In Europe, We Made A "Bang" but It Wasn't "Big"
March 20, 2018 3:01pm
By Georges Panayotis
The sharing economy is a generous concept, but it is one with which Latin societies are not very familiar. Latin populations are rather attached to their properties, and have a difficult time sharing them with others. The company Gobee Bike which drew from the French market in a blatant illustration of the lack of respect in France (where the population is more accustomed to associative operations) for things that do not belong to them.
Uber entered full throttle, suffered violent setbacks from the taxi corporation in France, and is suffering in Greece. The outcry is also heard from its drivers. Meanwhile, the company has sought to diversify its activity by offering Uber Eats - whose economic balance has yet to be demonstrated in the face of competitors who have been established for longer - and, recently, a service to take patients to the hospital.
And how about Airbnb, which will celebrate its 10th anniversary next August and is now valued at $30 billion. It is shifting from a concept of private rentals, to a discreet and marginal use of the platform by accommodation professionals, to finish with the recent announcement of a section dedicated to boutique hotels. The company even offers a quality guarantee via an "Airbnb Plus" label paid for by the owners (120€) for which an auditor goes on site and checks the standing of the accommodations. In short, Airbnb is losing his soul. Will this change be successful? Nothing could be less certain considering the results of Trip Advisor's transfer. The change in the platform's business model from an online review site to one that monetizes the rankings of hotels and restaurants on its pages has not been successful. The online advisory firm has gone from a valuation of nearly 12 billion dollars in October 2015 to barely 4.5 billion dollars at the end of 2017. A word to the wise...
These so-called sharing economy companies are setting up and growing in a legal vacuum by proposing innovative or even revolutionary concepts in certain cases. But few manage to swivel around within their concept to adapt to new regulations and to lobby groups that take shape... In a desire to become ever bigger, entrepreneurs lose their souls as they forget their fundamental concept and philosophy.
This pitfall can only be beneficial for traditional commercial accommodations that work in compliance with regulations and develop an economic model and products that have long met their customers' expectations. This does not mean, however, that we should rest on our laurels; on the contrary, it is necessary to fight, to improve properties again and again, as well as operations, to seek profitability by relying on the tools now available thanks to the development of digital... The real problem is to know who will invest the necessary CAPEX and what a brand without CAPEX is worth.
An economic war is brewing, as we shift from a period of open borders - which has resulted in increased imbalances - to an era of exacerbated protectionism. As it withdraws into itself, Europe finds itself in an uncomfortable position because its very essence is the opening up of the single market both internally and externally. Web giants are American or Chinese and they have growing influence on the consumer. Google, for example, absorbs 89% of searches through its search engines alone; Amazon, Apple, Facebook and Google together weigh over $3 trillion. But it would be wrong to believe that all is said and done, there is still time to act and to anticipate the crisis that is brewing. Make no mistake, in the end the consumer will decide. Faced with increasingly expensive products, he will look for substitutes.
Protectionism, taxation, inequalities, compensation of unskilled workers, the race for profit, dividends, inflation... all these ingredients combine perfectly to create an unstable and dangerous cocktail. Long-established companies, with solid business models, should have all the cards in hand to win, but the battle will be tough and merciless. Right now, the answer to these issues can only come from the European Union.
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Georges Panayotis is the President & Founder of MKG Group & Hospitality ON.
Born into a family of hoteliers, Georges Panayotis left Greece at the age of 18 to study Political Science and earn a management degree at the University of Paris, Dauphine.
In 1986 he created his own company and started developing specialised marketing tools for the hotel industry.
Over the past 30 years, MKG Conseil, later to become MKG Group, became the leading European consulting firm for the hotel business, food service and tourism industries. He is also a consultant for several radio and television stations that focus on the economy.
Contact: Georges Panayotis
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