The Sharing Economy’s Effect On Travel
The increase of IoT and the global economic downturn has become a fertile ground for ‘sharing economy’ in the travel sector. Most of the services or travel offerings are provided through sharing platforms between peers (P2P).
This has caused a major shift in the tourism ecosystem changing the way travel services are offered. The smartphone-equipped travelers, mostly Millennials, prefer shared services such as renting an apartment, work in exchange for accommodation, etc. as an alternative to professional offerings such as accommodation, transportation, and leisure. The impact is particularly high in the initial phase of the customer journey or during the booking phase.
The new generational travel marketers are focusing on adapting the collaborative-consumption business model or changing their traditional model to function more like a sharing economy model. This concept is not only helping them to grow company revenue but also encourage repeat sales. Consider these stats –
Airbnb is serving more than 300 million customers with their faux hotel services and now aiming to tap into high-value travelers with luxury homes. (Source) The ride-sharing giant Uber has 95 million monthly users across the world with about 76% of US citizens familiar with it. (Source) The sharing economy is growing exponentially and forecasted to be worth 86.5 million by 2021. (Source)
Buying into sharing economy model or integrating such companies into the business through acquisition works best for large travel companies who are looking to innovate. Small businesses can, however, work alongside sharing economy providers by collaborating with them or imitating their business model. Additionally, platform-linking to sharing economy services allow customers to compare and book through a variety of travel service providers.
The mobile technology is the key to connecting users and facilitates seamless access to information shared on peer-to-peer networks. Travel retailers can leverage the sharing economy to offer more personalized services and non-conventional travel experiences to enhance customer loyalty. This will allow customers to compare prices between suppliers, review opinions, communicate directly with the service providers and organize personalized trips themselves. Customer experience lies in the center of sharing economy enabled by the convenience of digital technology. Brands can expect greater reach and positive associations by offering everything under one roof. Seamless mobile and web services along with personalized content are the drivers for business growth in a sharing economy model. Social media and networking help meet demand and supply across a much wider network that also help leverage valuable data from location and sharing.
The emergence of P2P digital platforms is helping businesses to meet the expectations of a diverse range of customers. Not only it breeds customer loyalty, but also contribute to new demand in the travel industry by attracting a new type of customers who gravitate towards lower prices, emotionally relevant experiences and digital access to the services. In this sense, the sharing economy can improve competitiveness and scalability by giving more choices to customers. This gives a huge advantage to loyalty program connections with the idea of accessing goods or services temporarily rather than owning them.