Covid-19: a new opportunity for the Sharing Economy?
This week Sphere Travel Club highlights some of the consequences of the current Covid-19 crisis on the sharing economy. Clearly the tourism industry will be affected as a direct consequence, so how should people tackle this situation? Will the Corona-Crisis cause a sharing economy wave 2.0?
Following the financial crisis in 2008 the concept of sharing greatly grew. Most people needed to watch their finances and could not afford to own everything they wished for. But there was also a pushback from many people against overconsumption and debt accumulation that appeared to be one of the reasons for the crisis.
The success of sharing business models seems to stem from the 2008 crisis and the mindsets and human contexts that emerged from it. The big question now is, whether the current COVID19-crisis, which will see GDPs around the world shrink between 5 and 10%, will be the beginning of a sharing wave 2.0 — especially given the development of technology and user readiness over the past decade.
More than ten years later, we live in a transformed world. Technology and digital development have enabled billions of people to share billions of services and goods. It has never been so easy to interact with people in a safe and accountable way. Global platforms offer all types of services that can be shared. The overarching mantra being: anything goes, as long as it makes life easier and hassle-free.
Concepts such as Airbnb and Uber were born around the time of the crisis and gave people access to a type of service or good, without owning it, though still providing them with the same value experience. In the meantime such companies have thrived. Taking a look at the numbers from the Brookings Institutions report shows that the sharing economy is set to grow to a value of $335 billion in 2025, up from $14 billion in 2014.
Impacting the traditional industries
Let’s take a look at the potential future situation in the travel industry.
Holidays will not be the same post-Corona as they were before this pandemic. Not only do the health hazards have a radical impact on transport modes, but also on the type of accommodation travelers will choose.
With reduced numbers of flights and reduced numbers of seats available, air transport may become more expensive, but also the question remains of how safe it is to be in crowded places such as airports. Whilst air conditioning filters on planes are hospital-grade HEPA filters and hence do not pose a threat to a quick spread of the virus during the flight, the filters on trains are most of the time not hospital-grade.
So for those weary of getting infected on the journey to this year’s holiday destination, the car may be the best option and it may feel like going back in time. How did people do it in the 70s? The whole family in the car and off into the South, stuck in long traffic jams on motorways and burning heat to finally reach the packed beaches and cool off in the azure sea — with the difference that today most cars do have air-conditioning and that the kids have their phones to distract themselves, hence the question “Are we there yet?” may arise less often.
Travelling by car means two important things:
- Travelling within your own continent and perhaps discovering destinations you would not typically go to. Less hotspots and more hidden treasures.
- You’re not limited by strict luggage rules, you can take all kinds of things.
Hence the go-to choice will rather be second homes and holiday rentals, rather than hotels.
They offer more destinations on the whole: more holiday homes exist than hotel rooms, which means that holiday rentals allow not only a wider spread of population, but also a higher number of destinations to satisfy the demands and travellust of this year’s holiday-goers (certainly for extraordinary destinations — wonderful houses have been built in the most remote areas of natural beauty, whereas hotels are generally built in places that guarantee high occupancy ratios).
Furthermore, second homes or rentals provide more privacy, space and free timing for families and groups of friends on holidays together. No need to frequent busy places, such as the hotel’s breakfast buffet — just the supermarket once in a while, but that you’d do at home as well. Additionally travellers also get the advantage of living their own real holiday rhythm, not bound by any fixed meal times.
Last but not least, the financial side. Hotels are not a cheap affair. On top of the room rate, all food and drink needs to be factored in — as in most hotels cooking is not an option. Lower financial costs can be found by renting a home, which typically even has more space, allowing travellers to go in groups with friends and family, further reducing the cost per capita.
Add on top of that a sharing mode, such as Sphere Travel Club, which allows owners to travel for 10–15% of the real cost, and you get the pleasures of a private environment, space, privacy and safety from potentially virus-contaminated hotel guests for a fraction of the cost.
Using resources in a responsible way
Besides those points there is another, rather value-based element in the equation: sustainability. Holidays in a second home or a rental property are more environmentally friendly and far more connected to the local economy. Travellers leave a smaller footprint by essentially integrating the local community for the time of their holiday.
They go shopping in local shops, they use local services linked to the house and most of all, they use a property that would very probably otherwise be empty. Making use of the second homes and holiday rentals across the country means bringing life to villages and towns. It can contribute to keeping rural areas economically relevant and it certainly supports the local economy.
Desire for options
Taking into account the probable consequences of the crisis for transportation and accommodation choices, as well as the potential financial impact of an economic turndown on holiday plans and the digital possibilities, it would seem fair to believe that the COVID crisis will clearly boost sharing economy business models.
The factors limiting the conventional ways of doing things, combined with the human desire for options, will without doubt propel services and products ahead that know how to provide people with a safe, responsible and cost-efficient value offering.
In what concerns the 2020 summer and autumn holidays, the stakes are high and it would not be surprising if the holiday trend destinations were to be those reachable by car with a wide supply of accommodation shielding travelers from unnecessary exposure to potentially infected other travelers. Of course all that whilst keeping prices reasonable and offering peace of mind — something everyone needs after months of confinement and health drama all around.
