Ready for the shared economy?

In the latter half of July, renowned columnist and author Thomas Friedman wrote an article about Airbnb, employing the phrase “shared economy” to denote the communal nature and peer-to-peer transactional allowances these types of websites provide. Although he left it fairly open-ended, it was clear that Friedman believes this to be a viable, flourishing area of our 21st century economic habits alongside other Internet-based hubs like Craigslist, Kijiji, Couchsurfing, SERVAS, Easynest or dozens more.

Whatever merits Airbnb may have, I believed then as I do now that Mr. Friedman is wrong in hailing this “shared economy” as a hospitality usurper. But rather than conjure a hasty rebuttal, I waited, watching events play out to see how these peer-to-peer sites would grow over the following months.

I like the term “shared economy.” It’s catchy, and it can spawn infinitesimal debates on its financial adhockery implications. I’m not writing this to discuss the purported illegalities of Airbnb (see my previous post on New York City’s ban of Airbnb), its framework of trust or the circumvention of taxes that its ecosystem of users currently enjoy. I want to think more conceptually about how Internet-born trading websites will affect traditional hospitality establishments and what you can do to keep pace with this evolution.

It’s best not to think of Airbnb as the next big thing, but instead as a cottage industry to our own. There will always be those people who will find staying in a random short-term sublet more appealing than getting a hotel room. Before the Internet, people were still engaging in this practice of sharing one’s domicile, albeit not with the same level of voracity. On the other hand, some people will always prefer a hotel room with all the comfort and security that a clean, safe guestroom and surrounding staff members can provide. But there’s a gaping caveat here: the millennials.

Millennials are not as loyal as their predecessors. They have options, and they intend to maximize their personal experiences whether you’re in the picture or not. The reason why Airbnb, Craigslist and all these other communal sites have flourished is because they feed into this mentality. They give people choice. And not just stock rooms that are more or less interchangeable, but real alternatives where each experience will be slightly, moderately or exhaustively different.

When we talk about what this shared economy means, essentially we are discussing the hyper-connectivity that allows first for the sharing of ideas — ideas about where to travel and what experiences are the most worthwhile, and a hotel guestroom should be thought of as an experience. Airbnb and even the OTAs have indirectly put the spotlight on the hotel industry by opening consumers’ eyes to a plethora of alternative travel experiences, forcing us to retool and augment what we offer our guests. Basically, an arms race.

Some of the most popular rentals on Airbnb, believe it or not, are tree houses. Why? Because they offer a sense of rustic adventure with a powerful dose of exclusivity. If every backyard had one of these fully furnished tree houses, the ones offered on Airbnb wouldn’t have the months- or years-long waiting lists they have accrued.

Therefore, if you want to compete in this supposed rise of the shared economy, offering a truly exclusive guest experience is your best weapon for success. You cannot compete solely on price because then you will be entering a race to the bottom, forced to battle with Airbnb’s selection of cheaper, edgier alternatives. This is the crux behind the shared economy — use the Internet to share ideas about what can make a hotel exceptional, because if your property is unique, then it will always be in demand.