SHARING ECONOMY AND TOURISM: SEEING THE ELEPHANT IN THE ROOM
TOPOSOPHY turns knowledge into action while working with partners from all over Europe
November 26, 2015
Posted By: Manolis Psarros
Our approach to monitoring the growth and influence of sharing economy in the wider field of travel services for quite some time has recently driven our involvement into various projects. As a matter of building partnerships across Europe we took many opportunities to share substantial knowledge and expertise about the elephant in the room.
Towards the end of 2015, the whole experience reminds us of what we highlighted twice inside the most recent annual editions of 'Tourism Trends Review' published by the Institute for Tourism Planning and Development in Portugal:
As a new style of peer-to-peer (P2P) commerce, sharing economy does not merely involve an unusually large number of options for transport, accommodation, and recreation activities. It has also provoked a shift in role of service user and provider. In this environment, contemporary consumers can openly express their individual interpretations of tourism product uniqueness and authenticity as well as indulge themselves in an imaginative manner while moving around well-known and emerging destinations.
We actually corroborated this view in 2015, during the 1st Semi-Annual Meeting of the European Travel Agents’ and Tour Operators’ Association where we discussed this issue thoroughly with ECTAA and HOTREC representatives and Ms. Elżbieta Bieńkowska, European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs of the European Commission.
In terms of building on the momentum of previous work, November included two key milestones for TOPOSOPHY:
On November 5 we presented during HOTREC 71st General Assembly in The Hague, the key points of HOTREC Policy Paper on the “Sharing” Economy in front Mr. Taleb Rifai, General Secretary of UNWTO, together with European Parliament officials HOTREC members.
On November 23, we also participated in the European Cities Marketing Annual meeting of CEOs of Capital and Major Cities. This occasion was a chance to examine latest destination trends at an influential policy level and focus on the respective impact of sharing economy stakeholders. In two sessions moderated by TOPOSOPHY, brainstorming between ECM members and a vivid debate with Airbnb also shed light on what it takes for destination authorities and P2P platforms to work together and deal with issues of common interest over the provision and consumption of travel services. Particular emphasis was also given in exchanging views with representatives from Barcelona and Amsterdam, two cities which have already developed approaches to sharing economy and monitor their results.
It is a fact, however, that both these influential events were only the tip of the iceberg during a busy 2015 including relevant speaker engagements in countries such as Israel, Montenegro, Belgium, Estonia, Croatia, Greece, Portugal, Latvia, and the UK. In all these cases there were moments of great empirical value, especially when we were given the opportunity:
- To realize how market dynamics together with latest statements of UNWTO/EC officials put sharing economy on the spot in this year's World Travel Market, while only on the sidelines last year.
- To take a look at the actual results of Tel Aviv’s recent partnership with Airbnb to promote the city in joint manner and exchange views with representatives from Barcelona and Amsterdam, two cities which have already developed approaches to sharing economy and monitor their results.
- To learn under what conditions sharing-economy friendly legislation has been in place for decades in Croatia and how hotels team up with BnB apartments and offer them concierge services.
To concentrate for the purpose of this blog post on HOTREC project, the key objectives of the policy paper were to understand the various issues that arise due to the fast growth Short-Term Private Accommodation Rentals (STR) and contribute to the development of a suitable regulatory environment to level the playing field.
When travelling for business or leisure, booking a private house or apartment to stay in via a P2P platform is seen as a trendy and affordable choice: booking, arriving, collecting the key and making oneself, quite literally ‘at home’. More importantly, a simple fact is already common knowledge.
Although the Global Economic Crisis reinforced an interest towards the more effective use of existing resources and the development of new sources of income, advances in technology such as social media and mobile devices accounted for the strongest driver of the sharing and trading of private assets particularly in the case of travel and tourism services.
To examine how the STR have evolved in recent years and transformed the ‘playing field’ for all those involved in offering visitor accommodation, HOTREC policy paper takes into account the following perspectives and international trends.
- Business growth: From 2010 to 2015 venture capital firms have invested billions in the “sharing” economy start-ups, with the sectors of transportation and accommodation receiving the biggest shares of funds. Major companies such as Facebook and Amazon are also included lately among potential entrants to the “sharing” economy through the development of peer-to-peer services and partnership-building with existing start-ups.
- Consumption patterns: Younger generations (Millennials are commonly identified as those born between 1980 and 1999, and who entered their teenage years as from the year 2000, putting them currently in the 18-35 age group) appreciate a lot personalisation in customer service at a global level as enabled by technological advancements. P2P Platforms have been effective in using global tools to enhance interaction between service providers and users at local level as well as in providing affordable options for value-seeking Millennials.
- Entrepreneurial mobility: P2P platforms are also providing a range of products and services for a new type of footloose global entrepreneur, often freelancing or part of a SME (of which there are now many more, in the wake of technological developments and the global economic crisis). “The way we think about long-term residents versus an emergent and more globalized and mobile population” is actually changing due to the growing appeal of P2P services in transportation, accommodation, and all sectors defining the business travel experience.
- Forms of employment: P2P platforms provide alternative sources of income to individual service providers, who opt to work as micro-entrepreneurs of the freelance economy. A gradual transition from contractor to employee relationships is however less likely to happen in the accommodation sector, where properties are managed by their owners or tenants. The issue lies in that the sum of individual and commercial activity undercuts hotels on price. When there is also a negative effect on hotel revenues and jobs, it might be another case where technological progress has not yet proved to be a driver for jobs creation.
- High-level policy making: The activity of the “sharing” economy start-ups has also drawn the attention of national governments and supra-national agencies. Elements of innovation are not rejected in principle, yet political parties in countries such the UK and Canada already participate in a vivid exchange of both positive and negative views on the “sharing” economy.
As these perspectives frame the discussion of various issues including terminology and scales of activity together with suggestions for legislative work, you can a have a look at the HOTREC Policy Paper if you’d like up-to-date knowledge on the agenda of Short-Term Private Accommodation Rentals or even share your thoughts with us.