The old barter system of yore has reappeared in our economic world in a varied avatar as Sharing Economy. Worldwide, this new economic concept of peer-to-peer sharing of assets, goods, services and knowledge has rattled sectors like Hospitality, Travel & Logistics, Food & Beverages, Health, Human Skills and Education – to name a few. Each of these industries have new entrants who are growing exponentially leaving the existing players reeling. Indian Hospitality sector too, has been witnessing the growth curve of global players like Airbnb and Indian players like Stayzilla, OYO Rooms, QiK Stay, Zostel to name a few.
The unprecedented growth and the workings of sharing economy have brought a paradigm shift in the hospitality industry; changing the industry for the better in these 4 ways.
- Be Online or Die – With the smartphone penetration expected to touch 340 million Indians and 2 billion users globally in 2017, online presence has become a serious must for all hospitality players big and small as travellers check out options on the web and trust online ratings. Merely having a working website is no-longer a sufficient means towards a desired end. Sharing economy has bestowed legendary statuses to OTAs and review platforms. Hence, Hospitality players need to be visible across all online avenues to register a presence and identity in the minds of prospective customers.
- Widened scope of business – Sharing economy has widened the scope of business in the hospitality industry:
- Sharing economy brings increased business opportunities and newer business models. The advent of Airbnb, globally, and later, Indian players like Stayzilla, have given a boost to micro-entrepreneurs in hospitality industry – especially those in the peer-to-peer accommodation segment where travellers can avail spare rooms or spare homes.
- It has also given the hospitality industry players access to a wider customer base spanning both locally and globally.
- Budget Hotels have found limelight and voice – Economy hotels and budget travellers are the biggest beneficiaries of the sharing economy. Indian Budget hotels find global visibility on aggregator platforms like Stayzilla and OYO Rooms, all sans incurring impossible spends on advertising campaigns. They get to be part of national/ international brands thereby earning higher degrees of trust and credibility.
The changed scenario has also attracted investments and fundings in the budget segment which further underlines the importance of this segment.Budget travellers are now spoilt for a choice. They have thousands of, earlier otherwise hidden, options to choose from. Sharing economy has created a win-win situation for hoteliers and customers of this segment bringing about a veritable revolution.
- Utilisation of resources and Need based adaptions – The market forces of this new economic system compel the hoteliers to focus beyond just price cutting. They need to consider all aspects of their business and utilise their unused resources by adopting innovative measures and customised offerings for travellers looking for authentic local experiences.
Sharing economy compels hoteliers to identify different distribution channels for increasing occupancy. It is important to explore alternatives because hotels still lead the way in the trust factor. According to a recent study by Hotelnewsnow, despite a surge in peer-to-peer accommodation segment, 67.6% users don’t trust renting a room in someone else’s house. Hotels need to hold on to this competitive advantage by ensuring complete transparency in reviews, information and responses.The advent of sharing economy has brought about an overall development in the hospitality industry.
- By aggregating opportunities, the number and types of offerings have increased multi-fold in the market. This enables a better match to the needs of individual customers resulting in a higher overall satisfied transaction between the traveller and the industry.
- Sharing economy has made it a level playing field to some extent for all players of the industry in their own segments. The system provides each hotelier equal opportunity for achieving excellence. It also empowers the fringe and budget players equally.
- Empowerment and opportunities are resulting in more job creations leading to overall growth.
- Sharing economy also facilitates cross- platform and cross-industry tie ups, example Hospitality with travel, hospitality with health; bringing forth many hidden and unrecognised economic opportunities.
In short, the success of sharing economy has dramatically altered the frames of references and perspectives in the hospitality industry. Even players in segments of industry yet untouched or barely affected like luxury segments are learning to look beyond their brands to stay relevant within the paradigm shift. It is the customer who ultimately is the beneficiary and he has never had it so good earlier.