“Mi casa es su casa” may be a good example of the tremendous shift of the tourism market towards to the sharing economy in light of the multimedia and digital technology age. The way of consuming in our world is rapidly evolving and has an impressive effect on our business environment.
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The Innovation of the Sharing Economy
This alternative economy has been divided in 4 categories and represents a growing market and big opportunities for many companies within the next 10 years. According to PwC, the sharing economy will generate more than 335 billion dollars of revenue.
- Collaborative consumption, sharing products or services in online marketplaces (Ebay)
- Makers & Peer Production (Crowdsourcing products)
- Open Knowledge (data, culture) Wikis
- P2P Finance and Crowdfunding (My Major Company)
This new business model is closer to personal interaction and is far from the established system. Explaining the disruptive innovation is made possible by micro entrepreneurs eager to show an alternative way to traditional commerce due to several newly available tools, such as digital technology, and the economic depression.
Consumers do not identify themselves any longer with traditional models of consumption.
The sharing economy is based on several factors which are key to this new way of thinking such as new technology allowing people to share information, comments and interact strongly as part of communities. The value of individualism and social economics (companies offer rejection and less purchasing power) reinforces the new way of consumption. Consumers do not identify themselves any longer in this model of consumption.
According to ING International Special Report, the sharing economy will grow up to 30% in the next 12 months in European countries and this new way of consumption is leading in Europe by some countries such as Turkey (9%), Spain (6%) and UK (5%).
Community: The Alternative to Consumption
This new market of consumption has impacted several sectors such as accommodation and transport. Consumers are now enable to share goods or services online and get easier and faster access to their needs. Why such a rapid evolution? People made aware of their underutilized property to contribute to the economy, which creates an alternative way of consuming through sharing what they own.
This sharing economy is the result of development of the web, as well as wireless implementation (Geolocalization). The recent economic depression means people are more cautious and ready to share to tighten their wallets. In fact, this way of consumption enables people to earn extra income by lending goods or properties, in addition to the added human interaction within the community.
Tourism Industry Opportunities
Regarding the tourism industry, this new way of thinking has had a significant impact on this sector by creating new opportunities and challenges for companies by opening the market to micro entrepreneurs full of inspired ideas who are quick to respond to demand. These micro entrepreneurs offer flexibility, quality, reactivity, user-friendliness, and a good price to quality ratio. According to Christian de Baurin, HOTREC, Association of trade hotels, Restaurant in Europe:
“Internet has changed dramatically the way the tourism sector operates, the explosion of new online platforms in particular, the new forms of tourism service has modified substantially the classical tourism business. Shadow hospitality in particular, is a new phenomenon that need to be addressed as it also affects the quality of the overall travel experience of the consumer which may directly impact the other tourism sectors.”
Digital Technology: Changing the Consumer Profile
The Internet has affected tourism activity by switching from classical tourism businesses to the online platform. This business model allows to create new possibilities and respect sustainable environmental resources.
This sharing economy on tourism may appears as a real threat to the professional services. The sharing tourism compounds four profiles:
- Engaged people needing to get meaning in their actions
- Couch surfing, which offers a real community of couch sharing for those traveling to different places. This group is especially active and meets regularly for the sole purpose of meeting new people and making new friends.
- Pragmatics with practical consumers method
- BlablaCar a French ride-share company destined for those who are traveling and want to pay less than public transport offers, or just want to make new friends while traveling.
- Opportunists focusing on economic reasons
- Airbnb, which offers rooms, full apartments, and houses for rent on a short term basis for tourists traveling to their homes, which are typically a better deal and cheaper than hotels.
- Skeptics consumers looking for more information
- TripAdvisor, which is a community of reviewers who rate attractions, restaurants, hotels, etc for tourists to be more informed about a city before traveling.
This form of tourism is characterized by its community aspect, and travelers are willing to share to get a rich and valuable experience off the beaten path.
Market Challengers competing against Traditional Tourism
Some companies are managing to drive on this new trend free from government restriction. They were able to create a business platform easy to access and use for customers which allowed for substantial growth in a relatively short amount of time. The new tourism industry is compounded of four sectors: Peer to Peer accommodation, Transportation sharing, Peer to Peer dining and Peer to Peer Tours & Experiences.
Internet and the rapid expansion of the mobile interaction boosts the model featuring geolocalization and algorithms optimizing offer-demand combination. For instance, Airbnb, the world leader of sharing accommodation managed to offer thousands of accommodation facilities to individuals without any third-party and represents the biggest sharing economy success.
Restrictions to Come
Some questions have been raised about the legal restriction of these sharing platforms. This sharing economy is associated with equal values and respect of the environment also has its limits since having become a real business where no legal restriction has been enforced. In fact, competitors and governments can’t keep up with these new innovations.
However, recently Airbnb accepted to collect hotel taxes for governments to avoid some future legal issues. Some cities protested against this activity, and have enforced laws to prevent some people from taking advantage of the system without paying taxes. Furthermore, Blablacar, enables people to travel in long distances for a reasonable price while meeting new people.
These new alternatives to the traditional sector are not automatically a success: Uber, a taxi driver company started in America then in Europe as UberPop. This activity had been strongly rejected by taxi drivers in some European countries and provoked new dialogue about whether or not they had the right to operate there. In fact, the company had to face the anger of traditional taxi driver objecting this unfair competition.
The Future of Traditional Tourism
The traditional tourism sector has to adapt its offer to the community by reorienting its services closer to the customer needs. In fact, they should provide better, more personal services to face this new trend of the sharing economy. How they should react to remain competitive in their sector?
The traditional tourism sector has to adapt its offer to the community by reorienting its services closer to the customer needs.
Some companies are already trying to innovate and respond to the new desires of the customers by offering some similar services. For instance Hertz has created new service called Hertz on Demand. Regarding accommodation, Marriott Hotels has taken initiative by offering apartment rentals on their website. Some companies have managed to mix in apartment rental with hotel services (Bemate.com or Mercure with its EasyWork places).
The sharing economy due to the rise of the Internet and digital technology allows customers to find the best offer matching their needs. This alternative model gives great power and many opportunities for consumers and companies. The whole market has been affected by this new trend which has forced firms to reorient their strategy to respond to new expectations. The tourism industry has changed tremendously.
Therefore, the traditional tourism industry needs to adjust their offer to stay on the track. Due to the boom of the sharing economy, we have no choice to think about new ways of consuming and integrate in our decisions to make the world more sustainable.
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