The “sharing economy” is a buzz phrase that has been thrown around the travel industry a lot over the last couple of years. Any travel company today needs to consider how it should respond to this new phenomenon that is winning over travelers in their millions. So what is it, and which companies are reshaping our business with their sharing economy-based models?
The origin of the sharing economy
The phrase may be new but the sharing economy is as old as commerce itself or even the very first exchanges of services and goods. Before the introduction of money, economies were based on sharing possessions and tasks.
What has completely transformed the ability to share in the last few years has been technology. Now people can reach out to complete strangers around the world at a very low cost Web and mobile-based platforms have opened the gate to new levels of connectivity and lowered the bar for innovation without expensive investment in programming and development. This technological setting prepares the ground for private individuals to distribute all kinds of surplus resources to each other.
Sharing economy travel businesses
Within the travel industry, the resources ordinary people are sharing with each other could be a bed, sofa or a car. What has really made these exchanges take off, however, is that some very clever companies with brilliant marketing expertise have found ways to package and promote sharers together and make good money by taking a small cut from each transaction.
Some of the best-known sharing economy travel players include:
Couchsurfing – founded in 2003 as a non-profit organization. In 2011 its assets were sold, and today Couchsurfing International Inc. operates as a for-profit hospitality exchange. The idea of hosting guests in private homes is far from new, but Couchsurfing took it online to become a phenomenon that, in many ways, kickstarted the sharing economy phenomenon of the 21st century.
Airbnb – the San Fransisco-based company has shaken up the hospitality industry like no other player. Airbnb took a page from Couchsurfing’s book of connecting surplus accommodation resources and brought it to the next commercial level. Airbnb connects home owners with travelers and makes a profit out of both.
Uber – Another highly profitable company that has managed to be even more controversial than Airbnb. Also based in San Fransisco, and with heavy financial backing behind it, Uber has introduced a highly successful app-based taxi service. However, Uber has met resistance and lawsuits in several countries thanks to questions about the legality of its service, a reputation for aggressive business tactics and concerns about the safety of its drivers.
Knok – A family travel network, home exchange and apartment rental.
Lyft – Yet another San Fransisco-based company that has been described as a “Couchsurfing on wheels” for connecting people who need a lift with people with a car. Lyft is in direct competition with Uber, and there have been some highly publicized confrontations between the two companies.
Vayable – Local city guide with experiences offered by locals (restaurants, city tours etc.).
Wimdu – Conceptually very similar to Airbnb. Berlin based.
What does it all mean for the travel industry?
The core principle of the sharing economy – “unused value is wasted value” – is still sinking in as a starting point for innovation through Web and mobile technology, and we’re only beginning to scratch the surface of where this principle can take us in the future. As the controversies surrounding Airbnb and Uber, in particular, demonstrate, technology and commerce have moved faster than legislation. As a result, travel companies and authorities alike are facing unprecedented challenges as long-established business and regulatory models are swept away at lightning speed.
But now the established travel industry is beginning to react. It has already understood it needs to be more flexible than in the past, so workspaces, hotel rooms and rental cars are becoming available on hourly basis, and more products are being presented as shareable, including hotel rooms. The sharing economy revolution – and it really is no exaggeration to call it a revolution – will lead to new marketplaces, new booking processes, new partnerships and new connections for those who are smart enough to adapt.
Next time, we’ll look at how travel management companies, hotel booking agents and other intermediaries should respond to the sharing economy.
The highest-valued sharing economy companies
If you think the sharing economy isn’t big news, take a look at these valuations of some of its biggest players (much bigger than many of their traditional car transportation and hotel rivals):
Uber – valued at $18.2 billion
Airbnb – valued at $13 billion
Lyft – valued at $2.5 billion
(source of value estimations, forbes.com)