November 2, 2016

My Insight looking into Barbados Tourism from an Airbnb Perspective.

In recent times, the Sharing Economy has become the subject of a real discussion in Caribbean tourism circles. From The Caribbean Tourism Organization’s State of the Industry Conference with high-levels experts from World Tourism Organization, Airbnb, TripAdvisor, to the third quarterly Barbados Hotel and Tourism Association Meeting- this new reality is being talked about, a lot. I attended these events and throughout both of these sessions, we heard topics like “ The Sharing Economy – an Opportunity or a Threat”- a topic driven by the dual reality that Tourism Arrivals have increased by 14% in Barbados  – which is amazing, yet hotel occupancy has only increased by 1.1%. These two realities are driven, simply, by this new economy.

For us at Caribound, when we think of the sharing economy- naturally we think of the story of Airbnb- and our chapters in that story. Our Story with Airbnb began in 2011 when we joined what we knew would be a game-changer. We were one of their first suppliers on the island, a partnership which today includes 120 properties online and over 250 reviews of this amazing portfolio. As a result, we developed a special relationship with special privileges which include on demand access to inside intelligence and data from Airbnb. Short term rentals driven by The Airbnb Experience in Barbados is one of the major drivers of the increase in tourism arrivals and decrease in hotel occupancy with Airbnb welcoming over 30,000 visitors to Barbados in the last year. This massive shift in the industry is being caused by something special and reflective of our times.

You know, there is a great story behind “the sharing economy.” It is powerful, it literally transcends borders during such a difficult time for our world and it is revolutionary.

Airbnb pushes the greatness of living in a stranger’s home together with a local family. They feed into the millennial dream of togetherness….. But for us here in the Caribbean, for the most part, it is just a nice story. The reality is that only 22% of all Airbnb visitors visiting the Caribbean and 13% of Airbnb visitors visiting  Barbados stay in “Private Rooms” within the homes of locals. Thus the fact remains that 87% of those visitors are staying in good old fashioned private accommodation.  There have been landlords, hoteliers and innkeepers for decades in my opinion,  they are the Original “Sharing Economy.” They have been “Sharing” which seems to be another word for renting.  They have been renting their own properties for ever and the “local kindness” which is marketed by the home sharing industry is truly good old Hospitality. Maybe our mass marketed hotel industry has lost some of the intimacy of hospitality which can now only be found in the small luxury boutique hotels of the world?  Maybe the world traveller yearns for that intimacy again or maybe the independent freedom hunting traveller desiring space and  privacy and armed with the knowledge of google at their fingertips, feels more than ever that they can take care of themselves.

The truth is, that Airbnb changed the way that this market worked, they made staying in Private Home accommodation cool not just for the super rich who could afford to stay in luxury villas (and who have been doing so for decades, think of The Hamptons, think of Barbados)  but for anyone with any budget, even the hotel guests of the world. The story of authenticity and togetherness gave the brand supersonic international stardom but the really impactful difference was that they made it free and easy for landlords to list their properties.  In the past, only committed Vacation Rental homeowners could afford to pay the exorbitant upfront fees that Homeaway and VRBO were charging annually to list a property on those platforms, which in many instances was in excess of $1000 per property.  Airbnb changed all of this, they made it free to list and thus free to test and the market chose what properties would survive in the short term rental space. They changed the industry standard and the rest of the industry had no choice but to follow suit. Now the entire industry is paid on performance and this is one of the major factors which has driven the massive onboarding of available inventory world wide.

The real estate market in Barbados has changed. Expats who once rented these ideal properties in the tourism districts dried up; the high paying Embassy tenants reduced in numbers and the ones that did stay disappeared from the coast lines in favor of homes in developments like Fort George Heights, after new rules were released prohibiting many expat employees from renting private villas on the beaches for environmental safety reasons  and housing budgets drastically decreased due to the economic downturn. Suddenly, rental homes that achieved high long term rental yields were suddenly, not renting and were empty for months and months regardless of the breath-taking beauty and convenience which their locations possessed.

Now with over 3000 units on Airbnb, Barbados, for the first time is becoming a cheaper destination to visit. A family of 6 can stay in a 3 bedroom villa with a pool on the cliff tops of St. Philip (5 minutes from the airport)  for USD $125 Per Night, that works out to just USD $25 Per Night per person. According to Airbnb their blockbuster rentals are those between $50 – $100 per bedroom per villa. I think that this is great, we are welcoming a new type of traveller not in exchange of the luxury traveller which we are still receiving in seemingly larger numbers every year but in spite of being a luxury destination, we are reaping the benefits of budget travellers who generally stay for longer periods. A wonderful addition to the Barbadian Tourism Story.