Rise of the Sharing Economy: Should Traditional Travel Companies be worried?
The new age traveler has arrived! They are aware and conscious. They belong to the ‘haves’ category and are capable of getting all that their heart desires. They know that they have options today and are willing to choose the very best. Their motivations of choice can vary from economical to social to convenience to uniqueness of experience. The advent of an Airbnb, Uber, Lyft, BlaBlaCar etc has empowered them with that choice. They travel for business, fun, adventure or relaxation. Safety, cleanliness, ease of transaction etc are their hygiene factors.
Do they sound like somebody who would choose the traditional way to travel? Would they go through an agent to book their travel or would they just log on and book on their own? Would they seek the comfort of a template hotel or would they want to adventure into the world of Airbnbs? Would they ride a pre-booked full day taxi or would they just call a cab through a cab app?
Whatever they choose, their choices would seal the fate of the traditional travel companies and the sharing economy participants. The hoopla surrounding the rise of sharing economy has raised all these questions. Much research is underway to examine the future of travel and impact of Sharing Economy on traditional travel companies.
As per Travel Weekly Consumer Trends survey in 2014 respondents, almost two-thirds (63%) had never heard of them (Airbnb and HomeAway in lodging and Uber in transportation), and only 8% had used them.
In the one year since, awareness has soared to 60%, but usage has only increased to 10%, driven mainly by younger travelers; the greatest incidence of use of these types of services (17%) are travelers in the 21-to-34 age range.
Examples of sharing economy players and offers
Sharing Economy promises unique experiences compared to the templated experience of traditional providers. That is what makes it adventurous for them. And with the advantage of lower costs, it has a distinct lure for them. But is it trustworthy or clean or comfortable?
There are regulatory issues like taxation and safety surrounding the whole concept. Traditional lodging companies are under the government net for providing safe, secured services but regulatory framework is still to be devised for sharing economy. The diversity and scope of Sharing Economy makes it incredibly difficult to regulate.
Travelers prefer traditional travel solutions for the standard format, trust, guaranteed security and loyalty programmes. Sharing Economy has a long road to travel before it reaches there. It will learn, stumble, adapt and then stabilize.
Like it or not Sharing Economy is here to stay because of its obvious advantages and the traditional travel will just have to evolve and adapt around it. One such case in point is Hyatt which has invested in Onefinestay (UK based home sharing site). But before offering it to the public, it verifies each and every home through actual visits. Now that’s an improvement over airbnb! In fact the chart below explains the thought process of travel managers about the sharing economy.
Travelers’ concerns about Sharing Economy
Many such innovative solutions like Hyatt-Onefinestay will be devised by the traditional travel companies to stay relevant to the times and to the new age traveler. The Online Travel Agents, travel software interfaces and the internet will all come to the aid of traditional travel companies. As we have been witnessing for the last decade, most of the travel agents are opting (or considering) for online solutions irrespective of their size. It has just made their business much more profitable by saving on cost, time and effort.
For now, both are here to stay! One has to adapt to the new and the other has to evolve around the old!
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