most severely by low-cost and budget-sensitive travel segments.

Legacy carriers can partially absorb shocks through loyalty programs, premium upselling, and larger aircraft utilization. Budget airlines, by contrast, operate on thinner margins and have fewer ancillary levers, making them more exposed to abrupt fuel inflation.

For consumers, the practical effect is straightforward: higher all-in travel costs, fewer schedule choices, and increased price sensitivity around discretionary trips.

This creates a wider sector implication for the global economy, as reduced affordability may soften tourism flows, suppress small-business travel, and force corporations to reassess nonessential in-person meetings.

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New York City — New York’s vibrant streets are a bit quieter these days, and it’s not just because of the usual ebb and flow of tourists. The city is noticing a significant drop in foreign visitors, and local businesses and guides are starting to feel the impact.

“There’s a worldwide fear about what’s happening in the U.S.,” says Bill Martin, an Australian traveler currently touring New York on an open-air bus. On his six-week journey from Tokyo to Vancouver, with a stop in NYC, Martin has heard the same concerns from fellow tourists around the globe.

“People worry about getting into the U.S.,” he explains. “There’s a real doubt about whether they’ll be allowed in, and that makes them consider other destinations.”

Political Climate Fuels Travel Anxiety

It’s not just casual tourists who feel the heat. Eman Moretti, an Italian student studying in the U.S., shares that President Trump’s tough immigration policies have made his family hesitant to visit him in New York.

“It was a bit harder for them to come,” Moretti says, walking through Times Square with his family. “You never know if they’ll get through customs. It feels like a hostile environment.”

Javier Muenala from Ecuador agrees. “Your visa could be canceled,” he says bluntly. “That risk scares many people away.”

The Numbers Tell the Story

This anxiety is reflected in the data. According to the World Travel and Tourism Council, international travelers are expected to spend $12.5 billion less in the U.S. this year.

For cities that rely heavily on tourism dollars, this drop is painful. New York City, the top U.S. destination for international visitors, is expected to host 2 million fewer international tourists in 2025 than it did in 2024 — a 17% decline, according to New York City Tourism + Conventions CEO Julie Coker.

“International visitors make up only 20% of our total tourists but account for 50% of visitor spending,” Coker says. “We were hoping to hit pre-Covid levels this year, so this slowdown is really disappointing.”

Canadians Are Staying Home — And It’s Hurting NYC

Historically, more Canadians visit the U.S. than any other nationality. But recent political tensions are causing many Canadians to reconsider.

Matt Levy, owner of Spread Love Tours, which offers customized New York tours, has seen business slow, especially among Canadian student groups.

“Canadians are choosing places like Halifax, Nova Scotia, or Vancouver instead,” Levy says. “They’re spending money in their own country.”

He adds that Canadian travel agents have warned clients away from the U.S., citing tariffs and political rhetoric — including Trump’s controversial comments about making Canada the 51st state.

“If this political climate doesn’t improve, 2026 could be even tougher,” Levy warns. “Forty percent of my business depends on Canadian visitors, and they’re staying home.”

Tour Guides and Small Businesses Feel the Impact

Renée Rewiski, a New York City tour guide for over 10 years, says the slowdown is the worst she’s seen since the Covid pandemic.

“This time last year, I’d have 20 people on a tour; now I have five,” she says while leading a small group through lower Manhattan. “Fewer people, fewer countries represented.”

Rewiski worries that if the trend continues, jobs in the tourism industry could be at risk.

“It’s not the policymakers or politicians who lose out—it’s people like me and my colleagues,” she says. “The folks who rely on tourism every day are the ones feeling the pain.”

Hope on the Horizon

Despite these challenges, optimism remains. NYC Tourism + Conventions is running an international campaign called “With Love + Liberty, New York City” to remind travelers that the city is open and welcoming.

Coker points to upcoming events — like the 2026 World Cup nearby in East Rutherford, New Jersey, and the U.S.’s 250th anniversary celebration next summer — as opportunities to bring international visitors back.

“We’ve hit a bump in the road,” she says, “but New York City is here, ready and waiting for you whenever you decide to visit.”

Bottom Line: NYC Still Has Its Magic — And It Wants You Back

So, if you’re thinking about a trip, remember: New York City’s doors are wide open. The concerns around travel may feel daunting, but the city’s iconic energy, culture, and warmth remain as strong as ever. Whether you’re an art lover, foodie, or first-time visitor, NYC is ready to welcome you back with open arms.

Source: CNN – Fewer foreign tourists are visiting NYC. The city is feeling the pinch

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