HOW AIRBNB PULLED OFF A COUP IN CUBA

HOW AIRBNB PULLED OFF A COUP IN CUBA
By Erin Griffith

A new tourism market has become a test case and a PR bonanza for the
home-share startup.

Brian Chesky and Lester Holt are the cleanest things on this street.
Their crisp oxford shirts gleam in the heat as they stroll along a
crumbling Havana sidewalk, the smell of gasoline mingling with ocean
air. Everything surrounding Chesky, the CEO and co-founder of
home-sharing startup Airbnb, and Holt, an NBC anchor, is covered in a
layer of dust­—the '57 Chevy Bel Airs, the frankensteined bicycle
rickshaws, the stray dogs rolling in mud or poop. Anywhere else, a
camera crew following two guys that look like they belong on a yacht
might draw a crowd of onlookers. But the Cuban men and women leaning out
of their windows and doors barely acknowledge the action. Down the
block, someone is blasting dance music.

Chesky alerts Holt's camera crew to the upside-down anchor symbols
displayed in front of several homes. "All of these are Airbnbs," he
says. Technically they are casas particulares, part of Cuba's
home-rental network, which makes them potential Airbnbs. But the casas'
ready-made supply, with regulations, registries, and taxes in place,
made it easy for Airbnb to launch in Cuba when the U.S. loosened its
travel restrictions in 2015. About 4,000 of Cuba's estimated 20,000
casas particulares have signed up with Airbnb, and 13,000 Americans have
booked rooms—making Cuba the fastest-growing market Airbnb has ever
launched.

Of course, "easy" and "fast" are relative terms in Cuba. The strict
Communist regime and 56 years of a U.S. trade embargo have created
obstacles for Airbnb, notably that most Cubans don't have direct
Internet access or a way to accept payments from an American company.
(Never mind that access to running water, food, and transportation can
be unreliable, especially as increased tourism from the U.S. strains the
island's limited resources.)

With 11 million people and just 3.5 million visitors a year, Cuba is a
much smaller opportunity for Airbnb than, say, Brazil or Mexico. But
Airbnb's promise is that you can go anywhere—well, not anywhere anywhere
(Crimea, Iran, Sudan, Syria, and North Korea are out), but close—and
feel at home. So the company has made Cuba a priority, jumping through
legal and travel-visa hoops, building software work-arounds for web
access, and bringing casas particulares owners into the Airbnb fold.

The decision has been a public relations victory. Chesky's trip to Cuba
this spring coincides with President Obama's historic visit; there, the
President brags about Airbnb's $25.5 billion valuation and calls Chesky
one of America's "outstanding young entrepreneurs." The moment stands in
contrast to Airbnb's home-turf regulatory battles: New York's attorney
general has said three-quarters of its New York City listings are
illegal, while San Francisco has pinched Airbnb with new taxes and
pressure to shutter nonresidential listings.

But in Cuba there are plenty of warm fuzzies to go around. Throughout
the trip, Chesky describes interactions between Cuban hosts and American
guests as "person-to-person diplomacy." That narrative allows Airbnb
travelers to handily comply with the U.S.'s "people-to-people"
educational travel visa requirement.

And Airbnb is helping Cubans become mini-entrepreneurs: The average host
makes $250 per booking, a meaningful sum when the average Cuban salary
is $23 a month.

That part fits neatly into the President's promotion of the American
Dream to the Cuban people. "As we've seen in America, businesses that
start small—even in a garage—can grow into some of the world's most
successful companies," the President says to a beer brewery full of
Cuban entrepreneurs and business people.

What Chesky loves most about the country, he says, is that it's so
authentic. "This is exactly what you'd think it is," he marvels as he
takes in Havana's paint-chipped colonial buildings. "Whenever you see a
picture of a place and then you actually go there, it never looks like
the picture, or only one street looks like that."

Authenticity is Airbnb's thing. Chesky hates mass tourism—Times Square,
McDonald's MCD -0.23% , and Bubba Gump Shrimp Co. are his favorite
examples—and sees Airbnb's 2 million listings as a sort of anti–tourist
trap. "We're about allowing you to feel like you live in a community,
even if it's just for a few days," he says. He's made subtle revisions
to Airbnb's site to reflect that view, like changing the wording on a
sign-up button from "List your space" to "Become a host." This week the
company introduced a new initiative called "Live There," which will
provide city guides created by its hosts. Articles that describe Airbnb
as just a way to rent a room get it wrong, he says: "It's about
something much deeper."

I ask if anyone has ever called Chesky a hippie. Maybe a little bit, he
says, reminding me that he didn't get into this business to get rich.
When I ask whether money taints Airbnb's altruistic mission, he
dismisses the idea and directs me to his co-founder's TED Talk about
"commerce with compassion." Later, at a party for local Airbnb hosts, I
overhear him brag that someone just called him a hippie.

It's hard to dismiss Airbnb's idealism once you see it in action, as I
do during numerous visits to casas particulares. Almost across the
board, the hosts are effusive about the transformations they're going
through. At the apartment of Yuleidi and Octavio, Chesky tags a wall
with Airbnb's logo, a triangular loop that the company has christened
"Bélo" and is meant to be a sort of hobo code for "universal belonging."
(The logo caught some ridicule when it was introduced in 2014, inspiring
headlines like, "Is it balls, vagina or both?"

"I have goose bumps," Yuleidi gushes as Chesky scrawls on her wall. "I'm
going to cry!" Later, she uploads a photo of his message to her Airbnb
listing.

The next host we meet actually does cry. Sitting on a bright blue velvet
couch in her colonial townhouse, Reysa, a former criminal lawyer,
explains that becoming an Airbnb host has allowed her to keep her
home—she was about to sell it—and support her children. There's just one
problem: She has to reject booking requests from non-Americans, since in
Cuba, Airbnb is open only to Americans.

Chesky tells Reysa, through a translator, that that rule is about to
change, and the news overwhelms Reysa. "Qué bien! Muy feliz!" Tears of
joy stream down her face, and Airbnb's PR reps well up too. Someone
hands Reysa a tissue. She says Airbnb has empowered her: It's as if a
book was kept in a hidden place, and Airbnb opened it for her.

"Wow," Chesky says. "This is unbelievable." Though what's moving us
isn't what's moving him; he's got Reysa's rejected bookings on his mind.
"I was wondering why the conversion rate was so low," he says.

Throughout the conversation, Chesky takes notes on his phone. He later
references Reysa's tears at Obama's entrepreneurship summit, at a White
House press corps briefing, and in TV interviews. It can be hard to tell
where the PR operation ends and Airbnb's mission begins, but on some
level, it doesn't matter. The company ignites zealous enthusiasm from
hosts because it has had a big impact on their lives. I wonder aloud
whether Airbnb gives hosts a script for media tours like mine. Chesky
says that's not possible. "What they said is better than the script!"

A version of this article appears in the May 1, 2016 issue of Fortune
with the headline "Airbnb's Coup in Cuba."

Source: - http://fortune.com/cuba-havana-airbnb/