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Sharing platforms disrupt hospitality trade

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Sharing economy platforms have the potential to change the way business is conducted in the hospitality sector.

Although it’s still early days, traditional hotels should be considering potential strategies for the future, says PwC’s Hospitality & Gaming Division. The sharing economy allows people to use information technology that enables distribution, sharing and reuse of excess capacity in goods and services.

“Worldwide this is a trend that is emerging. The sharing model has been made possible by digital platforms and changing social norms,” says Veneta Eftychis, PwC senior manager: hospitality and gaming division.

The sharing economy is growing swiftly, particularly in the hospitality and tourism industry, according to PwC research. Airbnb is an example.

According to PwC research, about 425 000 worldwide people stay on properties found on the accommodation rental Web site every night.

Companies like Airbnb let people sublet their rooms or entire homes when they are not around.

PwC’s recent research shows that a sharing economy is resulting from the collision of four megatrends: breakthroughs in technology and connectivity, rising urbanisation, a growing environmental conscience and shifting social preferences.

In the hospitality and leisure sector, a new breed of traveller is emerging from this coming together – “digital natives” are a tech savvy generation, who see through hotel marketing literature with a quick scan and get the best deal available through price comparison Web sites.

Airbnb is reportedly valued at $13-billion, more than some of the mature players in the hotel industry.

In 2014 the company booked stays for 20-million travellers, operating with about 1 500 employees in 20 cities worldwide. Airbnb has also gained traction in South Africa, where there are now more than 1 000 listings countrywide.

Eftychis says: “Other models similar to Airbnb are growing in numbers across the globe.”

With management companies as intermediaries, there are no concerns for the lessor and lessee in sorting out the terms of the arrangement, and hopefully there is greater trust that the experience will be of consistent quality.

However, issues such as safety, hygiene and uncertain quality still remain as concerns in the industry.

According to PwC research in the UK, hoteliers say that ‘sharing economy’ business models are not a significant threat to traditional business models (yet) and that online travel agents (OTAs) were the biggest threat.
Luxury operators especially did not believe the sharing economy, using business models like that of Airbnb, could consistently compete with a five-star business model.

The hotel industry should take the necessary steps in identifying the potential for disruption in their sector today.

“Hoteliers should also look into their current strategies, business models and look at ways in which they can differentiate their products and services as a means to justify their current hotel pricing structures,” suggests Eftychis.