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Is this disruptive new trend really good for the economy and consumers?

By Alan E. Young

Chances are, you’ve used some sort of “sharing” service or technology recently. Maybe you’ve taken an Uber ride home from the airport, or rented out a loft from Airbnb for a weekend trip. Many people are saying that the sharing economy is the way of the future. It may indeed be disruptive, but is this trend really good for the economy and consumers?

Whether you call it the Sharing Economy, the Collaborative Economy, the Gig Economy or C2C (Consumer to Consumer), it’s certainly innovative and by all indicators, on the rise. More and more startups and legacy companies are launching with the promise to be the ‘Airbnb of food’, ‘Airbnb for music studios’ and even ‘Airbnb for dogs’. How about the ‘Uber of boats’ ‘Uber for Doctors’ and ‘Uber for alcohol’. Ultimately, these companies are not only getting around business regulations, but they are also creating an economy where job security is less and less normal every day.

There are many positives to these new business models and technologies. They provide easy access to a wide range of services, which are often higher quality and more affordable than their traditional business counterparts. They also allow almost anyone to start a business out of their car or their apartment. But these sharing apps can seriously disrupt the economy. What happens to the local cab company or boutique hotel when they can no longer compete with Uber, Lyft, and Airbnb? 

They close, and are replaced by everyday people who are renting out their cars and homes as businesses, without paying licensing fees or regulated effectively. Over time, this could have very serious implications for our tax structure, which could eventually effect other businesses and government services. While this is an extreme idea of what could happen, some negative effects are sure to be felt over the next few years. 

The other major problem with sharing services is that they employ a large number of people part time, with none of the benefits of a comparable full time job (such as working in a hotel). If sharing services continue to become a large part of the economy, and employ more and more people, the gap between the rich and the poor, which is already a big economic issue, could severely widen and create it difficult for anyone to live a financially stable life. 

More and more companies are getting on the bandwagon with sharing apps. BonAppetour lets people share their home cooked meals with strangers. JustPark lets you rent out your parking space. DogVacay and Holidog are Airbnb for dogs. The list goes on and on - there is an app or sharing site for everything you could possibly think of to rent out or share. However where do we draw the line? At what point do we decide we actually would prefer a traditional business model?

Only time will tell whether the sharing economy continues to boom, or whether it fizzles out. Eventually, sharing companies will likely have to change their business models to focus on longevity, which may mean complying with traditional business fees and regulations, and offering their workers better compensation and benefits. Will these companies be able to stay afloat this way? Their whole business model is based on getting around the obstacles that traditional companies face which could mean trouble for the consumer. It remains to be seen whether this trend will stand the test of time or not. 

About Alan E. Young

Alan E. Young is the President of Puzzle Partner Ltd. and Co-founder of Next Big Thing Travel & Hospitality (nbtworld.com). Previously, Alan has held executive level positions with startup companies such as Newtrade Technologies, (acquired by Expedia), Hotel Booking Solutions (acquired by IBS Software) and TrustYou. Alan is past Chair of The Board of Directors of The OpenTravel Alliance, and been very involved with other industry associations most notably AHLA, HEDNA and HTNG. With over two decades of experience in the travel and hospitality technology world, Alan specializes in helping innovative companies achieve winning performance and dramatic growth.

Contact: Alan

alan@puzzlepartner.ca / 705.241.5244

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