Executive managers within the tourism industry have mixed feelings about the exponentially increasing sharing economy model. Companies based on the sharing economy do have some advantages over traditional hotel chains which should be addressed because of a lack of legislation, lack of assets, low cost operations, and more personalized services.

2016 has been a very positive year for the hotel sector. According to Turespaña, from January to June 50,8 Million international visitors were registered in Spain. This amount is a 6,3% higher than in 2015 and a higher growth is expected for the following months. Spain received more than 74 Million international tourists, 6 Million more than the year before. This increase in international tourism has contributed to the increase of 4,4 in the GDP generated in tourism related activities.

But it’s not all good news for the hotelier sector, since 2014 new business models based on shared economy (P2P) have appeared and the number of companies using this model have increased exponentially, limiting the increase in occupancy and ADR in certain important touristic cities such as Barcelona.

According to a report about touristic prospects for 2015 carried out by Deloitte, 41% of executive managers see this new business model as “a threat for the whole industry because they can lead the customer into confusion or even harm the image of security that managers are currently showing”, while a 9% see it as “a threat to the market quota”. This information proves that a part of the hotelier sector is concerned and doesn’t know how to react against the sudden success of sharing economy.  

On the other side, 50% of enquired managers from the tourism industry think that these new models based on sharing-economy can become an opportunity, 35% of these see it as “an opportunity that will widen the market in which everyone can gain from” and 15% see it as “an opportunity to innovate and stand out”.

Sharing – economy, or Peer-to-Peer, is an economic model that has been going around during more than a decade but has experienced an unexpected growth during the past 4 years. This strong progression has allowed Airbnb reach a higher value in the stock market than many big hotel companies.

But how do these companies based on sharing economy work and which are its advantages versus traditional hotel chains?

One very important advantage of a company like Airbnb vs. hotel chains is its lack of assets. All assets available on the Airbnb platform belong to their providers, private owned properties rented out; as well as all topics related with the legal responsibilities of renting touristic apartments. Another advantage for Airbnb, and a problem for many hotel chains and cities that are crowded due to this type of accommodation, is the lack of legislation in this sharing economy. The provider must fulfill all legal responsibilities, so Airbnb doesn’t have to pay taxes or fees corresponding to the rental of these apartments. On the other hand, Airbnb only recommends its’ providers to fulfill the legislation of each country, not being an obligation in order to use their services. Due to this business model, Airbnb is capable of operating at fairly low costs, consequently affecting market prices in its’ environment.

The main problem for the hotel sector is that the client already considers Airbnb as an option just as feasible when searching for accommodation in a destination. For this client Airbnb offers more advantages than some hotels could provide, other than usually having a lower price than the average price for a room at a hotel. For any future client, all services will need to be personalised due to the options Airbnb offers all around the world.  On the other hand, an Airbnb user has the chance to choose the accommodation according to their needs and the number of people that are travelling. Ultimately, another key to success for these companies is its technological development and online presence, owed mainly to smartphones. Allowing these companies to reach a segment of the population, Millennials among others, at any time and to store a huge amount of data out of reach for any other company in the hotel sector.  Nowadays this database is a key success factor for companies to learn people’s customs, habits and needs, in order to personalise services almost instantly. These features are what are launching Airbnb’s success worldwide.