Lured by the promise of white sand beaches, crystal clear waters and year-round sunshine, the Caribbean is one of the most popular tourist destinations in the world. Tourism in the region has been on the rise since 2015, when 28.7 million holidaymakers descended upon the expanse of idyllic islands. This year, visitor numbers are expected to surpass the 30 million mark for the first time, boosted by the thawing of relations between the US and Cuba.

A surge in visitors is good news for the majority of Caribbean states – their emerging economies rely on tourism as their main source of income. As a result, widespread construction projects are underway on many of the islands to meet demand. There are currently 188 hotels under construction in the wider Caribbean-Mexico region, totalling more than 32,000 rooms and representing a 12.9% rise from last year.

Many Caribbean governments are offering incentives to speed up the process. For instance, in Dominica, an individual is able to earn citizenship provided they invest a minimum of $200,000 in approved real estate projects – some of which include eco-villas, spa resorts and luxury apartments. 

But hotels and apartments take time to build and tourists are not prepared to wait around. One new player in the tourism market is having a much quicker impact: shared economy giant Airbnb.

The rise of Airbnb in the Caribbean

Airbnb is an online marketplace and “people-to-people platform” that allows individuals to temporarily rent out their homes to visitors. The property owner benefits from being able to generate disposable income, while travellers are able to stay in locations at a reduced cost.

Homestays are a relatively new phenomenon in the Caribbean, but for tourists who want a more authentic experience, living among locals and immersing themselves in the culture is a more attractive option that arriving on a cruise ship or a costly package holiday.

The Caribbean has seen a huge rise in Airbnb-listed properties. There were more than 25,000 accommodation listings across the region as of February 2016 – a number that continues to grow. Cuba has unsurprisingly seen the biggest rise in short-term home rentals, while Saint Lucia expects a 17% year-over-year increase in stays in 2016.

Airbnb is undoubtedly helping to meet demand for accommodation in the Caribbean, but the platform has been accused of undercutting prices and bypassing local and national tax rolls. So is Airbnb positive for local economies or is it a drain on the region’s main source of income?

Airbnb poses a threat to Caribbean hotel industries

Already operating in 191 countries, financial analysts have predicted that Airbnb hosts will take 500 million bookings a night by 2020, potentially rising to one billion by 2025.

Hotel industries across the world are feeling the seismic impact of their rival’s success. For every 10% increase in Airbnb supply results, there is a 0.35% decrease in hotel room revenue. It’s estimated that hotels currently lose around $450 million in direct revenues each year to Airbnb.

The rise in private holiday rentals has a negative knock-on effect on those employed in the hospitality sector. Around 2.2 million Caribbean citizens are currently employed in the tourism industry. With more tourists heading to the region you’d expect this figure to increase, but more than 2,800 jobs are directly lost to Airbnb each year, a total loss of over $200 million in income for employees.

Local economies stand to benefit from Airbnb

Airbnb argues that it benefits economies across the world by supporting residents and local businesses. Within certain markets, many of its listings are outside of the main hotel areas allowing income to trickle through to less visited areas of a destination.

For example, when Airbnb arrived in Barcelona in 2009, around 80% of total accommodation bookings were in the Old Town. This area enjoyed the economic benefits of tourism, while other areas of the city went largely unnoticed. Now, 70% of bookings are for listings outside the old town, bringing the economic benefits of tourism to more Catalonian people and more areas. Airbnb provided accommodation for 900,000 guests in Barcelona last year, bringing $175 million into the city.

Furthermore, the average Airbnb traveller stays in a destination for twice as long as tourists staying in hotels. They’ll also spend twice as much money. One study found that Airbnb guests in New York City tend to stay two days longer and spend nearly $200 more at local businesses during their visit. 

In the Caribbean, where demand for accommodation regularly outweighs availability, Airbnb presents a lucrative opportunity to give local economies a boost. Embracing experiential tourism and allowing visitors to stay in local properties frees up space for others in hotels. Holidays in the region are the most heavily sought after in the world, so it is unlikely that rooms will go unfilled.