Raconteur

New-style house sharing is shaking Hotels can learn from disruptors such as Airbnb that have introduced the hospitality industry to the sharing economy SHARING ECONOMY DAN MATTHEWS F rench philosopher Victor Hugo said, roughly translat- ed, that there is nothing more powerful than an idea whose time has come. The remarkable thing about this is its emphasis on timing – some ideas must wait for a trig - ger-event before making their debut. Quite often a good one floats around the cosmos for years without impressing. Then the stars align, the idea is trialled and it transforms from a rudderless notion into something tangible, valuable and sought after. One minute we all wonder who would want it, the next we're equal - ly perplexed as to why we didn't de- mand it sooner. This is true of many innovations, from seat belts to touch screens to the smoking ban, which were once considered undesirable, but today are undisputed. One such idea has become known as the sharing economy, which put down roots soon af - ter the widespread adoption of social media. It allows people to bypass the rigid structures of capitalism in which consumers buy and produc - ers sell, and jiggles them about, blur- ring who does what. There is nothing new about it, nor is it particularly inventive, in fact it's re - cycled from the bartering economies of yore. It simmered for decades in car boot sales, babysitting circles and neighbourly exchanges of lawn mow - ers and cups of sugar. Then globalisation and mass com- munications arrived, blending to create a platform upon which shar- ing has risen from the small, paro- chial and ad hoc, to something truly international, organised and status quo-obliterating. Leading this shake-up are the new business titans like Uber and Airbnb whose universal appeal and colossal sales belie their tender years. They are the child prodigies in short trou - sers beating aged grand masters at their own game. Founded only eight years ago, Air- bnb has kicked the legs from under the hospitality industry. Its rise was predicated on a shift in the mindset of property owners. Ten years ago your home was your castle; now, for many people, it is a fantastically val - uable asset to sweat. "There was an economic need to share an underutilised asset like a home or a room within a home," explains Adnan Saulat, general manager at technology services company Mindtree. "Once there was enough liquidity and branding in the market, a tipping point was reached that drew many people to - wards it. "With the advent of social media, it became very easy to trust others. It was now OK to share rooms with complete strangers and buyers were now willing to sleep in other peo - ple's homes. Reviews, photos and social media profiles help create the trust initially. It is further strength- ened if the seller has provided am- ple information about the property. Community plays a very important role in helping the circle of trust that forms between individuals." Hotel chains that for so long operat - ed on a level playing field with chal- lenges and opportunities they under- stood, are now ripping up business plans and devising ways to co-exist with this enormous new rival. Airbnb attacks the end of the market that is undifferentiated and doesn't add a lot of value: stars one to three. Luxury hoteliers have the firewall of customer service, which Airbnb doesn't major in. But con - veniently located, no-nonsense guest houses are directly in its sights. The new service can beat them on customer experi - ence. It plays up the notion that travel- lers want to holiday like a local, getting to the heart of a community instead of perched on its hinterland as a – the word sticks in the throat – tourist. But chains like YOTEL, founded by Simon Woodroffe in 2002, claim to have a ready-made set of unique selling points that protect it from what Airbnb does best. "Business travellers often require meeting spaces or shared working areas, which an Airbnb property is unlikely to provide," says Jo Ber - rington, YOTEL's vice president, brand. "Most Airbnb accommoda- tions don't offer the flexibility hotels can give such as around-the-clock check-in or free cancellation of bookings. Hotels provide guaran - teed comfort and basic necessities free of charge, and most of all vir- tually instant communication for whatever you might need." There is another check on Airbnb's fast growth, one which is common to many businesses in the shar - ing economy: regulation. Hoteliers complain, with some justification, that it holds a charmed position in the market. In most jurisdictions it swerves onerous rules rivals must comply with. Hotels have to meet stringent health and safety standards which cost mil - lions of pounds in fixtures, fittings, Founded only eight years ago, Airbnb has kicked the legs from under the hospitality industry AIRBNB'S IMPACT ON THE HOTEL INDUSTRY TOP 10 AIRBNB CITES BY NUMBER OF 03 05 PARIS 78,000 01 LONDON 47,000 02 MAIN REASONS FOR USING AIRBNB AVERAGE STAY AT AIRBNBS AND TRADITIONAL HOTELS Source: AlphaWise/Morgan Source: AlphaWise/Morgan Stanley Research 2015 1 night 2 nights 3-5 nights 6-10 nights 7% 7% 14% 51% 22% Airbnb Hotels LEISURE ACCOMMODATION ALTERNATIVE REPLACED BY AIRBNB Source: AlphaWise/Morgan Stanley Research 2015 FOR THOSE WHO HAVE USED AIRBNB IN THE PAST YEAR FOR LEISURE, WHICH OF THE FOLLOWING ACCOMMODATION ALTERNATIVES DID IT REPL ACE? Hotel Bed and breakfast Friends/family Extended stay hotel Other vacation rental Corporate apartment Other rental site Other I would not have taken this trip if not for Airbnb 42% 36% 4% 31% 30% 22% 19% 19% 5% 55% Cheaper price 33% Location 31% Authentic experience 24% Uniqueness of unit 17% Large party accommodation 23% Easy to use app/website MAIN REASONS FOR NOT USING AIRBNB Never heard of Airbnb 59% 32% Privacy concerns 27% Safety concerns 26% Uncertain on logistics 18% Lack of amenities 15% Lack of availability BARCELONA 23,000 06 ROME 23,000 07 FUTURE OF HOSPITALITY raconteur.net 08 RACONTEUR 22 / 09 / 2016

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