What Does The ‘Sharing Economy’ Mean to You?
How This Catch-All Term Could Be Damaging Your Business
It’s a term that gets used a lot these days. Newspapers love it, politicians are discussing it, and as a vacation rental owner some people consider you a part of it. But do you consider yourself as part of the ‘Sharing Economy’? Or is yours just another business that simply sells space to the public at a profit? Could describing all vacation rentals as part of this sharing economy, be not just inaccurate, but damaging to the future development of the industry of dedicated hosts?
The problem is that there is still a suspicion that the sharing economy is a fad, unlikely to escape from the ‘small time’ mentality. The businesses themselves have attracted huge investment and valuations, but the people providing the service are doing this on an amateur level. This is still a sense that by using services in the sharing economy you are taking a chance. You are entrusting a service to a person with no formal training, qualifications or requirements. This is not the case with vacation rentals. Professional owners and managers need to be dedicated and professional in order to survive. Negative implications of being part of the sharing economy stem from the businesses being viewed by some as a cottage industry - less legitimate and regulated than established businesses. There is an implicit suggestion of being ‘small-time’.
Is the sharing economy part of the problem that vacation rentals are having in the battle to emerge as a permanent business force? Should professional, full-time hosts be distancing themselves from the idea of the sharing economy and focusing on doing more to establish professional hosts as a sector of their own?
Airbnb is one of the biggest businesses in the sharing economy and an important part of many hosts’ revenue. Whilst many hosts may use Airbnb to host their properties, more full-time vacation rental managers may not consider themselves to be part of the peer-to-peer economy. To many, sharing sites are just a good platform to host their properties and reach their guests. Their business models operate in a more traditional way, and whilst they can be similar, they are not just a newer version of existing sites like Airbnb that people may consider them to be.
Speaking in a Fortune interview the CEO of HomeAway describes how vacation rentals do not necessarily fit into the sharing economy.
To hear Sharples explain it, HomeAway [couldn’t be more different from sharing economy businesses]. His company caters to people wealthy enough to own a second home. The other guys are catering to scrappers who are so hard up they offer a room in their home to strangers.
HomeAway are also backing this up with a $100 million marketing budget that aims to define the difference between apartments that are part of the sharing economy and the exact service that HomeAway provide. And this is not a small site, HomeAway is a giant in the industry and it still feels the need to be even clearer about how their business operates.
But as well as having certain negative connotations, such as being unregulated and inconsistent, being considered part of this movement does have some advantages. There’s plenty of information about how the sharing economy benefits the people nearest the bottom of the economy and has less of an impact on the environment than traditional holiday accommodation. There is a sense that the sharing economy is the opposite of corporate big business and are more ethical in the way that they do business and how their business distributes money around the community.The paper titled: The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry explains further:
Clearly, there exist beneficial transactions enabled through the sharing economy... that provide positive utility, have no negative externalities, and thus manifest themselves as a net gain in social welfare.
Airbnb have also commissioned reports into their economic impact in nine cities and it is almost impossible to overstate the positive effect they have had on bringing vacation rentals into the public eye. They are one of the true success stories of the sharing economy and a vital portal for many full time vacation rental businesses, but is covering all vacation rentals with this term damaging the public image of some businesses that do not fit in it? As we have seen from HomeAway’s PR and new marketing campaign there are businesses that are separating themselves from the idea of the sharing economy.
And whilst there may be signs of division growing, all of this is good news. As the industry expands, businesses are now defining themselves in clear ways and not all of them fit in the popular example of the sharing economy. This is a sign that vacation rentals are becoming established as a permanent force, as different branches and brands separate from each other and are still strong enough to survive. Vacation rentals do not have to operate in the same way and businesses are starting to separate themselves from images that don’t describe them correctly.