Wednesday, July 24, 2019

Speaking Out


Competing with ‘sharing economy’
July 2014 2001

HAVE you heard of the ‘sharing economy’ yet? The word has been flying around the internet for a while now, but many industry professionals I speak to seem still hard-pressed to define what exactly it is, how it is impacting the hospitality, leisure, and tourism industries, and what future threats and opportunities it holds.

Mention ‘sharing economy’ and the better informed will bring up Airbnb and express concern about how it snatches business from hotel and serviced apartments operators. Other examples of popular ‘sharing economy’ companies are Uber, the new alternative to traditional taxi companies, EzCater (catering and events), and Vayable (travel and experiences).

Sharing economy is often referred to as peer-to-peer economy or mesh economy, but whatever you call it, the results are the same: over the past few years, we have seen the emergence of entirely new businesses and business ideas that have changed the way guests and customers travel, book accommodation, or rent conference space.

Sure, we can complain about the ‘unfair’ competition and call for government involvement (Airbnb and Uber are currently subject to investigations in various countries and cities mainly for tax reasons), but it looks like the trend will get bigger rather than smaller. Perhaps, the better question then would be, “What makes companies like Airbnb and Uber so popular with customers?”

Technology, and its clever use by sharing economy companies, of course, play a big role. Until recently, booking an Uber car in Dubai was a much more customer friendly and reassuring activity than calling a public taxi: just activate the Uber app on your phone, order your ride, and see drive to your location in real-time on the in-build map. There’s no need for cash, because you pay by credit card at the end of the ride, again through the mobile app. If several people share a car, the app lets you easily split the cost between them and charge it to different cards. Dubai’s Road and Transport Authority recently released its own mobile taxi ordering app – a start, but it isn’t quite there yet in terms of functionality and user-friendliness.

Customisation options and uniqueness are further reasons services like Airbnb or Vayable are popular with customers. Why stay in a cookie-cutter hotel suite if you can book a cottage, a room in a castle, or even a stay in a treehouse, through Airbnb? The site’s accommodation choice is as diverse as it is large and people seem to like the authenticity of the offers – if you so wish, you can reserve accommodation options that are totally one-off and unique in many locations around the world, which adds considerably to a customer’s overall destination experience.

Price, on the other hand, often doesn’t really drive customers to peer-to-peer service providers: Booking an Uber is always more expensive than using a local public taxi and many Airbnb options are cheaper than hotel accommodation.

What are more traditional hotel and travel companies to do then? Stopping to complain about the new competitors would be a good first step. Instead, use the time you save by not whining about Airbnb taking away business from your hotel, to look what makes your target audiences tick and find ways to incorporate “peer-to-peer” authenticity into your company’s offerings. The key is to make customers feel that you’re aware of their uniqueness and that you can provide them with local expertise and experiences that let them get a glimpse behind the scenes of their chosen destination.

It’s not an easy task, but a considerable change in business and customer service culture, and yet, the earlier you start, the higher your chances to compete with the new breed of service providers successfully.

By Martin Kubler




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