All Cuban hotels are state-owned so the deal signed yesterday puts a major US corporation directly into business with the Communist government under a special US license that pushes the Obama administration's legal dismantling of the trade embargo on Cuba further than ever before.

In a once-unimaginable arrangement, a hotel owned by the tourism arm of the Cuban military will become a Sheraton Four Points.

Starwood's chief of Latin America operations, Jorge Giannattasio, said the firm will invest millions to renovate and rebrand the Quinta Avenida, Santa Isabel and Inglaterra hotels, train and hire new staff and reopen the hotels by the end of the year.

The Quinta Avenida is owned by Gaviota, a military-run tourism conglomerate. The Santa Isabel and Inglaterra, which are run by other state agencies, will be operated as part of Starwood's Luxury Collection brand.

It's unclear, however, how long Starwood can be called an American company. On Friday, Starwood called off a USD 12.2 billion buyout agreement with Marriott in favor of an offer from a group of investors led by the Chinese insurance company Anbang.

Cuban hotels are notorious for their ramshackle furnishings and poor service. Giannattasio said the Cuban Starwood hotels would be refitted with everything from new mattress to improved kitchen equipment and safety measures and managed by teams of expatriate Starwood employees.

Cuban law prevents widespread direct hiring of Cuban workers by foreign firms. International companies complain that their inability to directly hire Cuban employees, and if necessary demote or fire underperforming staff, hinders their ability to provide satisfactory customer service.

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