TOURISM INDUSTRY SHOULD EMBRACE SHARING ECONOMY

Popular sharing economy companies such as Airbnb and Uber are helping to resolve event-specific issues

Airbnb, VRBO, Uber, and Lyft have been getting more than their fair share of attention lately. And while we often hear concerns laid out by taxi companies and civic leaders, tourism and meetings industry players – such as event planners and destination marketers – have also been rattled by these technology upstarts.

Their fears are understandable. These new companies are threatening the viability of traditional tourism industry players. Each room booked outside a hotel means lost revenue for meeting planners, event holders, hotels, and Convention and Visitors Bureaus (such as Tourism Vancouver). Each rideshare trip is revenue lost, not only to a taxi, but also to a limo or tour bus driver.

But the reality is that these companies are here to stay, and if we take a step back from the edge, we may see that these companies, and the collaborative economy as a whole, present significant opportunities for the tourism and meetings industries.

Detractors argue that there isn’t a level playing field and point to the key issues regarding regulations and taxes – hotel tax, sales tax, and income tax. While some jurisdictions have overcome these hurdles, many haven’t and these companies are operating outside the rules. Since they aren’t paying the same wages, buying the same insurance, or paying the same taxes, they can be cheaper for consumers but society as a whole loses out.

There is also no control over the guest experience. When a conference delegate shows up to a hotel, a planner or CVB can have confidence in the services and amenities that will greet them. With home sharing sites, there are a lot of unknowns. The recent media coverage of a Nassau VRBO guest’s cockroach-infested luxury villa is every destination marketer’s nightmare. These negative guest experiences can taint the brand that destinations work hard to build.

But there are benefits to the industry as well. Many large events (such as SXSW or the Superbowl) exceed their host city’s hotel capacity. Alternative lodging accommodates more event attendees and can create downward pressure on hotel room rates during peak times. Airbnb guests, who have been shown to spend more money, stay longer, stay outside hotel districts, and visit establishments that don’t usually see tourist traffic, can extend and distribute the economic benefit associated with events. Hosts can also be excellent city ambassadors, providing guests with a more authentic experience.

South by Southwest event organizers recently told me that before the arrival of Uber and Lyft, transportation was among the chief complaints of event attendees. People were waiting hours for taxis that never came and event staff laboured over complex shuttle schedules to move guests around town. After the arrival of ridesharing, transportation didn’t even rank among the top six complaints.

Recently, Uber and Lyft announced that they were suspending service in Austin after losing a public vote to uphold city regulations regarding driver fingerprinting and background checks. It will be interesting to see the impact on the next SXSW festival because clearly these providers were filling a void in the market, and in doing so dramatically improved the guest experience.

Recognizing the potential upside, some forward-thinking cities and CVBs are finding a way to work with these providers. For example, Airbnb collects and remits taxes in 30 jurisdictions including San Francisco, where it collects the city’s 14% Transient Occupancy Tax. By finding a way to work together, a city can benefit from activity that is occurring and level the playing field for other providers.

Despite the pushback in many markets, these players are here to stay. The competition will keep us on our toes. They will improve the experience for guests and add capacity to meet the traffic spikes inherent in our business.

Are there downsides? Yes. Do they need to be regulated? Yes. Should we be worried? Maybe. Should we be excited? Absolutely.