Few concepts have revolutionized travel the way the sharing economy has. Virtually unheard of just a decade ago, the sharing economy is now a multi-billion dollar industry, even though home shares and hostels have been around for decades. When it comes to hospitality and transportation, a sharing economy means you can try one of the new forms of travel accommodations like car rides from Lyft and Uber or housing by Airbnb.
But, is it the best way to travel? There are some, particularly in the millennial generation, who prefer traveling that way, but for business travelers, a traditional hotel with a town car or rental car transportation is preferred. Shared economy accommodations are certainly less expensive than hotels, but what is uncertain is the size of the room, the quality of the building, and how clean it is, not to mention any recourse you have or don’t have should any problems arise during your stay.
A hotel has ratings and reviews that you can study ahead of time to know what you are booking. Plus, you have the opportunity to earn rewards and get special perks the more you stay with a given chain and use your rewards card. The wide range of choices travel agents have to make arrangements with is virtually unlimited.
Statistics gathered by PriceWaterhouseCoopers shows that 34% of travelers will choose a hotel over sharing site Airbnb. Still, the sharing economy is something to not take for granted. To get an idea of just how big the shared economy has gotten, take a look at these statistics:
- Lyft is worth $2.5 billion
- Uber is worth $18.2 billion
- Airbnb is worth $13 billion
The shared economy is not going away any time soon. Millennial travelers are some of the most affluent ones in a long time, and they are also confident in knowing what they want and wanting a unique trip no one else can say they had. Their heavy use of social media and portable technology makes obtaining shared economy aspects of their trip lightning fast and easy. The highest percent of shared economy users are those who are between 21 and 34 years of age – the millennials.
They are also a niche market. In a survey conducted in 2014 by Travel Weekly Consumer Trends, 63% of respondents had never heard of the most common shared economy sites, and a minuscule 8% had used one of their services. Atmosphere Research puts the figures a little higher. Fourteen percent of travelers in the US have used a home sharing company such as Airbnb, and more than that have done so in France and Britain.
Shared economy accommodations have their charm. No matter where someone is traveling in the world, it is easy to book a room in a home and share in the culture of the local area. Even total strangers from thousands of miles away can become connected thanks to portable devices. It also makes it easy for those looking to earn a little extra money to sign up to be a provider without any start-up costs or expensive marketing infrastructure. Tour operators can provide travelers with a list of potential places to stay as part of their business.
Phocuswright Research noted that people also want to be able to rent a full home while on the road. Perhaps it’s for the relaxed feeling of being at home, or perhaps it’s more convenient when traveling with others. In just four years, the percentage of people who rent shared economy homes has risen from 8% in 2010 to a respectable 22% in 2014.
The process of finding accommodations has been made easy in the new economy as well. Lodging sites include Couchsurfing and Airbnb which both have commercialized the method. They allow participants to connect easily, but they do take a fee on each transaction and they are for-profit companies.
Vehicle companies including Uber and Lyft take advantage of a need for people to get somewhere efficiently and a desire by people to make a little extra money – or make a career of it.
They are not without their drawbacks. Uber has faced lawsuits in some cities because it operates like a taxi service but it doesn’t go through the licensing process like taxi companies do. There are also horror stories of Uber drivers in other countries committing crimes against their passengers. Until city regulators catch up, the internet and mobile devices will allow shared economy sites to continue to operate virtually unfettered. The trade-off is speed and convenience versus reliability and trust.
To combat this trend, travel agents are able to capture some of this market for their clients who want to use shared economy travel arrangements. The websites and apps that are used to make the connection between client and provider can also be used by agents with the ability to help promote these services.
One place that the status quo is changing rapidly is the way the travel industry we know and recognize is operating. Car rentals can be had for short term rentals, even as low as an hour, by services like ZipCar. Hotel rooms can be booked easily, even same day through places like HotelsByDay, and conference rooms or virtual offices can be rented for a traveler to host his or her meeting in.
Major companies are also getting onboard with sharing. Case in point – Hyatt’s Onefinestay in Britain. Each home posted to the site is carefully inspected by Hyatt before its addition to the listings. It’s expected that other companies will follow suit and create their own new ways to take part in the shared economy and give travel agents a reliable place to book their clients who want a completely unique experience without the worry of unfamiliarity and potential danger.
The sharing economy’s impact on travel will truly and radically change how we think about booking trips and establishing connections. Even old standards like American Express are thinking of ways to innovate. Business travel is on the rise again, not just in the US but around the world. Corporate travel companies that are willing to take a chance on the sharing economy can come out ahead, but they will have to tread lightly as they go. As older established companies develop new ideas, the possibilities for a synergistic success story for all just keep growing.