Introduction

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The sharing economy can be defined as "economic activity that involves individuals buying or selling usually temporary access to goods or services especially as arranged through an online company or organisation" (Merriam Webster, 2018). Also known as the gig economy, this somewhat new phenomenon in the digital economy first emerged in 2008 and covers a wide range of consumer goods and service areas such as transportation, personal services and accommodation (Schor & Attwood-Charles, 2017). The sharing economy has become incredibly popular since it first emerged and had undoubtedly changed the way in which we share and consume good and services and collaborate with others. There is no doubt that the sharing economy would fail to exist without developments in Web 2.0 and the extensive reach of the internet and social media platforms (Quattrone, et al., 2016).

 

 

 

Positive impacts created by Airbnb surrounding the Share Economy

 

Reduced transaction costs

The interest and influence of Airbnb bring about positive effects on the economy regarding its sharing nature. As users list their own homes, apartments or rooms for rent on the platform, Airbnb enables peer-to-peer transactions to occur at an unparalleled scale and speed (Chia, 2017). The company acts as a broker facilitating sales and exchanges and does not own any of the homes nor any licensing of any of the real estate listed on their platform. Instead, all transactions are commercial, and Airbnb leverages the assets of individuals distributed within their marketplace to meet consumer demand (Chia, 2017). Therefore, Airbnb has successfully increased efficiency by reducing operating costs as well as increasing the number of utilised goods and services within there marketplace, as a result transforming the sharing economy (Taeihagh, 2017).

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Resource allocation and utilisation

Airbnb is considered one of the most successful platforms within the sharing economy and has had a revolutionary effect on the way goods and services are distributed and consumed. Another positive effect Airbnb has created in the sharing economy is the allocation and utilisation of resources. Traditionally, individuals would be unlikely to rent a residence while away for a weekend, instead would only do so when they were absent for weeks or months as a large amount of effort was required for both the individual and broker (Edelmen & Geradin, 2015). Therefore, it was historically seen as meaningless to rent out short-term accommodation, and not all lodging utilisation was not being maximised. However, Airbnb makes it possible to rent lodging for a short duration by providing on-demand supply, as anyone with a spare house, room or mattress can create their own b&b (Cesarani & Nechita, 2017). Thus it is evident Airbnb has maximised resource allocation and utilisation within the sharing platform.

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The interest and impact of Airbnb have had a mostly positive effect on the sharing economy. Due to this, trends in consumption are changing all around the world and consumers are becoming less materialistic.

 

Community development

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The term "sharing" captures certain aspects of Airbnb's activates, as the company says its service lets hosts "share homes with guest" (Edelman & Geradin, 2015). Airbnb allows users to develop strong communal growth through sharing platforms as transactions are perceived to be quite intimate and positive benefits are placed on consumers, neighbourhoods and households (Federal Trade Commission, 2015). Airbnb also creates opportunities for growing urbanisation due to the sharing of leverage of density, immediacy, specialisation and obscurity that attracts community investments and improvement (Cesarani & Nechita, 2017).

The Federal Trade Commission (2015) has identified three communities that are positively impacted by Airbnb's sharing practices;

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1.    Consumers and the Tourism Industry

The development and acceptance of Airbnb are leading to necessary changes in the way individuals travel and experience destinations. It has been found that Airbnb entices visitors to stay in a destination longer than traditional travellers, spend more money on local businesses, and are more likely to return to the destination as a result of their previous experience (Federal Trade Commission, 2015).

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2.     Neighbourhoods and local businesses

Airbnb is also changing where tourists chose to stay when they travel. Many people decided to remain in less concentrated communities, thus impacting the public development that they would have otherwise traditionally received from the tourism industry (Federal Trade Commission, 2017). Local communities and local businesses are being strengthened due to Airbnb.

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3.     Residents and households

Lastly, the economic benefits of hosting an Airbnb allows residents to remain in their neighbourhoods and continue to participate in their communities (Federal Trade Commission, 2015).

Essentially, it is evident that Airbnb facilitates community development which positively impacts the sharing economy.

 

 

 

Competitor Analysis

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Nowadays, there are hundreds of different platforms to find short-term holiday rentals. However, the user to user lodging is a relatively new phenomenon, and Airbnb generally occupies most consumers' minds when it comes to peer-to-peer rentals. Airbnb is competing not only with hotels but now with new competitors who are attempting to copy Airbnb's business model of in-home accommodation. Two main competitors have been identified for Airbnb; HomeAway and Trip Advisor.

 

HomeAway has an almost identical business model as Airbnb, as it is also a peer-to-peer vacation rental platform where users can list their houses, apartments, cabins, condos, villas or farmhouses for rent. HomeAway was founded in February 2005 by Brian Sharples and Carl Shepard (HomeAway, 2016). The company prides themselves on being a world leader in the holiday rental industry. As of 2018, HomeAway has had more than two million vacation rental listings in over 190 countries, much less than Airbnb which has over four million listings in 191 countries (HomeAway, 2016, & AirDna, n.d.). Unlike Airbnb, HomeAway does not offer experiences such as tours, concerts or classes available to book within their marketplace.

Moreover, Tripadvisor has a very different approach to Airbnb and HomeAway. Trip Advisor also has a peer-to-peer marketplace; however, the company also specialises in hotels, flights, reviews and other travel related information. Trip Advisor was founded in 2000 by Stephen Kaufer. The platform was created to assist travellers all over the world plan and book the perfect trip, and the company prides themselves on being the world's leading travel site with over 7.7 million accommodations, airlines, experiences and restaurants (TripAdvisor, 2017). As of 2018, Trip Advisor has over 630,000 different types of short-term vacation rentals listed such as hotels, apartments, houses and villas in 190 countries, a lot less than their competitor Airbnb (Tripping, 2018). However, similarly to Airbnb, Trip Advisor offers experiences such as tours and sightseeing available to book within their marketplace.

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The table below is a comparison between Airbnb and its two main competitors HomeAway and Trip Advisor.
 

 

 

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Downfalls Created by Airbnb Surrounding the Share Economy

 

Focus on Monetary Gain

Airbnb also brings about negative impacts on the economy regarding its sharing nature. Looking at how the sharing economy is based upon the thought process of sharing resources (Jaivin, 2014); being physical from money to tools and services, or mental like ideas and thoughts. It shows it that doesn't necessarily have to be based around making money and wanting that in return.  It can be found on trading goods and favours for people showing our togetherness as a community. But one thing Airbnb focuses on is more surrounded by the profits and monetary benefits. People put up their properties and spaces for the pure reason of financial gain, rather than thinking of it as a space someone else could use, that you don't make use of. It completely crushes the ideology of what the sharing economy was based upon and the community-based culture that once existed involving bartering, trading, lending and general willingness to give (Belk, 2014). People realise the benefits they could make from listing their spaces to make money, being more about individuals, and their wellbeing over everyone else's. And in doing this Airbnb also gets some of the profits from people paying fees to be listed. We value convenience and low prices to save money creating this downfall of our economy and allowing platforms like Airbnb to arise. We look at owning less and borrowing more simply because we crave this convenience and spending less money in one full go. To uphold this idea, Lutz and Newlands, (2018) have even defined the sharing economy as something where people can earn money from their property and spare time. Again, money is the keyword.

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Divide with the Hospitality Industry

Another major downfall that Airbnb created in the broader spectrum of things is the effect on other businesses. Because Airbnb is facilitated on the internet, a significant player in the sharing economy today, it is contributed to by millions of people from many different places, meaning there is a lot of listings.  It allows the ability for people to access more information and see more items or services to share, than if the internet did not exist. But with this, it then creates a lot more listings for hotels, and bed and breakfasts to compete with. Essentially it creates a rift in the functionality and sustainability of the economy, defeating this sharing economy. Because of the cheapness and ease of entry for people to upload their homes or rooms online for people to connect with and ‘share,' the hospitality industry does not even come close. It allows the consumer to make that choice between going to a hotel which may be more expensive or buying a home. Using Airbnb has become a unique idea, it causes havoc within our established housing industries (Belk, 2014). It defeats the purpose of sharing the economy and its resources by essentially giving hotels a smaller chance to exist and creates a lot of legal battles for countries around the world El-Kahtib (2018).

 

 

Decrease in Privacy

With the internet and this online based business, as mentioned before, Airbnb also looks at harming the sharing economy, in terms of sharing too much. It allows contribution from many, which allows for more access and options for consumers but in doing so, it can lead to people revealing too much about their lives to people they have never met. People post their addresses, with pictures attached of the inside, all of their valuables on display and their name and number to contact. Their living space and lives are printed on the internet, for others to judge and even target. Necessarily, the internet and Airbnb create a privacy issue both in person and online. While naturally being an enabler of the sharing economy it is also a threat for it (Jaivin, 2014). When looking at privacy and the definition of stranger, this has also changed a lot from previous societies motives. The sharing economy is now based more on allowing people to access more; as El-Kahtib (2018) states we have a new form of the concept ‘trust’ allowing strangers to enter and stay in our homes and use our property for a price, something that did not exist in previous years. With this willingness to trust then creating that higher threat factor. Lutz and Newlands (2018), convey this message, displaying that people that have stayed in Airbnb's worry about staying with people they do not know or have a relationship with, especially dealing with a company that anyone can join and list their housing spaces on. On the trust aspect, there is also having the trust in strangers to enter your home and correctly use everything. Again, Airbnb opens up the element to host a variety of people all over the world, but this can bring in people who may not treat the property with respect. This also defeats the purpose of a sharing economy, to be two-way and in agreement. Examples of this have been shown on A Current Affair (Grimshaw, 2018), where housing is trashed and infiltrated with crime. Essentially, Airbnb allows more opportunities but also more threats, decreasing what the sharing economy aspect of it should be about.