The Sharing Economy is here to stay, but now what?


THE rapid growth of services like Uber and Airbnb over the last decade make it clear that the “sharing economy” is not a passing trend. These businesses are causing some concern for traditional travel suppliers, with the potential to impact both volume and pricing in the long-term.

What is less clear, however, is the level at which corporate travel managers should integrate these suppliers into their travel programs. While using sharing economy suppliers presents an opportunity for transaction-specific savings, there are also several challenges and concerns associated with using these suppliers that must be considered.

Low usage of sharing economy suppliers

The use of sharing economy suppliers still represents a relatively small portion of most corporate travel programs. A 2015 survey by the Global Business Travel Association (GBTA) indicates 24% of companies do not allow their travelers to use ride-sharing suppliers. The study also indicates ride-sharing options as the least used by business travelers with only 11% using these services, while the majority opt for traditional transport options like renting cars or hailing taxis.

While travel managers in Asia are beginning to explore the viability of working with sharing economy suppliers – largely at the request of their travelers – they are cautious and calculated in their approach, given the concerns around traveler safety.

In Asia, the use of these suppliers varies widely based on the market. While the sharing economy is not a common phenomenon in markets like India and Vietnam, markets such as Australia and Japan have been much more receptive. Differences in the demand and supply in a market are a key factor in determining whether sharing economy suppliers are an attractive option. A place such as Tokyo, for example, which has some of the highest hotel occupancy, is a very interesting place to consider sharing economy accommodation providers.

The relatively low integration of sharing economy suppliers into managed travel programs thus far leaves a number of questions around the actual savings that can be achieved, and how best to work with these suppliers, still to be answered.

Serious savings or the price of service?

CWT Solutions Group recently analyzed the use of Airbnb vs. traditional accommodation such as hotels and serviced apartments, by looking at 68,200 stays made by various companies that have included Airbnb in their travel programs.

Findings from the study indicate that while tracked sharing economy usage is still marginal at only 2.5% of total accommodation bookings, the average paid rates were 37% lower than traditional lodging. In Singapore, the average daily guest rate for Airbnb was 27% lower than traditional lodging.

The study also identified a clear pattern in the length of stay; Airbnb stays are twice as long as traditional hotels, with 7 nights’ stay on average. Travelers to Singapore stayed in Airbnb accommodations for 17 more days, on average, compared to hotel stays. On the other hand, in destinations such as Tokyo or Shanghai, travelers actually booked Airbnb accommodations in lieu of traditional hotels, even for shorter stays.

Yet, before rushing to savings, buyers and travelers must also understand the price difference may be the price of service.

Read rest of the article at: TTG Asia