The 'sharing economy' became a buzzword in the last couple of years and it's not limited to the hospitality industry. In this post we explain in very simple terms what it is, how it works and what hoteliers can learn from this buzzword that now is worth around $15 billion USD dollars.
In 2015, 1.2 billion people traveled around the world for business or leisure. This significant number is expected to grow by 4% worldwide in 2016. But not every traveler is following the 'traditional' path, and some of them are looking into their destinations as a source of knowledge, experiences and business that was nowhere to be found in the traditional marketplaces. Sharing is now being called an economic model. How did this become a business and how is it affecting the hospitality industry?
What is the sharing economy?
The sharing economy, also called peer, access or collaborative economy is based on shared resources, like a room, a service, a skill or a car, between individuals and facilitated by the internet, in its majority as a temporary exchange. Great examples of this practices are AirBnB and Uber. Both companies recognized traveler's need for an alternative to the traditional options. It is interesting to note that, although these are the most common examples, we can also find skills, competencies and time sharing.
A big part of the credited success the sharing economy has had is attributed to the services facilitated by online platforms. Called peer-to-peer companies, they reach out to customers and are created, managed and marketed directly to users, acting as intermediaries. Some examples are Uber, the transportation service; AirBnb, the accommodation service; Fon, sharing WiFi with 18 million users around the world;Holidog, a pet sitter community. As these companies are online, they cross countries and continent, and become available to tourists and locals equally. The speed and scale at which the sharing businesses have grown is directly connected to the high-speed internet and the growth in offer-demand.
Valuable lessons to learn
Gaining competitive advantage and learning from the sharing economy is possible. The first lesson is how to use distribution channels to increase bookings and occupancy. Seeking alternatives to traditional channels is important to hoteliers, who count with higher trust rates than the sharing economy members. A recent study by Hotelnewsnow revealed that 67.6% users don't trust renting a room in someone else's house and 51.4% don't trust renting a holiday property from someone else. With low trust levels, hoteliers have a competitive advantage built with years of effort, sweat and online tools. Reviews, photos, complete information, responsive platforms and a coherent and steady online presence empower and assure users about their decisions.
Mobile importance has equally boosted the bloom. A study revealed half of Americans own a smartphone, making it worthy of attention to hoteliers who want to react to the market trends. Strong mobile presence is, but does not limits, to a responsive website, good SEO strategies, valuable information about the hotels and surroundings, good quality photos, and having a coherent online presence. Improving mobile search, online discovery and exploration, and reservation options are key elements.
Embracing change and understanding the fast-paced marketplace promotes innovation in hoteliers and reflects in consumer empowerment and experiences. As part of the differentiators, the quest for original and unique experiences is a point hoteliers can observe and adopt. Local and regional attractions are often overlooked when promoting hotels and properties, whilst the shared economy sees this as a core element. Hoteliers are inherently locals experts and using this as tool is valuable. Travelers are looking for authentic, local and memorable experiences, and hoteliers definitely know about this.
We hope this brief and condensed summary helps hoteliers to understand the sharing economy and to open new possibilities to innovate and evolve their business.