Impact of Airbnb on the Hotel Industry

The Business Environment and the Sharing Economy


The business environment is dynamic, and the need to create value from the available resources has allowed the individuals and corporates to device ways of making profits from otherwise dormant assets.


The sharing economy which was traditionally defined as the joint use of facilities among neighbours, family, and friends has shifted into profitable business practice. The change in social and monetary paradigms has re-defined the consumption patterns, the way various individuals interact and share resources at their disposal.


The availability of rooms in households, seasonal use of cars, office spaces, boats and holiday cottages has prompted to make profits out of these resources through short-term renting or leasing. Technology has enhanced business by linking consumers with service providers and suppliers of goods.


However, in the case of the contemporary sharing economy, intermediaries, as seen in the case of companies including Airbnb, Zipcar, SnapGoods, and RelayRides, link the renters and owners of assets. This paper will analyze the impacts of Airbnb in the hotel industry as far as sharing economy is concerned.


Customized Services in the Sharing Economy


The emergence of companies providing avenues for a sharing economy, consumers in the hotel and hospitality industry can access customized services and facilities that are only available in private homes.


Idle machines, holiday cottages and apartments owned by individuals who cannot fully utilize the items can rent or lease the given facilities to consumers seeking customized services which are not available in typical hotels.


The services available in a home set up are quite expensive if the same is provided in a tourist hotel. Private camping spaces, boats, and apartments are customized, and the renters using platforms such as Airbnb provide consumers with a variety to choose from based on tastes and preferences.


The sharing economy is revolutionizing the hotel industry in that unlike typical hotels which have a relatively uniform design, private resources are customized to suit personal preferences. Congestions and huge human traffic realized in traditional hotels are avoided by spending holidays and vacations in private homes, thus enhancing value to consumers in the hotel industry.


Utilization of Technology in the Sharing Economy


Companies including Airbnb and RelayRides have no real estate that they can rent or lease out to consumers in the hotel and hospitality industry. However, the investors in the sharing economy platform link the renters and leasers of touring and hotel facilities with asset owners over the Internet.


In the case of Airbnb, the American company lists facilities and resources available worldwide, and tourists who are seeking to rent or lease items can access, choose and book the facilities online through the company’s website.


The utilization of information technology as seen in the case of an online listing of items and social media marketing enhances the embracing of technology in the hotel industry. The sharing economy in the hotel and hospitality industry is utilizing technology to increase consumer experience and expand the choice base of destinations and accommodation provisions.


Review ratings of services at given rented or leased facilities on the sharing economy platform website allow tourists to access the best quality experience and avoid poorly rated destinations.


Collaborative Consumption in the Sharing Economy


Collaborative consumption in the hotel industry is beneficial to the renters and leasers of property as well as the hosts.


Renters and leasers in the sharing economy can incur less expense on facilities and assets that they require for a short while or on a seasonal basis. Accessing accommodation from traditional providers including hotels or travel services from a car-hire company is significantly expensive compared to renting or leasing from private owners.


Collaborative consumption in the hotel industry as provided by shared economy companies including Airbnb and RelayRides ensure that tourists rent assets only when they require them at an affordable price.


Collaborative consumption allows individuals to purchase assets without fear of remaining idle by having the tourists as the target market and create income when they are not in need of the given items.


Collaborative consumption presents an advantage by people seeking to interact and enhance multicultural knowledge. In the case of sharing economy, tourists can live with people in rented homes, interact and learn their cultures, thus furthering the experience of consumers in the hotel industry.


Regulatory Implication of the Sharing Economy


The emergence of the sharing economy is posing a policy and regulatory challenge to the governments and international trading organizations.


There is the need to ensure the safety of the consumers in the hotel industry utilizing private leased or rented facilities. Also, the owners of facilities listed under the sharing economy platforms including those on RelayRide and Airbnb ought to be protected from rogue tourists who might vandalize private property or fail to pay the rental fees.


The regulatory uncertainty in the sharing economy industry is a major hurdle to the stakeholders in the sector. Questions on the licensing of home and car renters, taxation and safety standards require policy establishments to ensure seamless operations in the growing industry.


Lobbying from traditional hotel industry service providers including hotels, taxi firms, and car-hire companies are pushing regulatory agencies to ensure strict regulation of the sharing economy platform to guarantee fair business competition.


The potential of the sharing economy is immense as witnessed by the rate of growth of companies including Airbnb and RelayRiders. The hotel industry is detrimental towards the economic growth of many countries due to the foreign exchange and foreign direct investment realized from tourism activities. There is dire need to regulate the sharing economy to ensure preservation and sustainability of the hotel industry.


Conclusion


Economic development is enhanced when the resources at the disposal of the citizens of a country are optimally utilized to create income and value for the owners.


The advancement of the sharing economy is a source of relief to many property owners who possess assets that are under-utilized or are just lying idle.


People can rent or lease out items for profit while ensuring that the renters and leasers are provided with customized and quality services in the hotel industry.


The advancement in technology as seen in the development of sharing economy used by companies including Airbnb and RelayRides allow to create the connection of service providers and consumers over the Internet.


The hotel industry is revolutionizing as a result of the growth of the sharing economy. Tourists can access facilities at a lower price compared to traditional hotels, camping or car-hire firms.


While the consumers in the hotel industry are enjoying variety and affordable services, there is the need to regulate the sharing economy to ensure fair business practices and safety of the consumers.

References


Newcomer, E. (2017, September 14). Why ‘Sharing Economy’ Comes Wrapped in Faith and Rear: Quick Take. Bloomberg.


Harris, J. (2018, February 12). Profiteers make a killing on Airbnb – and erode communities. The Guardian.


Sigala, M., " Gretzel, U. (2017). Advances in Social Media for Travel, Tourism and Hospitality: New Perspectives, Practice and Cases. London: Taylor and Francis.

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