The ‘sharing economy’ – where people get together to share access to products or services – was once an idealistic dream. Now it’s a fast growing multi-billion dollar segment of the global travel industry.
In 2011, TIME Magazine said that collaborative consumption – the hallmark of the ‘sharing economy” – was one of ten big ideas that would ‘change the world’. Four years later it seems this prediction has come true. The Global Vacation Rental market is now worth $100 billion and could grow up to $150 billion in 2018. Almost every week there are fresh stories about the phenomenal growth of innovative companies like Airbnb and Uber that are reshaping the landscape.
Growth of the Sharing Model
The sharing model has taken off in travel for a number of reasons. For one, it’s grown off the back of travellers who are looking for something that’s a bit different. 35% of so-called ‘millennials’, or people aged 21-34 – are willing to participate in the sharing economy, according to Skift. Looking specifically at travel, 54% of travellers in this millennial generation are open to the idea of Airbnb-style accommodation, as we found out in our Business Travel Insights: Hotels 360 report.
These adventurous travellers look for a much more “local” experience and want to see their destination through the eyes of those who live there. Value for money is also a factor, with travellers attracted by the potential savings. We see this happening not only in the leisure segment, but also for business travellers who are motivated by flexible corporate policies (e.g. Google).
All kinds of things can be shared, from houses and cars to parking spaces, boat trips, meals, and experiences. As a result, the peer-to-peer marketplace is growing up like mushrooms in order to match demand and supply. Growth is particularly strong in the travel sector. Airbnb had 6 million users in 2014 booking 40 million room nights, with an inventory of one million listings in 34,000 cities and 192 countries.
Keys to success
There are two major factors in the success of the booming peer-to-peer players. First, they focus on building trust. They aim to persuade the traveller that their offer is safe and reliable. They verify traveller and host identities through credit cards, phone numbers, and social media accounts. They build their sites around social tools like traveller reviews and encourage travellers to use and contribute to them. They also allow direct messaging between guests and hosts, allowing them to get to know each other while protecting their personal identities.
Secondly, peer-to-peer providers perfectly fit into the online and social environments. As well as providing the information travellers need to make informed decisions, peer-to-peer providers create enticing sites that are rich with pictures, descriptions, useful info and user-generated content. They exploit the social potential of the online marketplace, enabling the traveller to share their plans and reviews across social media.
What to learn
Traditional players may see a ‘threat’ when they look at the rising stars of the sharing economy, but there’s a lot to learn from these disruptive players. First of all this is not a new business: you could rent an apartment or access a private driver with his car many years ago, but today there’s a new way of doing it and dedicated platforms. New players are exploiting very well the usage of online and social channels to inspire travellers and grow trusted relationships. The content is expanding dramatically: the travel space is not only covered by lodging and transportation, you also find tours, activities and gastronomic experiences that fit perfectly with the needs of both leisure and business travellers.
Probably not all the peer-to-peer content could fit into our distribution business, however there might be some interesting opportunities to cooperate. Whether new players could expand our online travel accommodation offers or potentially be new distributors of our existing GDS content, will pose interesting questions for us in the coming months.
This is such an exciting time for the travel industry and we are ready to shape it!