Benefiting from an Open Cuba

Highlights include Carnival Corp. (CCL), Royal Caribbean Cruises, Inc. (RCL), Marriott International, Inc. (MAR) and Starwood Hotels & Resorts Worldwide, Inc. (HOT).

Cuba may offer new growth potential for some travel and leisure firms, if recent steps taken by the U.S. government are sign of things to come.

Yesterday, the Obama administration announced that Cuban-Americans will now be allowed to visit the island nation without restriction, and will be allowed to send remittances to family members in Cuba.

The lifting of previous restrictions has sparked speculation among investors that further changes may be forthcoming. While the trade embargo currently remains in effect, if relations with Cuba were to be normalized in the future, several U.S. companies could stand to benefit.

The major cruise lines, Carnival Corp. (CCL) and Royal Caribbean (RCL) would likely stand out as winners, as the companies could add a very attractive destination to their Caribbean cruise itineraries.

Major hotel companies such as Marriott International (MAR) and Starwood (HOT) would also benefit from the potential expansion opportunities in Cuba.

Prior to the revolution led by Fidel Castro, Cuba was a popular tourist destination, filled with large hotels and casinos. Its convenient location just 90 miles off thevcoast of Key West, Florida made it a hot spot for U.S. tourists.

Given the fact that regular travel to the island nation has been prohibited for decades under the trade embargo, we expect that Cuba would prove to be an extremely popular destination for American tourists, and could provide substantial benefits to the travel and leisure companies.

We note, however, the step from the changes announced yesterday to a full normalization of relations with Cuba is a large one, and to invest in a company solely for this potential would be a mistake, in our opinion.

The outlook remains very challenging for travel companies in this economic environment, and we remain cautious on the group as a whole.

Read the full analyst report on CCL

Read the full analyst report on RCL

Read the full analyst report on MAR

Read the full analyst report on HOT