Share And Share Alike
By Kris Madden
The age of collaborative consumption is well and truly upon us, with ventures such as Airbnb and Uber now household names. But is the sharing economy a threat to traditional travel agents, TMCs and the accommodation sector at large?
The growth of collaborative consumption is not just about cash-strapped backpackers settling for a cheap room; it’s also growing in popularity with high-end consumers and business travellers.
A recent report by Carlson Wagonlit Travel (CWT) titled ‘Faster, smarter, better?’ stated that the sharing economy is not a fad, but a robust trend that is transforming society and traditional business models.
According to the report, 43% of travel managers consider the sharing economy to be a notable trend, with 31% saying it is important for accommodation.
“As the pace of technological change is accelerating, so is market readiness for new ways of buying, managing and experiencing travel. In this increasingly connected world, the role of the Travel Management Company (TMC) is also continuing to change,” CWT executive vice president global enterprise strategy David Moran says.
“Companies should not ignore the sharing economy. As brands adapt their offerings to the managed travel market, barriers are coming down.”
Airbnb estimates that 10% of its current sales come from guests on business trips. In July 2014, the company launched Business Travel on Airbnb, offering 500,000 listings that it considers appropriate for business travellers. At the same time, Uber announced a customised service for corporate travellers enabling them to bill their travel directly to their company and access reports such as trip details and expense management. Last year, United Airlines became the first airline to offer Uber services to customers via its mobile app.
While hotel groups don’t believe Airbnb will take away the lion’s share of their business, they’re still watching with interest.
“Airbnb is a great example of how the travel industry continues to evolve and we can potentially learn from them,” Accor Pacific chief operating officer Simon McGrath says.
“We respect all players in the travel sector and ultimately Airbnb are likely to be encouraging a new wave of traveller that we see as our potential future guests. We don’t see ourselves as competing with Airbnb, but we do need to align ourselves because at the end of the day it’s going to be the same 18 year-old customer that is choosing to stay with them today. And as their travel habits and preferences change, they are likely to stay in one of our hotels in the future.
“This is why we are focused on driving our digital strategy and reinvesting over €250M in mobile and online distribution as well as improving our loyalty programs and benefits to ensure that we continually evolve with the industry and keep our customers engaged.”
So far, the effect on travel agents and the travel industry has been minimal. However, the awareness and popularity of these kinds of services are mushrooming at a rapid rate, so travel industry players need to ensure they aren’t caught on the back foot by the speed of change.
Professional services firm Price Waterhouse Coopers reports that global revenue from sharing economy companies is expected to be worth $335 billion by 2025. With Airbnb’s inventory of 1.2 million properties across 190 countries, and a total of 35 million guests to date, that should be enough to make the travel industry sit up and listen.
While the Airbnb Australian office was unavailable for comment, according to Airbnb sources overseas, the company is open to working with travel agents.
Airbnb UK and Ireland general manager James McClure recently told a conference in London that while there is no official system set up, the company is evolving and is very open to ideas.
“We are all in the business of getting people the best experience possible. We want to know what people are looking for and what they want to get out of their holiday and then put together the best experiences,” he said.
McClure said he doesn’t consider Airbnb to be a threat to the traditional travel industry, but rather, a choice in an array of options for people to consider, including luxury travellers.
Meanwhile, Henry Harteveldt, a renowned US-based travel industry analyst, was recently quoted as saying the challenge for sharing economy companies is to figure out how to sell through travel agents.
“They would be foolish if they ignored that channel. A travel agent selling four or more nights is a sweet spot for home sharing. It would be perfectly logical for an agent to say, ‘I’ll search Airbnb and other sites and charge a service fee for that’.”
One thing is for certain; the sharing economy is not going away. Instead of fighting the new model, agents could look for ways to work in tandem with these services to grow their business. The sharing economy revolution may well lead to new marketplaces, new partnerships and new connections for those who are nimble enough to adapt.