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How Airbnb piggybacked on a communist program to make Cuba its fastest
growing market ever
Tim Rogers

VIÑALES, Cuba—As the strengthening sun burns off the mid-morning haze
that hangs low over Viñales, the strange dome-like rock outcroppings
that line the valley floor come into view for the tourists crowded on
the hillside lookout above.

While the tourists look through cameras and contemplate the majestic
scenery as an invitation to explore this rural tobacco-growing region of
Cuba, Airbnb contemplates the gathering tourists as an invitation to do
more business outside of Havana. The San Francisco-based home rental
website already has 200 property listings in Viñales—a town of just
14,000 people. And they’re just getting started.

“There is a ton of potential for growth,” Airbnb spokeswoman Maggie Carr
tells me as we wind our way down the hill into town aboard a rattletrap
taxi. “We’re still just growing awareness through word of mouth, which
is now Airbnb grew originally.”

As most American companies are still trying to figure a way into Cuba,
Airbnb is already in full-throttle expansion across the country.

The online vacation rental website was among the first U.S. companies to
move into the once-forbidden market last year with an initial property
listing of 1,000 homes. One year and 13,000 bookings later, Airbnb has
ballooned its Cuba offering to 4,000 homes (2,700 in Havana alone!),
making it the fastest-growing vacation market ever, according to Jordi
Torres, Airbnb’s regional director for Latin America.

Airbnb Cuba has jumped from 1,000 listings to 4,000 listings in one
year, making it the company’s fastest growing market ever

“In cities like New York, Los Angeles and Paris, it took us three or
four years to get to this level of growth,” Torres told me during a
recent site visit to Airbnb homes in Viñales, two hours west of Havana.

“There has been a latent demand in Cuba for a long time,” he said. “This
is an emotional destination.”

But the secret formula to Airbnb’s success here might surprise you: It’s
a U.S. capitalist model built on a Cuban communist foundation. Without
the groundwork laid by the Castro regime over the past 20 years,
Airbnb’s success and massive scale-up in Cuba would not be possible today.

That’s because the website only recruits new property listings from an
existing government roster of 21,000 state-authorized rental homes.
Airbnb is not introducing a new concept in Cuba. It’s giving a new look
to the old state-sanctioned rental system by putting existing listings
into its online booking platform.

In 1997, the Cuban government started allowing people to rent rooms to
tourists through a program known as “casas particulares.” Each casa is a
privately owned home that operates like a small bed-and-breakfast.
Participating homes are registered with the Cuban government, held to
basic standards and quality-control codes, and required to pay taxes on
each guest.

So when Airbnb arrived in Cuba last year, they found the perfect
vacation-rental infrastructure already in place to set up shop. It also
means that Airbnb’s continued growth potential in Cuba is massive. There
are still 17,000 casas particulares on the government’s list, and all of
them are potential listings for Airbnb (unless they’re owned by senior
members of the communist party. Sorry, comrade).

Airbnb’s biggest challenge in Cuba has been getting a digital marketing
and payment platform to work on an island with 5% connectivity
and limited banking services.

Luckily for the U.S. company, Cuban ingenuity solved that problem for
them. The Cuban workaround involves “hosting partners” (basically a guy
in the park using a WiFi hotspot to manage Airbnb reservations for
multiple property listings) and remittance services. So instead of
getting money wired directly to a bank account, most Cuban hosts receive
their payment—minus Airbnb’s 3% transaction fee, guest fees, and
remittance fees— in cash from a dude on a motorcycle, usually within a
week of the booking.

Involving more people in the booking and payment process means more
people take a cut of the action. Still, “90% of the money ends up in the
national ,” Torres says. And at an average of $250 per booking,
that’s still good scratch in a country where the average monthly income
is around $25.

“I’ve been in the business for 13 years and I’ve had some good
luck renting my house, but with Airbnb my bookings are constant and the
clients are good,” Cuban homeowner Mirta Diaz told me. “Since
mid-February I have made 27 reservations through Airbnb. I’m booked all
the way through April. I get two or three new reservation requests every

Business is so good for Diaz that she’s building three more rooms on her
house. She’s not alone. Her whole block is full of small apartments for
rent, advertised by signs marked with uncreative names such as Casa Dr.
Wilfredo, Casa Dos Hermanos, or the slightly more tongue-twisted Casa
Seidy y Greisy.

The Cubans I spoke with say listing their home on Airbnb has been a game
changer for them. Granted I was traveling around town with Airbnb execs,
so it wasn’t exactly a random sampling of Cuban hosts, but their
optimism was generally unprodded.

“We’ve been renting our extra room for five years now, but have only
been listed with Airbnb for three months. It’s been magnificent. Now 90%
of our bookings come through Airbnb, and we haven’t had a day without a
guest since January,” said Vladimir Delgado, whose family rents a room
in Viñales. “We’re building two more rooms.”

Cubans do, however, have some suggestions for Airbnb about how the
company can improve its services.

Fernando Garcia, an affable owner who rents two apartments
near the back of his property, says Airbnb is good for business, but
trying to manage his own online bookings while also running a restaurant
is a challenge.

Garcia doesn’t use a guy in the park to manage his reservations, so that
means he has to jump on his motorcycle several times a week and zip into
town to buy a $2 scratch ticket and connect his cellphone to the public
WiFi hotspot, where bandwidth can be spotty.

Due to his limited connectivity, Garcia says he sometimes loses
reservations from prospective clients who get frustrated when they don’t
receive immediate confirmation for their booking inquiries. He thinks
Airbnb should implement an SMS-based booking platform that would make it
much “easier to communicate with clients.”

The company says it takes those suggestions seriously. Last week Airbnb
opened its Cuba booking platform to all foreigners (previously it was
available only to Americans), after Cuban hosts complained that
Europeans travelers were unable to book through the site.

Kitchen table diplomacy

Excitement about Cuba is making tourism grow faster than current
infrastructure can bear. Cuba is said to have some 61,000 hotel rooms,
but that’s not enough beds to meet growing demand, which some estimate
could reach 10 million tourists in the years ahead (61,000 x 365 x ????,
carry the 1, rounded to the nearest tenth = not enough beds.)

With new hotel projects several years off, Airbnb’s continued expansion
across the country will act as a bridge to meet rapidly growing demand.
It will also help democratize tourism by spreading revenue to families
across the island, rather than depositing money into foreign bank
accounts held by international hotel chains.

Homestays allow American tourists to form a real connection with a Cuban
host family. It’s the type of pueblo-to-pueblo connection that President
Obama called for during his recent speech in Havana.

“This is not just a policy of normalizing relations with the Cuban
government,” Obama said. “The United States is normalizing relations
with the Cuban people.”

And Airbnb’s brand of “kitchen table diplomacy” can help make that
happen, Torres says.

“People have been wanting to connect with Cuba for 50 years,” he told
me. “And what better way to do that than to sit down at the table with a
Cuban family?”

Source: How Airbnb piggybacked on a communist program to make Cuba its
fastest growing market ever | Fusion –

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