The project, one of Leisure's three planned developments in Cuba, is also across from Havana's new Miramar Trade Center, Conners said. Each project is set up as 50/50 joint venture with the Cuban government.

The executive said that the economics of the C$180 million Monte Barreto project work even if the U.S. embargo against Cuba isn't lifted. With the embargo in place, Leisure calculates it could generate a sufficient internal rate of return of 18% to attract the necessary financing.

owever, if the embargo is lifted, Leisure Canada's internal rate of return could rise to as high as 35%, because increased demand would allow it to charge higher prices, Conners said.

To finance construction of the Monte Barreto project, Leisure aims to rely on debt. "We would prefer not to dilute our existing shareholders," Conners said.  Conners expects the U.S. to at least start moving towards ending the embargo as early as sometime this year, noting if the Americans stand pat, China will solidify its position as Cuba's main trading partner.

"Cuba poses no threat to the United States and when you have the United Nations voting in complete majority to end the embargo, it is a bit of an odd situation," Conners said.

Improving relations between the U.S. and Cuba are already evident, Conners notes. For instance, over the last year, for the first time since 1960, the Americans didn't veto Cuba joining the Organization of American States; immigration discussions are underway between Cuba and the U.S. and the embargo on Cuban Americans travelling to Cuba has been lifted. Americans now can also apply for a visa to travel to Cuba for cultural and humanitarian reasons.

Cayo Largo and Jibacoa are Leisure's other two projects in Cuba. Cayo Largo is about 50 kilometers south of the main island of Cuba and is a popular destination for divers. Leisure wants to develop a US$55 million, 380-room all-inclusive five-star hotel at this location. Leisure's Jibacoa site spans 5.5 square kilometers of oceanfront property, about 65 kilometers east of Havana. It has the potential to host several luxury hotels and two championship golf courses, according to the company's Web site.

By Ben Dummett, Dow Jones Newswires; 416-306-2024; This email address is being protected from spambots. You need JavaScript enabled to view it.