Cost drives interest in and expansion of sharing-economy services for travelelrs. Here’s a look at the good and bad of how the sharing economy affects corporate travel program costs and savings.
Pro: Sharing economy providers are often cheaper than conventional hotel alternatives. Salesforce.com says its travellers typically pay US$100 to US$200 through Airbnb, compared to US$300 for a hotel in the same city. The consultancy Priceonomics found that U.S. hotel rates are, on average, 21.2% higher than for an Airbnb apartment at the same destination.
Con: Travellers aren’t usually making valid comparisons when using sharing economy suppliers. For example, do they offer the same facilities as a hotel? If all a traveller needs is wireless Internet access, it’s not a problem. But what about those who need breakfast, room service, a business center or a gym? Then there are hidden costs: the time it takes to research sharing economy properties and establish a relationship with the host far exceeds the few clicks needed to book a tried, tested and program-approved hotel. Travellers also risk cannibalizing their company’s hotel program. If many employees switch to sharing economy suppliers, bookings with preferred suppliers fall, resulting in lower discounts.
Pro: During 2014, Uber and Lyft aggressively reduced prices to undercut regular taxis. Taxi competitors responded, and fares fell across the board in some markets. During periods of peak demand, like when it’s raining, using an on-demand service like UberX may offer a better chance of getting a ride than hailing a taxi. But be aware that its pricing is dynamic: If demand is high—so are fares.
Con: The sharing economy rides doesn’t always offer the same level of pricing certainty and consistency that you’ll find with metered taxis. You often have to rely on estimates provided by the supplier, or, as in the case of Carpooling.com, negotiate a rate with the driver before the journey. While UberPOP’s fare structure is transparent, it still varies among cities. Travellers need to have a clear understanding of price before accepting a ride.
Want to know more about managing business travel in a “sharing” marketplace? Read Advito’s new whitepaper, The Sharing Economy: Does It Have a Place in Your Managed Travel Program?