Amid the hand wringing over exactly how Cuba and the U.S. can annul a 56-year-old divorce, some magic has been happening between an island nation that punches above its weight in many arenas and a U.S.-based room rental platform with some high concept ideas about how to improve humanity.
A closer look at Airbnb’s success in Cuba is yet another illustration that simplicity is almost always closer to the truth, and in this case the simple truth is that Airbnb works in Cuba on many levels and for everyone involved.
Cuba’s Economic Challenge
Cuba’s educated society, considered to be the highest in Latin America, and its relatively high ranking on development metrics such as literacy and (low) infant mortality means it faces the unique circumstance in transitioning its economy towards openness and growth but without many of the burdens that bedevil other third world countries that rank lower on metrics like health and education.
The promise is that by inserting economic opportunity, the country can leverage the inherent resources of the Cubans themselves and perhaps deliver results faster and in ways never before seen in a developing country: an economic development path shaped by web technologies.
Of course, there are a lot of elements, political and economic, needed to fulfill this promise, but the ingredients are in place should current trends continue.
Traditionally, a country like Cuba would embark on a plan to develop giant hotels and port terminals to attract mass tourism. But there are significant problems with this type of economic development that are both financial and cultural. The Dominican Republic has capitalized on mass tourism with remarkable success as measured by its recent growth rate, yet Puerto Rico’s $100 billion (included unfunded pensions) debt-fueled spending binge has been a failure, leaving the island in a self-described “death spiral.”
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The big projects required to transform an economy towards mass tourism tend to be highly developmental during construction, yet after completion the employment base that once attracted skilled laborers transitions to lower-paid, non-skilled service jobs like waiters and maids. And the profits generated locally are almost always exported outside the host country.
This type of development has a potential social impact in that it preserves the cultural boundaries that separate first world primacy over third world depravity in structured environments designed to meet the financial interests of the providers of capital. The human, cultural side becomes secondary, and a “vinyl” sameness spreads across every venue. Local art, cuisine and culture are too often replaced with chain restaurants, strip mall-style ports and Chinese-made souvenirs.
Getting to scale in mass tourism infrastructure is typically funded by long-term institutional credits. International financial institutions (IFI) like the World Bank and the Inter-American Development Bank were created do this type of lending on a country level, among other things like providing economic development advice.
Hidden deep in the complex U.S. embargo against Cuba, specifically the Helms Burton Act, there exists an explicit prohibition against IFI’s lending to Cuba. The law requires the U.S. to withdraw financial support to any IFI doing business with Cuba.
Without significant external credits, Cuba’s growth plans for its vital tourism sector have to be accomplished mainly with meager internal savings and the “scrappiness” of its people.
Luckily for Cubans, years of scarcity has taught them how to be scrappy.
As the Puerto Rican case illustrates, achieving growth is a lot more complicated than having access to debt.
Airbnb’s Plans for Planet Earth
Airbnb is vocal about, “being built for a purpose.”
According to Alex Mimiziani, Airbnb’s EMEA marketing director, “It’s about delivering real, tangible value to people’s lives and the world at large.”
She goes on to say, “Airbnb could contribute to a movement where we are increasing cross-cultural empathy, decreasing cultural boundaries and ultimately creating a world where seven billion people can belong anywhere.”
What’s different about Airbnb’s success in Cuba is that getting to scale breaks down rigid cultural boundaries and, on an individual level, allows Cubans to discover the power of their own inner resources as a way shape the future – perhaps for the first time in generations. And for visitors, it quenches a thirst for authentic travel experiences and the memories created by real cultural exchange.
Airbnb’s impact in Cuba could pry open traditional thinking about what Mimiziani describes as, “the ill experience in mass tourism.”
The Future for Cuba & Airbnb
When former U.S. President Obama visited Cuba in 2016, Airbnb’s CEO, Brian Chesky, accompanied the entourage of business leaders and entrepreneurs aboard Air Force One.
There was an entrepreneurial event in Cuba where Chesky’s membership as a Presidential Ambassador for Global Entrepreneurship (PAGE) helped insert the company into Cuba’s existing program for casas particulares (Cuba’s legal provision for room rentals in private homes).
The results were immediate. Last year, according to Chesky, “Cuba is the fastest-growing country on Airbnb ever in the history of our platform.”
Today, the company has more than 15,000 listings in Cuba – equivalent to about a dozen hotels that would have taken years to build. With the U.S. embargo cutting off the possibility for large-scale infrastructure development, Airbnb’s web-enabled platform is emerging as a vital tool for powering growth in Cuba’s tourism sector.
Expanding on its plans to re-imagine humanity, the company has embarked on a new program called Experiences. The idea is to facilitate deep engagement between hosts and travelers in such areas as sports, nature, social impact, entertainment, food and arts.
The Cuba Journal spoke with Jordi Torres, Airbnb’s Regional Director – LATAM, who said about the Experiences program, “Since we launched, Havana has been the market with the most bookings and demand.”
It is unclear whether Cuba achieved the leadership position in the company’s new Experiences program due to any special focus or whether this came about organically. In any case, the travel industry would be wise to take note of this development.
What’s next for Airbnb in Cuba could be a physical presence for travelers and hosts alike. Chip Conley, Airbnb’s former Head of Global Hospitality and Strategy, made some comments last year about Airbnb’s plans to focus on such things as “embassy”, “lux” and “concierge.” According to Conley, the embassy idea is a long-term concept and would be a place to check-in for your Airbnb rental, listen to jazz or enjoy coffee.
Considering the growing pains in Cuba’s tourism industry, an Airbnb embassy would make perfect sense for everyone involved in Cuba – including interest among the already-strong affluent traveler segment, eager Cuban hosts, and Airbnb’s brand ambitions.
And for Cuban policy makers, Airbnb’s continued success fulfills what President Raul Castro has described as a need to update its economy that is, “bloated and unsustainable.”