The rise and rise of the ‘sharing economy is well documented, the names of Uber and Airbnb are already well known by many travelers and judging by the market shares they have attained in their respective travel sectors, they are used by a huge and ever increasing percentage of people who travel, whether it be for leisure or business. Of course, as with any product, there are positives and negatives attached to them. The positive of the Uber’s and Airbnb’s; in their own opinion; is that they are cheaper to use for customers than rival offerings for accommodation or taxi hire firms.
They also offer the opportunity for car or property owners to use their vehicles or properties part time, to generate extra income for themselves. All so far reasonable and sound in their theory, but on the flip side, a new word has appeared in the travel speak and that is the word ‘disruptor’. Airbnb and Uber are what nowadays are referred to as a descriptor; they break the mold or go against the grain of how the business has traditionally operated, and often against the wishes of stakeholders or people who hold travel budgets.
The city of New York was one of the first places to question the likes of Uber and Airbnb, and with the latter, the city quickly realized – no doubt with a bit of prompting from the city’s hotels – that significant amounts of taxes were being lost; that its hotels were seeing less people staying with them, and were thus paying the city less in taxes. That some guests were now utilizing Airbnb properties, where no provision for any sort of tax was in place, or even if it was in theory, it was easy to ignore.
In the past year, both London and Paris have also noted a curious yet obvious impact of people using Airbnb and other property sharing set ups. This is when city property owners quickly realized that they could make more money on short term rentals via Airbnb et al, than they can through traditional long term rental. Transcribing this into an example from Sofia, a central apartment can comfortably gather income of 40 – 50 Euro per night, which means in theory an income of 1200 – 1500 Euro per month, whereas realistically the same apartment would only rent for only 300 – 400 Euro per month on a longer term arrangement.
In London, for example, this has resulted in the sudden reduction in the availability of rental properties on the market, as property owners change their business model. The net result being an increase in the cost of traditional home/apartment rentals for those wanting a long term arrangement, as the availability of such property decreases and prices increase with the reduced supply. This has resulted in Airbnb capping the number of days a property can be rented out in London to just 90 days per year.
There is also another side to the sharing/disruptor factor in the travel sector, and that is whilst the likes of Uber and Airbnb works for people taking private leisure trips, for those travelling on business – the numbers of which should not be underestimated – there are significant ‘duty of care’ concerns around this area; perhaps less so with Uber although there are still issues, but certainly with property sharing structures. Business travelers and indeed people travelling for leisure have expectations of quality, security and safety, which accompany staying in a hotel, but step outside this and there is absolutely no surety of what you are staying in and how safe an area it is located, when you book through a property sharing site.
An example of this was a recent visit to Sofia booked through a property sharing site by a contact for a mixture of business and leisure, which saw him book into an apartment of mixed quality and standard, and in a less than attractive area. OK, it was cheap, but for around 20 EU more per night he could have stayed in a very good hotel in a better part of the city. We should all be aware, that whilst we all have perceived ideas about the standards of apartments that we would each stay in, that these norms are understood differently in say London, Rome or Sofia. Whereas a Hilton or a Radission hotel, is pretty much the same the world over and that’s why people use such hotels – they know what they will get for their money.
As previously stated for leisure travelers, the sharing economy and staying in such properties, may be less of a serious issue, but travel companies have both a different requirement for their staff, and also a duty to ensure they are safe and sound. Whilst shared property sites have no meaningful regulations attached to them in the same way EU country states are obliged to oversee hotels.
Our own research on this issue, seems to agree with the Senior Management of many of the larger and medium sized companies, that they ‘dare not for fear of legal implications,’ use an Airbnb or shared property booking channel for the moment, although we would also note that Airbnb in particular, is doing its level best to try to ensure that the facilities it offers, are as business compliant as possible, and in contradiction , are already working with some of the larger global bookers of business travel.
All travel services and all travel providers have their place, the sharing economy with Uber, Airbnb – et all – will be around for a long time to come; their business’s will evolve, and they will gradually become mainstream………. and, property owners will gradually be sought by the authorities to pay taxes on their rentals!