Caribbean Trade Law and Development

Tag: MOU

  • Caribbean Tourism Organisation (CTO) and Airbnb sign partnership agreement

    Caribbean Tourism Organisation (CTO) and Airbnb sign partnership agreement

    Photo credit: Pixabay

    Alicia Nicholls

    The Caribbean Tourism Organisation (CTO) has today signed a partnership agreement with one of the most visible faces of the global sharing economy, Airbnb. This is according to a Press Release on CTO’s website posted today February 7, 2017. According to the release, the agreement, which establishes a basis for mutual cooperation, is “to develop a set of policy principles and recommendations on the sharing economy for Caribbean governments and other stakeholders.”

    The Agreement was signed by CTO’s Secretary General and Chief Executive Officer Hugh Riley and Airbnb’s Shawn Sullivan, public policy director for Central America, the Caribbean at the CTO’s Headquarters in Barbados.

    Airbnb is a peer-to-peer online accommodation platform which was founded in 2008 in San Francisco, California, USA and has over 2,000,000 short-term rental listings in over 191 countries worldwide. A cursory search on Airbnb reveals thousands of listings from across the Caribbean, ranging from modest studio apartments to luxurious villas. Airbnb is just one of several virtual spaces where persons list for rent, or rent, vacation accommodation. Some other similar platforms are Homeaway, VRBO and Owner Direct.

    Based on the information outlined in the CTO press release, the prospects for mutual cooperation covered by the CTO-Airbnb partnership agreement appear quite promising and include:

    • Sharing of data and studies with policy makers
    • Identifying ways to make the sharing economy more inclusive
    • Broadening the benefits of tourism to non-traditional actors
    • Attracting new stakeholders and focus on providing amazing and unique travel and cultural experiences to visitors
    • Providing to the CTO an economic analysis of Airbnb’s positive impact on local economies.
    • Based on this, briefing key stakeholders on the value of a peer-to-peer review mechanisms

    Why is this timely?

    This formalised mechanism for mutual cooperation  between Airbnb and the Caribbean’s regional tourism development agency is an important development and is timely for several reasons. Firstly, peer-to-peer platforms like Airbnb have become important players in the global accommodation sector. As millennials comprise an increasing share of global travel demand, there has been a shift towards a more authentic tourism experience, with a preference for self-catering accommodation (such as villas, apartments and condominiums) being part of that shift.

    Secondly, it can be argued that peer-to-peer accommodation platforms allow for a more inclusive tourism model as they allow anyone from a retired person who has an extra room to rent to an expat with a vacation home to rent it for only a very minimal cost.

    Thirdly, this demand shift toward self-catering accommodation has not gone unnoticed by the traditional hospitality sector (hotels) which have blamed the shift for weaker revenues and occupancy figures. These concerns are not unique to the Caribbean. A 2013 study (last updated in November 2016), which sought to estimate the impact of Airbnb on the Texas hotel industry found, inter alia, that the impact on hotel revenue was non-uniform, with lower priced hotels and non-business traveller catering hotels being the most affected. As far as I am aware, no similar study has yet been done for the Caribbean. The data sharing pursuant to the MOU could make such a study a possibility.

    Fourthly,  traditional accommodation players complain that online market places are competing on an unequal footing. For instance, whereas a hotel has to comply with regulations and pay taxes, depending on the country a person who lists a villa or guest house on Airbnb for rent is not yet captured under the tax net and there may not be regulations for those types of accommodation.

    Fifthly, as villas and some other non-hotel accommodation remain unregulated, there are concerns about potential reputational risk to a tourism destination should a guest have a bad experience in a villa or apartment rented through Airbnb or through any other means for that matter.

    Given the above, this cooperation agreement is a welcomed and forward-thinking step as it will lay the framework for greater data-sharing to allow policy makers to estimate the size and contribution of the tourism sharing economy and to use this data to make evidence-based policy decisions for supporting and regulating the non-traditional accommodation sector. It will also set the framework for joint collaboration for promoting the Caribbean, bearing in mind shifting consumer tastes towards a more authentic tourism experience, and ensuring that the region’s tourism industry is inclusive and redounds to the benefit of all stakeholders.

    For further information, please see the CTO’s official press release.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Cuban and Virginian port authorities sign trade cooperation MOU

    Alicia Nicholls

    According to the website of the Office of the Virginia Governor, the port authorities of Cuba and the Commonwealth of Virginia in the United States have signed a Memorandum of Understanding to “evaluate commercial opportunities between the Port of Virginia and Cuba’s newly opened Port of Mariel Special Development Project”.

    The MOU is one of the outcomes of a three-day trade mission led by the Governor of Virginia, Terry Auliffe, to Cuba as part of a thrust towards strategically positioning Virginia to benefit from the normalisation of US-Cuba relations. According to the Governor’s website, the signed MOU “establishes a platform for cooperation and information sharing aimed at developing links between Cuba and Virginia to support waterborne trade and investment, improve customer service, enhance collaboration to achieve improved business practices, and increase the level of vessel services available between the two entities”.

    This latest move comes against the backdrop of a thawing of US-Cuba relations under the Obama administration, including the rescission of Cuba’s State Sponsor of Terrorism designation, the re-establishment of diplomatic ties, amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) and the signing of a commercial air services agreement for the eventual resumption of commercial aviation service between the two countries last year.

    Despite a growing groundswell of US companies chomping at the bit to enter the Cuban market, the US’ illegal embargo on Cuba remains. Late last year the US Government once again voted against a UN General Assembly resolution introduced at Cuba’s request condemning, and calling for the end of the embargo. The US embargo on Cuba which has been in place since 1960 has sought to economically and financially isolate Cuba by banning most American trade to and from the island, with stiff penalties for US companies and individuals who infringe these laws. US companies are also prohibited from selling goods to Cuba on credit. Although some agricultural trade currently exists between Cuba and Virginia, it has been recognised that full trade potential will not be realised until the economic, commercial and financial restrictions imposed by the US Federal Government are removed completely.

    The fourth US governor to visit Cuba since 2014, Governor Auliffe was one of the nine US governors who penned a bi-partisan letter dated October 9, 2015 to the US Congress advocating for an end to the restrictions impeding trade between the US and Cuba.

    Further information on this development may be obtained from the press release on the Governor of Virginia’s website.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.