Back in 2015, the Obama administration opened up travel to Cuba, although there were some stipulations that came along with it. Americans had to declare one of a dozen or so licensed categories (justifications) for the trip. This was great for cruise lines because they had another destination for passengers to book. However, recent developments have raised questions in this industry.

One of the original justifications that Americans claimed was for group educational or cultural trips for cruise ships to travel to Cuba. Under these exceptions, trips to Cuba flourished over the past couple of years and, due to significant pent-up demand from U.S. customers, the voyages quickly became some of the highest yielding in the region for cruise lines.

The controversy came when earlier this month, the U.S. Department of Treasury said in a statement that the United States will no longer allow group educational and cultural trips known as “people to people” travel to Cuba, starting with travel booked after June 5.

At the same time, the U.S. Department of Commerce effectively forbade noncommercial vessels such as cruise lines from making temporary stops on the island. The combination of these rulings effectively eliminated cruise travel to Cuba for U.S. passengers.

Wedbush looked at this opportunity in the Caribbean and believes that while there may be some restrictions on Americans traveling to Cuba, the reaction may be overblown for cruise lines.

The firm detailed in its report:

Fundamentally, the Caribbean market remains strong despite the elimination of Cuba premiums. Macro-economic weakness in Europe is our biggest concern for the group, and yet we believe that the strength of the North American consumer should be enough to sustain the top-line momentum for Royal Caribbean Cruises and Norwegian Cruise Line. Royal Caribbean Cruises remains our favorite names in the group and on the Wedbush Best Ideas list, as the company has the most favorable geographic exposure given the current circumstances (underweight Europe and Cuba), a number of yield-enhancing initiatives (Silversea acquisition; premium priced ship additions; Perfect Day at Cocoa Key) and an advantageous fuel positioning ahead of 2020 regulations.

Travelers that have to change their holiday plans may want to check out some of America’s greatest roadside attractions instead.

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