VARADERO, Cuba -- As bulldozers droned at new hotel sites down the beach, tourism official Nelson Martinez O'Hallorans predicted big things to come for Cuba's premier seaside resort.

With construction booming, Martinez said the number of hotel beds in Varadero may triple to 30,000 if the government finds that such growth won't harm the environment of this breathtaking peninsula.

Cuba's dream of becoming a tourism mecca is moving ahead in fits and starts. One of the fastest growing destinations in the Caribbean, Cuba has seen its tourism income soar. In 1994, it tallied gross receipts of $850 million. This year, it expects $2 billion.

Tourism is to the economy today what sugar once was -- its central pillar. But as in the rest of Cuba, problems dog the tourism sector. Cuba can't seem to draw enough visitors for a second visit. Many of those who arrive spend little. Service is still substandard. And some tourists complain of seeing sad faces on the streets.

"It is a poor country. And we have come to an area that is not the real Cuba,'' said Andy Riley, a British package tourist on a trip to Varadero.

The jury is still out on whether tourism can save President Fidel Castro, although soaring tourism receipts have infected authorities with optimism after the tailspin caused by the fall of the Berlin Wall nearly a decade ago.

"The government seems to have become giddy thinking it is leaving the crisis behind,'' said Gerardo Gonzalez, a Cuban economist based in San Juan, Puerto Rico, who went into exile three years ago.

Without doubt, though, Cuba's strides in tourism have been large. In 1990, Cuba had 13,664 hotel rooms of acceptable international quality. Today, it has between 28,000 and 30,000 such rooms. Big names have come in. A Club Med opened earlier this year. There's a Super Clubs all-inclusive resort. And Sandals is arriving before the end of the year.

In the wintertime, 40 flights a week land from Canada. Charter planes from Germany and Spain crowd Varadero's busy airport. When it's summer in Cuba, tourism picks up from Brazil and Argentina, when those nations are in winter. Meanwhile, world-class airlines and companies are eyeing Cuba, seeing its potential even if current circumstances are far from optimal.

"By the end of this year, British Air will start flying into Cuba from Gatwick [England]. That's going to be incredibly significant for Cuba,'' said John Kavulich of the U.S.-Cuba Trade and Economic Council, a nonpolitical group focusing on commercial prospects in Cuba.

Kavulich said a Mexican company, Ece S.A., has just won rights to a Hard Rock Cafe franchise in Cuba, and would like to go in "sooner rather than later.''

Red tape is common

The reality of business in Cuba, though, takes some of the shine off the possibilities. Foreign companies cannot own hotels or restaurants. They just operate them. That makes foreign managers reliant on Cubans for even minor improvements -- and subject to intrusive state security.

In the resident manager's office of LTU's Bella Costa Resort in Varadero, Dirk Rehorst leans over his desk and whispers: "Our faxes are controlled. Our telephones are controlled.''

Paperwork and red tape are common complaints, although many hotel operators are loathe to be too critical of Cubans.

"They are very bright people. But in a centrally controlled economy there is more bureaucracy,'' John Issa, owner of the Jamaica-based Super Clubs chain, said in a telephone interview.

Cuban workers, exceedingly eager to obtain jobs in the dollar-paying tourism industry, draw few complaints. But employees, sapped of entrepreneurial spirit by the communist system, often have limited creativity.

"One problem is the variety of food. They don't have a feeling for the presentation of food,'' Rehorst said.

Have changed image

Other hotel managers praise authorities for sweeping prostitutes, known as jineteras, out of Varadero, limiting entrance to the beach areas, and making the peninsula more of a family destination.

"Tourism to Varadero has changed in the past two years. Up to two years ago, 70 percent of the tourists came for the jineteras. Now, that has all moved to Havana. Today, 95 percent of the tourists are families, honeymooners, elderly people,'' said Jose Sanchez, general manager of the Melia Varadero Beach & Incentive Resort.

What is swelling tourism to Cuba these days is price. All-inclusive, weeklong packages to Varadero are available for $600 a week in Canada, and for $1,000 in Europe, drawing throngs expecting to spend little beyond that.

"Where Cuba needs to break out is with people spending $100 or $200 a day,'' Kavulich said.

Along the beaches east of Havana, known as Playas del Este, one can still see tourists nursing a single beer all day, staying in $20-a-night rooms in private homes.

Bargain-hunter paradise

For charter operators, Cuba is a peculiar market, drawing bargain hunters picking from worldwide beach destinations. While a smattering care about Castro and politics on the island, most don't.

"The political situation to a visitor is an irrelevance,'' Issa said.

Many tourists, such as Germans, are more concerned about the environment and personal security than about the socialism that has made Cuba off limits for U.S. tourists since the early 1960s.

"They want to get away from Germany, far away, but they want to feel safe,'' said Rehorst. "They just want to have sun, the beach, some fun and cold drinks.''

Even still, to the detriment of Cuba, few tourists develop an affinity that draws them back. Repeat business remains low. Martinez, the Cuban official, said only 19 percent of tourists return to Cuba. Rates are twice that for some higher-end Caribbean islands.

"When you get into the budget-type tourists, they tend not to have much destination allegiance,'' noted Arley Sobers, information manager of the Barbados-based Caribbean Tourist Organization, which represents 31 countries, including Cuba.

Sipping a soft drink before his charter plane departed for Britain, 28-year-old Andrew Chiles demurred when asked if he'd return. "I'd rather see something new. But that's not to say I disliked it here,'' he said.

But the hotel boom is bound to continue. Hotel operators say they are making returns on their investment, although they decline to provide details.

"It's profitable. Cuba is intelligent enough to let the companies make some money,'' Rehorst said.