Sharing economy – five things everyone in the tourism business should know

The sharing economy has grown its popularity as a phenomenon in the past ten years a lot. Still, it is surprising how hard the definition is or how academics are finding the same issues which need further research. Defining sharing economy (from now on SE) is difficult since it has many other names such as collaborative consumption, access economy, peer-to-peer services and the gig economy. Roughly, SE is people using internet to share items or services. Botsman and Rogers (2010) have defined a great practical example of SE. In American households, there are 50 million power drills just collecting dust. Often people would have just needed to make a hole, not necessarily buy the tool. How easy it would be just to borrow someone’s power drill when you know that you need it only once? SE is about utilizing already existing unused resources better.

Sharing itself is not a new idea, it’s something you learn as a child. SE can be found in several fields, for example, accommodation, transportation, finance and consulting. Sutherland and Jarrahi, M. (2018) found out in their review article that the most common examples referred are Airbnb, Uber, Amazon mechanical Turk, Taskrabbit and Zipcar. Other examples in Finland are for example Facebook ridesharing groups, Restaurant day, Mesenaatti.me or Nappi Naapuri. Moreover, in Finland houses often have a common sauna or washing machine, which are simple forms of SE. Why in the tourism business you should pay attention to SE?

Nature of sharing economy

The first thing everyone in the tourism business should know is the nature of SE and the relationship to tourism and hospitality. Cheng (2016) has studied in his literature review about SE in general, but also how it’s related to tourism and hospitality. In his other article with Edwards (2017) he continued with this topic by using automated content analysis to compare the current academic literature and news topics about SE in tourism and hospitality. Tourism is a pioneering field in SE. It is possible to share homes, cars, bikes, working space for business travelers, meals, expert local knowledge (local guides) or the experiences and knowledge in general (social media or Wikipedia). It’s important to recognize your competitors as a traditional tourism entrepreneur or seek alternatives when planning to start a new business. SE is about matchmaking (Sutherland & Jarrahi 2018). By using digital platforms, users can find people offering their resources. Additionally, companies can utilize the platforms to find workers, which is the key concept in flexible gig jobs. Temporary workers are vital to many tourism businesses. (Cheng 2016; Cheng & Edwards 2017; Sutherland & Jarrahi 2018)

Picture 1: https://images.unsplash.com/photo-1558420488-0ed4bebf615d?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=1189&q=80

Changes in consumption trends and lifestyle

In order to understand why SE is blooming, we move on to the second point, being current trends in consumption. New generations are becoming to the peak of consuming age and digitalization is not a new thing for them. According to European Travel Commission (2016) more and more people have mobile access and mobile internet. On the other hand, 65 % of consumers are carefully budgeting their money every month. Hawlitschek et al. (2018) researched consumer motives for peer-to-peer sharing. They found out that motives could be connected and presented with the theory of planned behaviour. Motives to choose SE service are financial benefits, uniqueness, variety, social experience, ubiquitous availability, ecological sustainability, anti-capitalism, modern lifestyle and sense of belonging. This is supported by a study about SE and lifestyle changes by Niezgoda and Kowalska (2020). Respondents wanted to embody their lifestyle when travelling and it affects the choices made. SE offers consumers better value for money, sustainability and authentic experiences. (ETC 2016; Hawlitschek et al. 2018; Cheng 2016; Niezgoda & Kowalska 2020)

Create trust

A dealbreaker in SE is trust. If you can create trust between users and providers, you are on the way to success. Factors beneficial to trust-building are reputation scores, review systems and profile pictures. It’s better if the platform only allows us to make a review after actually using the service to guarantee the trustworthy of the rating. Möhlmann et al. (2019) suggest that data is transferrable between platforms and one option could be to transfer good reputation from one online platform to another. Therefore, when creating a new account, you could in a way prove to be a reliable person. Linking pages is possible, but in practice, this idea is controversial regarding GDPR and data security. It’s not only about trusting “a stranger” but also about trusting the platform. Indicators that are the functionality of the platform and how it is managing the community of all users. (Möhlmann et al. 2019; Sutherland & Jarrahi 2018)

Picture 2: https://images.unsplash.com/photo-1521791136064-7986c2920216?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=1050&q=80

Another issue in the trust is instructions for both parties what to do if something goes wrong. What if you crash with a carsharing vehicle? What if the Couchsurfing host doesn’t show up? According to the European Commission’s study (2017) around half of the users had faced a problem over the past year using SE platforms. More than half of the respondents did not know or was not sure how to act in a problem scenario. Here rises the issue many studies state too, the slowness of new regulations and inflexible insurances. One way to tackle this problem is to have transparent and clear practices of trust and safety (Park & Tussyadiah 2019). For instance, the platform could have Q&A-page or a trust advisory board.

Tackle the most common problems

As a fourth thing to know about SE, it’s good to be aware of the most common issues. The government level with regulations has not developed as fast in research or in practice (Cheng 2016). Paying taxes, social security of workers, impacts on rents and apartments available on the market, unfair competition and searching loopholes instead of a legitimate business model are worrying people (Cheng 2016; Cheng & Edwards 2017). In some cities, such as Berlin or Paris, the policymakers want to ban Uber or/and Airbnb. The confusion between stakeholders is not creating trust. According to Tussyadiah and Pesonen (2016) the lack of regulation is decreasing trust between users and SE’s acceptance in the market. Then again Dredge and Gyimóthy (2015) are criticizing SE in their article by for example paying attention to the circumstances of the workers. Workers don’t have safety nets or union protection. In SE there is a risk for the black market. If that was not enough, SE and mainly Airbnb have been accused to amplify over-tourism.

Sometimes the users’ motives/impacts are questionable. If users are not receiving economical benefits, they are not willing to use SE services. If the cost for an Uber ride is remarkably cheaper, it may encourage people to use a taxi instead of public transportation, which is not very sustainable. When the main motivation is just to have a cheaper price, it’s wrong to claim to be interested in the environment. (Tussyadiah & Pesonen 2016; Cheng & Edwards 2017)

Picture 3: https://images.unsplash.com/photo-1577401239170-897942555fb3?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=1100&q=80

Extended reach

Finally, the fifth point: extended reach of SE. The costs of starting a new tourism business by utilizing SE and API (Application programming interface) platforms are low. Never before it has been easier to reach a large crowd of providers, consumers or resources. This works both ways, when you are in the need to buy or when you have a skill or an asset to sell. Bigger platforms offer visibility and more potential users. However, if you are starting a new SE system, it’s challenging to compete against the big platforms, e.g. Airbnb. (Sutherland & Jarrahi 2018)

Sharing economy for future

https://images.unsplash.com/photo-1552986916-199296e1dfb9?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=334&q=80

SE has the potential for making the future more sustainable. For example, Guo et al. (2019) studied the impact of Didi Chuxing and Uber on new cars sales in China. Turned out that these platforms reduced the sales of new cars in the examined years 2013-2015. If this trend would continue, there wouldn’t be a need to produce so many new cars, which is influencing the amount of private motoring in a long run. In tourism, this same could be implemented in e.g. activity equipment. You don’t need your canoe or tent all the time, so instead of buying a new one and using it once, you could borrow it from someone. Furthermore, SE is one way to deduct the need for new products and to influence the environment. It can also be a way to have social interaction by helping people. SE cannot be overlooked, but it does require more research and development. Hopefully, by solving the main issues, it is possible to enjoy the best SE has to offer.

Acknowledgements

This blog post was written as a part of the Information Technology in Tourism Business course at the International Master’s Degree Programme in Tourism Marketing and Management (University of Eastern Finland Business School). Read more about the programme at https://www.uef.fi/tmm

References:

Botsman, R. & Rogers, R. (2010). What’s Mine Is Yours: The Rise of Collaborative Consumption. Harper Collins, 2010. ISBN: 0062014056, 9780062014054

Cheng, M. (2016). Sharing economy: A review and agenda for future research. International Journal of Hospitality Management, 57, 60–70. https://doi.org/10.1016/j.ijhm.2016.06.003

Cheng, M., & Edwards, D. (2017). A comparative automated content analysis approach on the review of the sharing economy discourse in tourism and hospitality. Current Issues in Tourism, 22(1), 35–49. https://doi.org/10.1080/13683500.2017.1361908

Dredge, D., & Gyimóthy, S. (2015). The collaborative economy and tourism: Critical perspectives, questionable claims and silenced voices. Tourism Recreation Research, 40(3), 286–302. https://doi.org/10.1080/02508281.2015.1086076

Guo, Y., Li, X., & Zeng, X. (2019). Platform Competition in the Sharing Economy: Understanding How Ride-Hailing Services Influence New Car Purchases. Journal of Management Information Systems, 36(4), 1043–1070. https://doi.org/10.1080/07421222.2019.1661087

European Travel Commission (2016). Lifestyle trends & tourism: How changing consumer behaviour impacts travel to Europe. ISBN: 978-92-95107-06-9

Hawlitschek, F., Teubner, T., & Gimpel, H. (2018). Consumer motives for peer-to-peer sharing. Journal of Cleaner Production, 204, 144–157. https://doi.org/10.1016/j.jclepro.2018.08.326

Jourová, V. (2017). Key findings about problems consumers face in the collaborative economy. European Commission fact sheet June 2017. Available: https://ec.europa.eu/info/sites/info/files/key_findings_about_problems_consumers_face_in_the_collaborative_economy.pdf [Accessed 30.10.2020]

Möhlmann, M., Teubner, T. & Graul, A. (2019). Leveraging trust on sharing economy platforms: reputation systems, blockchain technology and cryptocurrencies. In Belk, R., Eckhardt, G., Bardhi, F., & Arvidsson, A. (2020). Handbook of the sharing economy, 290-302. Edward Elgar Publishing. IBSN: 9781788110549

Niezgoda, A., & Kowalska, K. (2020). Sharing Economy and Lifestyle Changes, as Exemplified by the Tourism Market. Sustainability (Basel, Switzerland), 12(13), 5351–. https://doi.org/10.3390/su12135351

Park, S., & Tussyadiah, I. (2019). How Guests Develop Trust in Hosts: An Investigation of Trust Formation in P2P Accommodation. Journal of Travel Research, 59(8), 004728751988465–1412. https://doi.org/10.1177/0047287519884654

Sutherland, W., & Jarrahi, M. H. (2018). The sharing economy and digital platforms: A review and research agenda. International Journal of Information Management, 43, 328–341. https://doi.org/10.1016/j.ijinfomgt.2018.07.004

Tussyadiah, I., & Pesonen, J. (2016). Drivers and barriers of peer-to-peer accommodation stay – an exploratory study with American and Finnish travellers. Current Issues in Tourism, 21(6), 703–720. https://doi.org/10.1080/13683500.2016.1141180

DTTT Global 2019, Day 2

The second day (Read about the first day here) of DTTT was all about technology and digitalization. What we can learn from data and how we can benefit data in place branding, leading and marketing.

Lead with data. Do marketing with it, learn from it, optimize – optimize – optimize – then do it again.

Head of Telia data technology Tapio Levä gave an inspirational speech on things you can do with data in Finland. Tourism sector statistics have been depended on interviews, surveys and such, where they calculate and estimate overall income to the area. Well, I have some good news: No more guessing! Data that you can get from mobile phones is mind-blowing: You can see e.g. from where the tourist is coming, how long he/she stays in the area, where they go during their stay etc. And most importantly: no more guessing about day visitors which does not stay at hotels: they are included in the statistics as well! Tapio Levä told us an example from Ed Sheeran’s gig in Helsinki – where the estimation was 9 m. € in revenue – from 2 days!

(Source: Tapio Levä’s presentation 5.12.2019)

Data gives us access to information what we have not to be able to see before. In discussions throughout the day, it was clear that using data improves collaboration with the stakeholders and it gives tools to understand tourism flows better. By using data, the traveller’s customer journey is possible to form from the first idea to get abroad to marketing after the visit. It is essential to learn constantly from your data and optimize your marketing by how your data is changing. E.g. in Benidorm, they understood from data that tourists from the USA are interested in their destination and are talking about it and changes their marketing strategies based on that.

In Ireland, they’ve put data into some serious work. By utilizing data they’ve built up a detailed customer journey and touchpoints. In practice, they collect data on how one tourist acts during their stay. Based on that data AI builds customer profiles and recommendations with future tourists with a similar profile. A massive project with 48 m. cookies and 1,5 m. digital touchpoints. WOW!

Content is king – Tell a story worth hearing!

As I love great stories and marketing, I want to showcase a few examples heard during DTTT on great stories utilized around destination brands.

In Vienna, they celebrate Ludvig van Beethoven’s 250th birthday and Capital of Music –title year in 2020. One way on how they combined LVB’s to a digital era, was to combine Alexa with Beethoven.

They did a project, where the integrate a vivid story of Beethoven with Alexa’s voice commands. With a command “I want to hear something about Beethoven” Alexa tells a 2 min long story about how he has lived his life in Wien. After one story it gives 3 more alternatives to where to continue with the story. So, it’s kind of a book I’ve read in my childhood where after one chapter you can choose what alternative you take. Except that you communicate with Alexa and hear the story from it.

(Source: Andrea Kostner DTTT 5.12 (A model from the storyline plots)

I think that this was a great example of how to build up great stories that combine place history and place attachment with place branding. And I instantly started to think about how could we in Finland e.g. take advantage of this in Jean Sibelius’s 160th birthday in the year 2025.. 🙂

The USA also used storytelling by creating unique stories around its destination brand based on the musical history of the country. They collaborated with “minor” actors such as MTV, BBC, and Spotify and let them create content independently around the topic. One result with Daily Telegraph was this microsite where the stories were combined with the evolution of music

Collaboration with open API

It’s obvious that technological solutions revolutionize tourism research and gives huge opportunities to destinations in optimizing and personalizing tourism flows. More importantly, it emphasizes collaboration IN the destination. Today, your business does not exist if you are not on Facebook and you don’t have a webpage – but tomorrow you don’t exist if you don’t collaborate. You don’t survive if you do things just by yourself.

tomorrow you don’t exist if you don’t collaborate.

Collaboration is in the focal point also now in Saimaa – where they try to achieve a title for the European Capital of Culture for the year 2026. To do that they must collaborate with 4 provinces all together – tourism, culture and most importantly, the local people. Digital tools and technological solutions give great tools on achieving this by first collecting data from all the stakeholders in one place and secondly, sharing that knowledge with anyone whose interested. The first thing to create collaboration is that stakeholders are aware of each other. Not just inside one city or just inside one province – but in Saimaa and Finland and the Nordics etc. To gain a competitive advantage you must collaborate and think big.

Conclusions:

Digitalization enables collaboration, it can make collaboration more visible and open via different kinds of platforms. Data provides information on what has been “hidden knowledge” before. This knowledge can be used on planning customer journeys etc. Besides just planning – you can see in real facts how you have succeeded in your plans. Sharing is caring – no matter if you are a DxO or RMO, tourism stakeholder or just an average Joe. Sharing knowledge with each other creates stories, gives data, creates collaboration, gives a competitive advantage. By utilizing data and technology, that work is more easily done.

2) The second conclusion is that AI is here. We are in the middle of a big change in society where digitalization, automation, AI and robots are already here. There’s no use on denying and fearing that robots are taking on the world. Let’s face it: we are living in the middle of sci-fi society. When you think about what kind of things we already have, it is something I couldn’t dream of in my wildest dreams in my childhood. ( but I’m still waiting for the flying cars!) Instead of living in fear, you have to look forward and figure out ways on how to utilize this efficiently. I think in this sense I saw quite a few good examples on how to utilize data efficiently what it comes to the tourism sector.

That’s my view from #DTTT Global 2019, hope you enjoyed it!

Using Pixel Hotel idea for entrepreneurship

Can we own a hotel or start hotel business with our limited money? You may think that the answer is no. But, I would say Yes, and you will probably agree with me if you take a closer look at pixel hotel business idea in Austria.

Pixel hotel is a new form of hotel business which I recently learned while studying tourism destination marketing course. I got so interest to this idea that, I wanted to learn more about this and share my thoughts.

Whenever we think about a hotel, what usually comes to our mind? A nice tall building with lot of rooms in different floors with many other facilities. But, Pixel hotel is just the opposite. “The city is the hotel” which is the slogan of pixel hotel and it works like that. This new idea of hospitality industry came into existence in 2006. The idea originated from a concept made by a group of young architects and designers in Linz, Austria.

Pixel hotel is a cultural enterprise in Linz, with the aim of giving guests a direct experience of unusual accommodation with certain particularities. Another aim of this association is to utilize unused properties in urban and rural areas in profitable way. This also gives an opportunity to their guests to stay close to their travel destination. Hence, tourists get more time to travel. Targeted tourists are those people, who love watching things a bit slower and bit closer. As an accommodation project, it has become an international recognized brand which was cited as an example of innovative tourism in 2009. Rooms of pixel hotel are scattered in whole city which can be an old building, workshop or basically anything which can be used as accommodation.

Picture of the first prototype Pixel Hotel which was in an empty garage.

Similarly, for pixel guests, there is not any certain restaurant to offer lunch and dinner. Rather guests are invited to discover the local food and culture and to know the story of that place.

In my opinion, this is a very nice business idea to learn from. This idea can be utilized to start hotel business with very little money and with minimum preparation. Another competitor in the market is Airbnb, but people who rent apartment there usually own only one apartment and that is not their main source of income. On the other hand, an establish hotel is always more reliable to the guests and more profitable.

How Pixel hotel idea can be utilized in Finland

Finland is a big country with very little population. Most of the tourists’ services like hotels and transportation facilities are available mainly in big cities and in the center areas. So, when tourists visit Finland, they tend to stay in those places which are close to their hotel and where public transport are available. Because of this, attractions in small towns and places remain unknown and undiscovered by most of the tourists. But, we can utilize pixel hotel idea here to arrange accommodation and other facilities for the tourists in all over the country, then it may appear as an attractive tourists’ service for those who will plan to visit Finland in future.

Idea: A simple house can be used as a hotel

Moreover, there are many empty houses and apartments in every cities and towns which are ready to use or with little arrangements can be made ready to rent to make money. People can use this idea to start their own business with a limited money and minimum risk.

Source: http://www.pixelhotel.at/index.php?id=1&L=0

Peer-to-peer accommodation and sharing economy from tourists’ perspective

Airbnb has become one of the largest accommodation companies in the world if counted by the rooms available. Its rapid growth has been enabled by a phenomenon known as sharing economy. People are less inclined to own things and are getting used to share what they own with other people. Peer-to-peer accommodation happens when a person rents an apartment or a room they own to other person and this is typically enabled by digital platforms such as Airbnb. We wanted to study how this peer-to-peer accommodation phenomenon is shaping tourist behavior results from three different studies are now available online, elaborating what is important in peer-to-peer accommodation from traveler perspective.

How is peer-to-peer accommodation shaping travel behavior?

In the first study we found out that sharing economy and peer-to-peer accommodation especially are good for tourism destinations. Availability of peer-to-peer accommodation enables wider selection of destinations for tourists, increase length of stay, travel frequency and number of activities tourists participate in the destination. Especially travelers’ desires for more meaningful social interactions with locals and unique experiences in authentic settings drive them to travel more often, stay longer, and participate in more activities.

Tussyadiah, I. P., & Pesonen, J. (2016). Impacts of peer-to-peer accommodation use on travel patterns. Journal of Travel Research, 55(8), 1022-1040.

What drives and hinders peer-to-peer accommodation use?

In the second study we explored the market characteristics and the factors that drive and hinder the use of P2P accommodation to better explain the phenomenon of collaborative consumption in the tourism and hospitality marketplace. Using responses from travellers residing in the United States and Finland, exploratory factor analyses revealed two factors that drive the use of P2P accommodation: social appeal (desire for community and sustainability) and economic appeal (cost savings). The barriers include issues of trust, efficacy and familiarity with the system, and cost.

Tussyadiah, I. P., & Pesonen, J. (2016). Drivers and barriers of peer-to-peer accommodation stay–an exploratory study with American and Finnish travellers. Current Issues in Tourism, 1-18.

Airbnb and sharing economy is shaping tourism — Peer-to-peer accommodation

What kind of peer-to-peer accommodation users there are?

In the third study we examined the drivers of peer-to-peer accommodation in more detail and focused on different P2P accommodation user groups. We found out that the major drivers affecting the use of P2P accommodation services are the age of consumers, active use of the Internet and online technologies, and the frequency of international travel. Cluster analysis identified two user profiles corresponding to consumer motivations for using P2P accommodation services. The first consumer group uses P2P accommodation services to make their trips more convenient, while the second uses them mostly for social reasons.

Pesonen, J. & Tussyadiah, I. (2017). Peer-to-peer accommodation: drivers and user profiles. In Dredge, D., & Gyimóthy, S. (Eds.) Collaborative Economy and Tourism. Perspectives, Politics, Policies and Prospects. Springer. pp. 285-303. http://www.springer.com/gp/book/9783319517971

Get a master’s degree in tourism business

Are you looking for an international tourism-focused master’s degree programme in business? Tourism Marketing and Management programme by University of Eastern Finland provides a unique learning experience for students who have finished their bachelor’s degree and are looking for new skills and knowledge in developing tourism industry in a sustainable way. Read more about the programme at www.uef.fi/tmm.