What’s Next for the Travel Sharing Economy?
17 January 2016
"Travel is an inherently social experience that is temporary by nature." Be part of the shared economy. Join the movement #sharetoday #hopsee
The sharing economy is here to stay. It is getting bigger, more powerful and more responsible as it moves from its infancy to its adolescence stage. These were the observations of Lisa Ganski, author of The Mesh and a sharing economy visionary who spoke at the opening of the inaugural SHARE conference held recently by Peers in San Francisco.
So, what lies ahead as the trend unfolds in the world of travel?
Gansky and the rest of the 500 attendees representing startups, regulators and users gathered to discuss the broader trend encompassing not only travel but also other goods and services. Travel, however, has emerged at the forefront of the sharing economy and is posed to remain there.
This central role should not come as a surprise to those familiar with the travel industry. Travel is an inherently social experience that is temporary by nature. Thus, it lends itself perfectly to the peer-to-peer (P2P) economy model where people interact directly with each other to get temporary access to assets instead of owning them.
“Travel is an industry that has taken a big opportunity to rethink the way travel happens,” noted Gansky.
Accommodation and transportation services have done extremely well in this new P2P model. Other travel related services are likely to follow their path.
Getting Bigger and More Powerful
Airbnb, the leading sharing economy company, has reached 600,000 rooms in only six years and has had over 8.5 million guests worldwide during that period. It recently closed a $450 million funding round, reaching a valuation of $10 billion.
Other companies are also being backed by increasing trust and funding from investors. Two months ago, the ridesharing company Lyft raised $250 million. Uber, which added a ridesharing service, UberX, is currently going through another round of funding expecting to reach a record-breaking valuation.
What these companies will do with their recently acquired financial power is anybody’s guess. But, there are several options that could be reasonably assumed.
One part will be used to amend existing legal frameworks to foster further growth. Another will go to direct market expansion, while yet another will be used to branch out into new products and services.
“We want to move beyond accommodation,” said Airbnb’s co-founder Nathan Blecharczyk, during the closing session of the conference.
There are speculations that the company will expand into destination experiences. It just launched a Weekend Getaways app for the San Francisco market. While the app currently suggests only accommodations in nearby destinations, such a tool could be a bridge to adding activities across the platform.
Lyft, which currently operates in more than 60 cities in the U.S., is expected to use its funds to expand internationally. Uber, already operating in more than 100 cities worldwide, has been reported to experiment with various transportation ideas, including currier and delivery services.
Growth is not privy to these three major companies. RelayRides, a nationwide P2P car rental platform, recently reported a triple revenue growth for last year. It also announced that drivers can now use vehicles rented in the U.S. to cross the border and travel in Canada.
Opening Up New Frontiers
Looking at transportation in particular, long-distance ridesharing seems to be the next frontier. Zimride, initially launched by Lyft’s founders and sold to Enterprise last year, does operate in this space but there is room for more players.
Carpooling.com, which is extremely successful in Europe, plans to launch in the U.S. within a few months.
“Companies like Lyft, Uber, Airbnb are paving the way for us. Ridesharing between cities is a logical extension,” said Odile Beniflah, the company’s Sr. Global Marketing Manager, in an interview with Travlpeer. “The U.S. is the perfect country for long distance carpooling,” concluded she, referring to the country’s car culture and historic commitment to highway infrastructure.
Currently, 1.3 million people use the platform for long distance travel throughout Europe each month. The company allows only cost sharing, not profiting from the rides, so it does not face any legal or regulatory issues.
BlaBlacCar , which operates in a similar fashion out of the UK, covers 12 countries in Europe, transports 1milliom passengers each month, and continues to grow.
Peer-to-peer dining is also expanding. Following a pilot launch a little over a year ago, EatWith is now available in over 30 different countries and 15 cities in the U.S. Feastly launched in 3 cities in the U.S. earlier this year. Cookening is growing out of France, and Upaji just launched out of Los Angeles.
“We are not concerned that there are many other companies in the P2P dining marketplace” said Baptiste Parravicini, co-founder of Upaji in a conversation with Travlpeer. “The more, the better – the market still needs to be educated.”
Vayable, Sidetour, Anyroad are already established and growing in the P2P tours and experiences market. In addition, there are several startups that address the “what to do” question from a new and unusual angle.
One example is Spinlister. It is known mainly as a P2P bike sharing service but it is expanding to offer pretty much anything “that moves you,” as their tagline explains. That includes snowboard, ski, surf, kite boarding and other equipment that one might want to use while on vacation. And for sailing trips, there are Boatbound and Getmyboat offering a growing number of options to charter someone’s boat.
Secondary Marketplaces and Corporations Come to Play
One sign that the travel sharing economy is maturing is the fact that it is beginning to support its own secondary marketplaces. Take, for example, the several concierge startups that help busy hosts on Airbnb and other similar platforms to manage their listings. Superhost, GuestHop, Airenvy, Beyondstays and KeyCafe have all launched recently to offer anything from key transfers to listing and revenue management.
What’s even more revealing of the sharing economy’s growth is the fact that some large corporations are beginning to warm up to this new economic model. While they are not venturing in P2P marketplaces, at least not yet, some of them are turning to offering flexible access to assets, i.e. they begin to rent instead of sell these assets.
Jeremiah Owyang, founder of Crowd Companies Council, who spoke at the SHARE conference as well, gave several corporate examples. Those of Puegeot and Mariott are most relevant to the travel audience.
Mu is a new program launched by the French carmaker, which provides rental services for cars, trucks, scooters and even bikes. The company does not even produce many of these items. It simply rents them out.
Mariott, for its part, has entered the co-working space rental marketplace. They have launched a flagship co-working center in Chicago where one can rent workspace by the hour, get membership for regular access, or even rent space to host an event.
Becoming More Responsible
“One of the ways we know we [the sharing economy] are in adolescence,” said Lisa Gansky, “is that we are getting red flags on the play. This is a good thing as it means people are taking it seriously enough to be concerned and engaged.”
The red flags in this case refer to penalties or restrictions imposed on sharing economy startups and participants in some cities.
Companies now have the responsibility to address existing concerns and resolve legal grey areas in which they operate. They have the responsibility to engage regulators in an open dialogue and create a new legal framework that works for all. To do that, they need to turn stories into data and educate the public on the real impacts and benefits of the trend.
“There are so many laws we need to change, tens of thousands of them. “ said Janelle Orsi, Executive Director of Sustainable Economies Law Center, to the SHARE audience. “Think of yourseves as policymakers.”
Some of the largest companies are already practicing good citizenship working with communities and paving the way for others to follow.
Airbnb was recently able to work with New York authorities and reach an agreement to address local concerns. In other locations, it has already begun collecting and remitting hotel taxes as part of its Shared City initiative. The platform also runs a disaster recovery program as part of which many of its hosts offer shelter to those in need in emergency situations. A new 24/7 neighbor hotline was also put in place in addition to the other safety initiatives it has for hosts and guests.
Taking on their safety responsibility, sharing economy companies are working proactively with the insurance companies to cover any insurance gaps.
The more established startups, such as Airbnb, Uber, Lyft, RelayRideas and others, already have comprehensive coverage packages in place but there is room for growth.
According to the panelists at one of the sessions, the insurance companies will inevitably have to offer more, better and cheaper products for the sharing economy. As younger generations continue to choose urban lifestyle with less ownership and more sharing options, the industry will eventually have to follow its customers.
No matter what challenges and responsibilities the sharing economy is yet to face as it matures, it is not diverting from its growth course. According to the thought leaders of the movement, the genie is definitely out of the bottle and it is not going back. The trend is making a gradual but permanent change in the way we live, trade and travel.
“The sharing economy has changed the definition of a stranger,” said Sunil Paul, co-founder and CEO of Sidecar. And his words hold particularly true in the growing world of shared travel.