The article “better than a hotel” illustrates a major trend by Airbnb that has assisted it in dominating the hospitality industry, this trend is the sharing economy. Simply, a sharing economy is when individuals rent out their product and services to others through peer to peer platforms such as websites and mobile applications, as for this case landlords and homeowners rent out their homes and apartments for a certain fee to tourists through Airbnb. The share economy popularity may be traced to the consumer’s change in taste and preferences where most of them, would prefer an alternative to the traditional methods used in providing products and services (Morais, 2013). These alternatives tend to be accessible, efficient and cater for all consumer classes. Therefore, Airbnb represents the alternative to the traditional products and services which are the hotels. Origins of a sharing economy could be traced back to the mid-90s where eBay and craigslist were founded introducing a market for recirculation of goods and services, these two firms could be credited to the improvement of customer experience leading to the development of a shared economy. This lead to the development of new firms and platforms such as Airbnb that focus their business entirely on a shared economy proving to be lucrative and slowly dominating related markets (Fleischer and Magen,2016).
The ‘Shared Economy’
Countries or regions that have a developed economy will attract a shared economy, this means that individuals in these economies have the luxury of sharing their assets, products, and services for a lucrative fee (Zervas, Proserpio, and Byers, 2017). This is evident in the article where landlords and homeowners rent out their homes and apartments which are durable assets to tourists through Airbnb. The article also illustrates the various significances of a shared economy to the consumer compared to the traditional ‘bed and breakfast’. Booking of rooms under a short period of time is possible with a wide range of apartments to choose from depending on the taste and preference of the consumer. Transparency and accountability go hand in hand in a shared economy, this is evident in the article where Airbnb website where they showcase their products online accompanied with ratings and reviews of their consumers who have used those facilities moreover, a sizeable fee is deducted and refunded until the owners of the apartments and homes confirm there are no damages.
Future Implications Of ‘A Share Economy’
Share economy is growing exponentially due to its lucrative gains to peer to peer platforms and consumers. This trend is fueled by an increase in declining power of transaction charges such as taxes where some governments have not caught up with the shared economy allowing homeowners to rent out their assets for a lower fee than hotels. However, in the coming years, this might change in most developed nations where regulations may be imposed in the years to come which could be problematic (Cheng, 2016). There is a constant increase in smartphone penetration and in emerging markets which will provide a strong launch pad for sharing economy, this will make it easier for peer to peer platforms such as Airbnb to penetrate and dominate the market.
Thanks to the constant advancement of technology and its adoption have led to the increase in penetration and launch pad of a sharing economy through peer to peer platforms such as Airbnb that allows assets owners to rent out their underused assets for a lucrative fee. Although it has rapidly decreased hotels bookings, it has proved to cater for all consumer classes with ease. This is possible due to the constant elimination of transactional charges such as taxes and labor which results in lower prices which might change if the authorities catch up with the sharing economy (Cheng, 2016) However, the sharing economy is relatively young and underdeveloped providing a margin for technological advancements by both inventors and entrepreneurs.
Zervas, G., Proserpio, D., & Byers, J. W. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), 687-705.
Cheng, M. (2016). Sharing economy: A review and agenda for future research. International Journal of Hospitality Management, 57, 60-70.
Ert, E., Fleischer, A., & Magen, N. (2016). Trust and reputation in the sharing economy: The role of personal photos in Airbnb. Tourism Management, 55, 62-73.
Morais, R. C. (2013, November 30). Better Than a Hotel. Retrieved March 18, 2018, from