When the sharing economy starts to take

The sharing economy has swept the world, disrupting a number of industries, particularly the hospitality industry. From the onset, there was a significant push from consumers for this new business model, which launched as a model for the little guy, and companies within disrupted industries continue to face pressure from this new era of individuals and groups making money from underused assets, as PwC describes it.

Tom Slee, a well-known critic of the sharing economy model, however, suggests in this Harvard Business Review article that sharing economy leader Airbnb is “facing an existential expansion problem.” A model that started out as one that allowed individuals to rent out living spaces for extra income and to spur local economic growth has reached a tipping point, becoming a mass vehicle for tourism. But it is also beginning to erode the atmosphere and livability of the same locations it attempts to build up, claims Slee.   

The number of Airbnb listings in Paris has skyrocketed in recent years, starting at just 20,000 two years ago and now up over 40,000, with Airbnb listings representing approximately 11.9% of hotel supply. In London and New York, Airbnb listings represent roughly 10% and 17% of hotel supply, respectively. In Lisbon, where toursim is on the rise, there is concern that this shift from residential to financial investments and short rentals is having a negative impact on the historical centers of the city.

The issue Slee has with Airbnb is that it positions itself as a service where individuals rent out their living spaces from all areas of a region (not just the downtown core or tourist hotspots) allowing economic opportunities for smaller areas where, prior to the sharing economy boom, this was a challenge. Through his independent review, however, Slee has determined that many Airbnb renters rent more than one residence, placing them in the commercial category. He also found that much of the rental uptake is taking place within central districts.

City officials and residents around the world are starting to pushback against Airbnb, which is where Slee derives his remark that the company is facing an existential expansion problem. What started out as a business model that supported new financial opportunities for local residents has reached a turning point, creating animosity among the basic foundation of Airbnb’s business model; that is, the local residents. 

We welcome your thoughts. Has the sharing economy reached a point where it’s no longer achieving what it set out to do?

-- Yassine el Ouarzazi

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