Airbnb bets on boom in Cuba tourism

Airbnb has opened its site to Cuba, making it one of the first US companies to open shop on the island since the dramatic thaw in tensions between Washington and Havana last year.

After five decades of hostility, estrangement, and economic sanctions between the two countries, tourism to Cuba - historically dominated by Canadians and Europeans - is set to spike after President Obama loosened travel restrictions in January.

Airbnb expects "significant demand" for Cuban rentals from Americans. US user searches for Cuba on Airbnb's site have jumped 70 per cent since January, the company said.

The online house-rental start-up now allows licensed American travellers to book rooms at more than 1,000 listings across Cuba, many featuring ornate colonial design and cheap prices: the average rental in Havana costs $42 per night.

"For over 50 years, Cuba has been out of reach for most Americans" said Nathan Blecharczyk, Airbnb's co-founder. "When we founded Airbnb . . . our dream was to help create a world where you could belong anywhere . . ."

Airbnb's "sharing economy" business model makes Cuba a potential sweet spot. It does not face some of the roadblocks for traditional American hotels, who would have to buy property and hire employees to operate on the island.

Rather, the $13bn company has soared in popularity as the middleman for people who want to rent out a spare room in their home.

Still, limited internet and phone access in Cuba poses a problem for Airbnb, whose booking system operates entirely online. Only five per cent of Cubans have home access to the internet and less than a fifth have mobile phones, according to US officials.

To enter this unplugged community, Airbnb has tapped into a local network of private home-stays - casas particulares - who have dominated the Cuban tourism industry for decades and make up a sizeable income for locals in an otherwise isolated, sluggish economy.

The casas particulares owners have added their homes to the Airbnb database, although some hosts have "limited internet access", the company admits. Airbnb will use a remittance contractor to pay the hosts in cash, whereas normally it transfers money online after taking a 3 per cent cut of the rent.

As Cuba slowly opens its economy, foreign businesses are still hampered by local regulations and US sanctions. About 60 per cent of foreign businesses established in Cuba since the fall of communism in eastern Europe have closed, according to government statistics.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation