English Corner

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The sharing economy explosion

Von Ben West

The travel industry is the sector most affected by the huge growth of collaborative consumption. How much of a threat is sharing to the industry?

So much of the travel industry has gone sharing economy now. This alternative travel option, AKA the peer-to-peer economy, started out as an indie movement. But now, partly triggered by a need to save or earn money during the global economic downturn, a growing sense of the community, a growing green awareness, a rejection of tax-avoiding big corporations and excessive consumerism and capitalism, and increasing trust of the internet, e-commerce and making online payments, it has most firmly gone mainstream.

Take Uber. By the end of 2015 more than one billion Uber trips had been made. Airbnb has now catered for 60 million users and 640,000 hosts in 57,000 cities. As well as Airbnb, for accommodation you can choose from an ever-increasing range that includes Wimdu, HomeAway, HolidayLettings, Couchsurfing, OneFineStay, campinmygarden and 9flats.

Want a taxi? Try Lyft. Car rental or car sharing? Try FlightCar, Carpool, Zipcar, Hiyacar or Turo. For ridesharing there is BlaBlaCar, Faxi and Zimride. If you’re after a bike, skis, snowboard or surfboard to rent go to Splinster, and for a city guide with experiences offered by locals try Vayable. Knok is a family travel network, home exchange and apartment rental, while for local food experiences go to Feastly, EatWith, Cookening, Bienvenue a Ma Table, EatWithALocal, Vizeat and Cookeat. You can hire local chefs through KitchenSurfing.

The number of these alternative options is growing daily, exploiting the flexibility social media, mobile apps and online can offer. There’s no need for middlemen to spike up the price, transactions are quick and easy, and the global reach means you don’t need a local travel expert to coordinate it all. Also, the sharing economy makes it possible to exploit under-utilized resources.

A huge barrier in the past to set-ups like these - sleeping in a strangers’ house or getting into their car - has been trust. This has been solved by technology and social networking being able to banish anonymity and provide an ability for both parties to rate each other and provide feedback.

The typical travel experience use to be so predictable and isolated: a taxi from the airport to a chain hotel in the tourism centre, a packaged bus or boat tour to familiarise yourself with the destination, the hotel concierge directing you to his restaurant recommendation. Shared economy options can offer more for less cash: with accomodation things like access to a kitchen, laundry and other home amenities, while with car rental you can choose a wide range of vehicles from luxury or budget and can collect the car from wherever you are rather than at set rental offices.

The traditional business has always had to face threats

The sharing economy is increasingly making inroads into the business sector too. Business travellers will appreciate office sharing through pivotdesk and sharedesk. Sharing apps increasing allow expense reporting or travel-related partnerships, for example Uber works with Starwood and Hilton so guests can easily hail a ride through their apps. Expense management software provider Certify looked at business expense data and discovered that business travellers prefer ride-sharing services like Uber to conventional taxis and in some locations ride-sharing to car rentals also.

For all the successes, the sharing economy hasn’t been without its critics. There have been charges of some such start-ups illegally bypassing regulations (especially safety, health and disability compliance standards), providing low-wage jobs and creating unfair competition for properly licensed professionals. There have been scare stories such as vanadalised properties, guests that won’t leave, fake listings, and sharing economy sites not always adequately protecting the consumer or service provider. There have been charges of tax evasion and unfair competition.

A European Parliament briefing in September 2015 stated that it’s creating an economy where job security is less and less normal every day. If the work in the sharing economy is the only source of income, no social security is provided to the worker, for example, no paid sick leave.

The briefing noted that hoteliers have to deal with environmental protection, labour law, municipal tourism fees, consumer protection, various taxes (value-added tax, taxes for cities, environmental protection, safety, etc) whilst many hosts on online sharing platforms do not comply with the same rules and laws. These new business models can often significantly beat traditional hotels, car rental firms, rail firms, restaurants and tour providers on price, as well as often offering a new exciting take on the travel experience. This immersion into the local scene of a destination is increasingly attracting higher spenders too also.

But the traditional business model has so far generally fared well despite the new threat of the sharing economy, and despite shrinking profit margins and rates hardly moving in a decade. It has always had to face threats: for example pre-internet listings and classified ads, and sites like Vacation Rentals By Owner, which has been online since 1995. For all the fanfare of the sharing economy revolution, it still only represents a small fraction of the travel industry. Revenues in both the traditional and alternative travel sectors have been rising in recent years.

However, the traditional sector can’t rest on its laurels: complacent service and extra charges seen as rip-offs like a fee for hotel wifi increasingly won’t hack it in these ultra-comptitive times. Hotels especially are starting to revamp their business models. Though benefitting from a perception that a travel experience will be less risky and unpredictable than peer-to-peer accommodation, they still need to add more and be more flexible.

They’re increasingly Including kitchen amenities to rooms to attract families, rooms bookable by the hour and classes and live events, for example. Recently The Student Hotel in Amsterdam, for example, held a one-day festival of ideas, Bedtalks, inviting 1500 guests. It is spearheading a new hotel concept, merging long-term digs for students with accommodation types attractive to business people and to traditional travellers also. The intention is for all three resident-types to mingle and learn from each other. With all these advances afoot the next few years will certainly be fascinating to watch in both the traditional travel industry and sharing economy worlds.