What do sites such as AirBnB, Relayrides, Cookening or Vayable have in common? They are all, in their own way and in their own niche, web platforms presently shaking the travel & hospitality industry inside out, with a groundswell that few are considering seriously: the collaborative economy. To read to original article on my blog : http://fredericgonzalo.com/en/2013/07/27/collaborative-economy-in-travel-the-big-disruptor/

1. Collaborative
Economy in
Travel: The Big
Disruptor
Frederic Gonzalo

2. What do sites such as AirBnB, Relayrides,
Cookening or Vayable have in common?
They are all, in their own way and in their own
niche, web platforms presently shaking the
travel & hospitality industry inside out, with a
groundswell that few are considering
seriously: the collaborative economy.

3. COLLABORATIVE ECONOMY?
Also known as the peer-to-peer (P2P) movement,
the collaborative economy basically stems from
technological developments enabling consumers
to bypass corporations and big brands to
transact directly with each other. According to
the Altimeter Group, it can be defined as follows:
The Collaborative Economy is an economic
model where ownership and access are shared
between corporations, start-ups and people. This
results in market efficiencies that bear new
products, services and business growth.

4. While social networks, massive mobile
device adoption and easy-to-use
websites, blogs and other platforms
explain in great part how this new
economy is taking shape, there are are
also two key market forces driving this
movement. As Jeremiah Owyang
explains in this June 2013 report, there
are both societal and economical
drivers explaining this new economy, as
explained in the figure below:

6. The P2P movement has been making waves for years
now, making notorious in-roads within the music
industry when Napster and other public file-sharing
sites shook up the traditional models in place some 1214 years ago. What happened next is now part of
history: music labels fought hard against what was to
be a losing battle. Napster ended up folding, but
iTunes came around selling individual songs for $0.99,
with a new model taking shape where copyrights
were respected, illegal downloads reduced and there
are now numerous new models, with monthly
payments, freemiums or individual payments, i.e.
Spotify, Grooveshark, Songza, etc.

7. AND NOW, THE TRAVEL INDUSTRY…
For many, AirBnB represents the posterchild of
collaborative platforms shaking up the traditional
hospitality model. Just like Napster ruffled some feathers
back in the days, AirBnB is presently the dominant player
under public scrutiny in the travel sphere, with some
legal woes in the State of New York among other
places. And as can be expected, hospitality leaders are
responding much the same as major music labels did
back in 2001: some deny the phenomenon or are
oblivious to its impact while others now want to wage a
full-on war on to what is considered “illegal” housing.
The thing is, how do you wage a war on a phenomenon
that’s becoming anchored in our everyday life, part of a
new, evolving social fabric?

9. And while there is a lot of talk about AirBnB,
Couchsurfing, HomeAway and other vacation
rentals sites, the truth is that the P2P
movement spreads much deeper and wider
than strictly accommodations. In fact, the
collaborative economy is now rooted in each
of the five key elements of the travel
ecosystem:

10. 1. GETTING THERE
From car-pooling to renting out your
car, there are even sites where you can
rent out your driveway as a parking
spot downtown or if you happen to live
nearby a popular spot, i.e. baseball
field, events, venue, etc. Some
examples: AmigoExpress, GetAround,
Parkatmyhouse, RelayRide or Zimride.

11. 2. SLEEPING
You can swap homes with one another,
have someone sleep on your couch or
living room floor, rent out a room or your
entire apartment, rent out occasionally
or professionally, downtown or by a lake.
Pretty much anybody who’s got a house
or place to live is potential player in this
field, really… Leading examples: AirBnB,
Wimdu,
Couchsurfing,
HomeAway,
HomeExchange, HouseTrip, not to
mention vacation rentals offered on
Tripadvisor (FlipKey) and Booking.com
(InterHome).

12. 3. EATING
We’re starting to see locals prepare
home-cooked meals and simply inviting
unknown guests to join and mingle
away. Other on-the-road chefs will
come over to your house, apartment or
chalet and cook a 5-course meal for
you and your guest. Or you can rate
your favorite local spot to share for
everyone’s delight… Some examples:
Cookening, KitchenSurfing, Forkly, Yelp.

13. 4. VISITING
Once at a destination, instead of waiting in line at the
information center, why not ask a local for the best
spots, things to do or places to see? Or better yet, get
your own private guide to show you the off-thebeaten paths stuff and hidden gems that only locals
would know about… Some examples: Vayable,
GetYourGuide, LocalGuiding, or SideTour.

14. 5. THE OVERALL EXPERIENCE
Finally, there are a multitude of side-services to help
you have a great experience prior, during or after the
trip. Need a babysitter once at the destination, or
someone to look after your dog while you’re away?
Perhaps you’d like to rent a kayak, camping tent or
generator for the BBQ while at the cottage? Some
examples: Zilok, Rover, DogVacay, Uniiverse, or
CanaryHop.

15. Notice that most, if not all, of the
above experiences and services
providers would traditionally be
paying members of destination
marketing organizations (DMO) or
conventions & visitors bureau
(CVB). Thus, this major shift under
way is one of the key disruptors
explaining Why the DMO model is
broken and how it will need to
adapt to this new reality.

16. AND IT’S BIG BUSINESS TOO!
But just how much money does this new
economy represent and how is it impacting the
traditional players? A recent analysis by
EuroMonitor International contends the impact
of AirBnB on the hotel industry is minimal.
Considering AirBnB has sold 10 million room
nights since its inception in 2007 pales by
comparison to the one billion room nights sold in
the US alone, only in 2012! Perhaps, but I still
believe there is a major shift going on here that
WILL impact traditional hotel players. Here are a
few reasons why:

17. 1. AirBnB is not the only player out there with its
300,000 listings. In fact it’s not even the biggest.
HomeAway, part of the VRBO family (Vacation
Rentals By Owners), is said to have over 500,000
listings, while FlipKey has over 170,000 listings and
InterHome holds on to more than 260,000 listings. If you
add up listings from other popular sites like Wimdu,
HouseTrip or Roomarama, not to mention all the other
smaller sites or even independent property owners
who distribute their offerings through popular sites like
craigslist, then you start to paint quite a different, more
complex picture.

18. 2. There are many who think listings
on these sites are mostly made of
everyday John Smith and Jane
Doe, renting out occasionally to
help with the monthly rent. Truth is,
it’s estimated only 28% of offerings
come from such people, who
don’t do this professionally. In other
words, 72% of listings come from
property
owners
who
often
manage multiple listings.

19. 3. According to the 2012 Summer VRM Owners
report, vacation rental owners generate an
average of about $26,000 per year in rental
income.

20. 4. In fact, the vacation rentals market is
estimated to be worth US$85 billion in
North America and Europe alone, and
growing…
And just like the Hygrade sausage
principle, the more people will talk about
this different way to travel and book
accommodations, the more it will add to
its credibility and popularity, turning it into
an even greater threat than it is now.

21. WHAT CAN HOTELS DO?
Acknowledging the present situation and shift in
consumer behavior would have to be the very
first step, yet few hotels publicly call it out or
seem to revamp their customer experience
accordingly. A study by InterContinental Hotels
Group (IHG), The New Kinship Economy,
published earlier this year, spoke of new travel
relationships, the evolving digital landscape and
different styles of travelers, from multigenerational to new family groups. Well I
wonder… do these new types of travelers find
what they need in hotels that have not changed
their offering in the past decade, if not more?

23. Some of the irritants from
traditional hotel business include:
 Prohibitive
costs for a local phone call
 Prohibitive costs for breakfast or most inroom dining options (when breakfast is
not included, of course)
 Ridiculous prices for anything found in the
mini-bar – which you’ll find across the
street for 10 times less…
 Uneven wifi access, performance and
access costs

24. All things we’d take for granted
a few years ago, but does it still
fly in
2013?
Independent
hoteliers or hotel chains nimble
enough to adapt are those
who will maintain their market
share and grow. A great
example is how Kimpton Hotels,
in the US, focus on customer
service with various surprise &
delight initiatives that keep
customers coming back. Or
Hilton’s Garden Inn brand,
offering suites and full-kitchen
amenities catering to families or
customers staying longer. And
there are many more, of
course.

25. The collaborative economy is here to stay and will
impact many aspects of our everyday life, including
how we travel and discover the world. Hurdles still
remain to ensure proper standards are delivered
across all experiences and to avoid illegal encounters.
But denying this phenomenon won’t help, nor battling
it with hopes that it shall go away. It’s time to
embrace the potential and see how it can become
beneficial to all in the travel industry, starting with the
consumer. Because after all, hoteliers who always had
and still have the customer as their number one focus
need not fear for the future…

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