US hotel chains face in Cuba growing competition from Airbnb

Posted: 13-Jul-16 09:03

With both Starwood Hotels & Resorts and Marriott International announcing plans to develop properties in Cuba in the coming months, both US chains face a number of considerable unknowns. However, while the country's business policies, infrastructure capabilities and economic embargoes all present significant hurdles, it is perhaps Airbnb that provides the most formidable opposition.

US hotel chains face in Cuba growing competition from Airbnb

When Starwood Hotels & Resorts inked a deal to become the first US hotelier to open a property in Cuba in nearly six decades earlier this year, the writing was already on the wall. Within a few months of their announcement, Marriott International said they’d soon be doing the same and a number of other big-name competitors have also expressed an interested in expanding into the island nation.

As these companies look to move into Cuba, however, they face a number of considerable challenges. Not only are there plenty of unknowns in terms of how the country will legislate and provide for new business, but there is already existing competition on the island in the form of Airbnb – the hugely successful home-sharing site that first arrived in Cuba back in the spring of 2015.

Indeed, in the space of a year, the company has established a strong foothold in Cuba, quadrupling its presence from 1,000 listings to 4,000 in record time according to a company spokeswoman. To put that number into its proper context, this means that Cuba is already the fastest-growing market in Airbnb Inc’s eight-year history and only looks to get stronger still as travel restrictions are relaxed.

Going against the grain

Sean Hennessey, chief executive of Lodging Advisors said:

“The typical scenario [for entering a new country] has been the opposite, where hotel companies are the established ones and Airbnb comes later. In Cuba, having the first-mover advantage, as we call it, is a big plus in Airbnb’s favour.”

Being an online service that doesn’t face many of the regulations that hotels do, Airbnb was able to quickly establish itself in Cuba, with the San Francisco company first offering rooms in Cuba in April 2015 – four months after Barack Obama announced US companies could begin doing business there.

With Starwood Hotels & Resorts not following their lead for another year, the group now faces an uphill struggle to compete with Airbnb in Cuba, but the company remains confident there will be enough demand to support both businesses. Jorge Giannattasio, chief executive of Latin American operations, declared:

“It is fair to say that today, Havana is basically sold out every month of the year and every day of the week. There is enough space for different types of competitors in the marketplace.”

Of course, any prospective US hotel development in Cuba also faces a number of issues including access to flights, building supplies and materials and being able to import food and beverages, but this is basically supply-and-demand issue – and right now, the demand in Cuba is at an all-time high.


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