Sharing economy, redefining some basics
Now that Sharing economy has come to another stage, we might ask ourselves how much some businesses do ressemble traditional businesses. This article is an attempt to clear the case of Airbnb.
The other day I heard about a Dutch entrepreneur talking about his washing machine business in a radio show about the Sharing economy.
The client pays a fixed price per month, and gets the washing machine delivered, installed and maintained at home. Detergents and advice are included in the price. The machines stay property of the startup. The startup is a pure network organization: it has concluded a deal with several players, and has been able to finance its first machines through crowdsourcing.
It’s a great concept, I might have been seduced if I still lived in The Netherlands.
The name of the startup is Bundles, and they are already imagining bundles of all sorts in the future : toasters, coffeemachines. Their business is based on the concept of sustainability (less machines, usage of less water, electricity and detergent): clients will owe less and pay more for service and less pollution.
Now I may be wrong, but it feels more like leasing than sharing. (Moreover, it seems that this French company does the same thing, except for the label “sharing economy”.)
This is totally OK by the way, but just one of those current misconceptions of Sharing Economy. Whereas I believed only a year ago that the Sharing Economy had two pillars, the free exchange and the paid exchange of goods and services, I am coming to believe that in 2015 we have to admit that the paid services and exchanging of goods are plain economy. Some have come up with the term of “access economy” — time will probably make this more clear.
Let’s focus on Airbnb. 1)) The original concept was renting a room with a private person in his/hers house, or occupying their house when they would be absent. The novelty of Airbnb was the fact that their discourse reminded strongly of the Coachsurfing philosophy whereas the platform made it easy to subscribe and to use it. Airbnb’s growth is substantial, and they have become an important player in the hospitality industry. Airbnb is one of the pure players, like Booking; it is not difficult to understand why both are not exactly beloved in the traditional hospitality industry.
Airbnb: discourse, storytelling and mediating between hosters and travelers in a trust economy
What does Airbnb do? They provide a platform and a specific discourse, and propose offer and demand to meet. A traditional capitalist approach of business. Except for the fact that the platform doesn’t own the assets; they are only mediating between owners and travelers.
The idea is that housing is more available than we think, especially when hosts don’t have to deal with norms and rules authorities and traditional players supposedly demand. Putting up your place for rent is quite an easy process and the discourse of Airbnb is cool, appealing to a certain type of tourists and of hosts. This is what they did and they did it very successfully, as you can guess from the vivid reactions from different stakeholders.
But is it so different? Now that I have been using Airbnb for a while, both as hoster and as traveller, and really, I cannot prevent myself from thinking that Airbnb does the same thing as, let’s say Gîtes de France here in France. The thing is, they do a better job. But hey, they have not done it for 60 years yet, as has done Gîte de France, so we’ll see what the future brings.
Airbnb has been accused of having disrupted the hotel industry. Since Airbnb has started, the hotel industry has not stopped crying out loud that Airbnb is unfair competition (read an interesting analysis here): whereas hotel owners have to face huge regulations and security issues, Airbnb hosts do not have to do so. But when you look closely at the business Airbnb offers, it becomes apparent that they do not offer or mediate for hotel rooms. Airbnb housing would be the equivalent of what we call ‘gîtes’ (self catering vacation homes) or Bed & Breakfast (‘Chambres d’hôtes’ in French). And these do not have to face the regulations hotels are continuously referring to. Airbnb is actually no more and no less than a mediation platform between people who want to rent their houses or rooms and the guests who want to rent something else than a hotel room.
Airbnb does not at all interfere with classification issues: reviews are their classification concept. The innovation is situated on the importance of trust. Both hosters and travelers need to build and maintain trust in their community. Therefore, reviews are reciprocal: not only are hosts reviewed by their guests, guests are equally reviewed by hosts. And no review is published as long as both have not done their job.
In other words: you do not know what your host has written about you until the review is published, and it is only published after you have written your review about him/her and his/her house. This is a fundamental difference with the traditional players like Tripadvisor and Zoover, as well as with Booking and alike platforms, where travelers can vent their false claims or get away with partial facts.
This concept thus reflects a difference in how the relationship is perceived: the real disruption may well be the integration of a horizontal relationship that replaces the traditional “provider — guest” (vertical) system. This is also underpinned by the fact that no direct financial transaction takes place between hoster and traveller during the trip, since payment takes place before the guest arrives.
Airbnb and alike platforms come close to what Mark Hoplamazian, Hyatt hotels director claimed at the #skiftforum in October 2015 : “What if hotels checked into guests’ lives instead of guests checking into hotels?”, one of the most remarkable phrases I have heard in a long time on hospitality industry issues.
Do hosts and guests seek social interaction through Airbnb?
Giana M. Eckhardt and Fleura Bardi state in their article that the main purpose of using sharing economy platforms is to obtain good service/hosting for less money and that the client is not, or less interested in the social aspect of the exchange. I am convinced that things are a bit more nuanced with regards to the hospitality industry.
Can authenticity rime with financial transactions?
Whereas pricing rests an important factor and may well be the most important in quite some cases (especially in big metropoles), the social aspect is certainly an important issue, both for hosts and for travellers. Some hosts I have interviewed have spoken about the search for more excitement and openness in their lives through contacts with strangers, and almost all of them have clearly showed very hospitable attitudes and signs. Even those who have started intermediary service companies (property management), have been quite friendly and welcoming in their communication and attentiveness. You might call it professional, and far away from the grassroots “sharing economy” philosophy, but in the end the tourist experience was a good one. Comparable or better than traditional ways of renting places for traveling. Professional, but enthusiastic, warm, authentic and welcoming. 2))
Renting through Airbnb is not the same as renting a hotel room, but it comes very, very close to renting a gîte, a self catering cottage or a classical Bed & Breakfast. If you do not call that social, I do not know what it would be. And in the end, it is tourism business as usual, but well done, for the most part. Indeed, I would not call it Sharing economy anymore; let’s say that Couchsurfing.com does a far more better job when it comes to sharing without exchanging money. And even there, exchanging is not without norms and codes about the value of the exchange, as has been thoroughly described by David Picard and Sonja Buchberger in Couchsurfing Cosmopolitanism.
But sharing or not sharing, Airbnb has provoked an enormous amount of fresh air and panic alike in an industry that desperately needed to be wakened up, has infused some good ideas and is not much different from the practices of renting out spare rooms in houses to make ends meet in the 1920's in Italy, but also in France, The Netherlands, United States and in England.
The hotel lobby is well organized and crying out loud, while no organization is defending the interests of Bed & Breakfasts and gîtes or self catering vacation houses, but both will suffer to a certain extend, of the growing capacity and beds on the offer side of the business. That is, hotels and B&B’s situated in rural areas will not extensively feel the competition with the newly arrived Airbnb hosters, since most of the Airbnb housing capacity is situated in cities, but for those situated in cities, the competition will certainly be felt — though not much independent research has been done that reveals just how this is the case. 3))
The effects of Airbnb and alike platforms are going to be felt mostly in other parts of the hospitality industry, probably most in the intermediary service organizations like Tourist Offices and the “Gîtes de France”-like mediation services, as well as in the self catering vacation houses that are not able to modernize their properties and their conception of hospitality as redefined by Airbnb.
Notes
1)) Now I have not interviewed many Airbnb travellers, but I am a traveler myself and own a small tourist business since 1992, in south-west France. My main business is training people (most of whom work in the tourism industry) in social marketing, which gives me a good idea of what the norms, procedures and attitudes are. The combination of both activities allow me to have a inside view on what is happening in France’s hospitality industry.
2)) It is interesting to note this claim made by non-financial transaction advocates that authenticity can not be provided whenever money is involved. Some preliminary research on Greeters and Guided Tours gave the same image : “when you are paid, you cannot be unconditionally hospitable”.
3)) Though the Boston University 2013 (updated in 2015) study dealt with Austin — a very particular city for several reasons and supposedly not a model for most “normal” cities around the world, it marks a beginning in a more detailed thinking about the effects of Airbnb and alike platforms on the Hospitality Industry. I personally think that we arrive at many conclusions without having serious research to back these “feelings-conclusions”.
