Download the sharing economy - Queensland Tourism Industry Council

THE SHARING
ECONOMY
HOW IT WILL IMPACT THE TOURISM
LANDSCAPE AND WHAT BUSINESSES
CAN DO.
“TRADITIONAL SHARING, BARTERING, LENDING, TRADING, RENTING,
GIFTING AND SWAPPING REDEFINED THROUGH TECHNOLOGY AND
PEER COMMUNITIES THAT IS TRANSFORMING BUSINESS,
CONSUMERISM AND THE WAY WE LIVE.”
QUEENSLAND TOURISM INDUSTRY COUNCIL
1
JULY 2014
The Queensland Tourism Industry Council has consulted with the QTIC Associations Council on the content of this document
during the first round of consultation. Members of the QTIC Association Council include Accommodation Association
Australia, Association of Marine Park Operators, Australian Resident Accommodation Managers’ Association, Australian
Federation of Travel Agents, Australian Timeshare and Holiday Ownership Council, Backpacking Queensland, Bed and
Breakfast and Farmstay Queensland, Caravanning Queensland, Clubs Queensland, Ecotourism Australia, Far North
Queensland Tour Operators Association, Marine Queensland, Queensland Bus Industry Council, Queensland Hotels
Association, Queensland Information Centres Association, Surf Lifesaving Queensland, Taxi Council of Queensland and
Whitsunday Charter Boat Industry Association.
The second round of consultation, with this version of the paper, will be held with the Department of Tourism, Major Events,
Small Business and the Commonwealth Games, National Tourism Alliance, Regional Tourism Organisations, Tourism and
Events Queensland and the QTIC Associations Council.
Contents page
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1. Introduction
2. Rise of the Sharing Economy
3. The Sharing Economy and Tourism
4. The Pros and Cons
5. Government Regulation
5.1 Shifting responsibilities
5.2 Introducing new regulations
5.3 Fostering the sharing economy
5.4 What’s happening in Queensland
6. Appendix A
7. Appendix B
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1. Introduction
New companies are frequently emerging and lending its name to the ‘sharing economy’,
drawing the attention of many in the tourism industry who believe that they are simply
allowing people a means to profit by ‘not playing by the books’.
Airbnb stands as the most recognised sharing company disrupting the tourism industry’s
accommodation sector – but they are not alone. Other sectors including transport, tours, retail
and hospitality, may also face increased pressures from the sharing economy in the near future.
If these pressures are not adequately addressed, tourism businesses stand to lose a significant
portion of the market to “unlawful” businesses and struggle to survive.
This report is only one step in addressing issues of the sharing economy. It focuses on
understanding the impacts it will have on tourism, and provides some considerations for
operators while changes to the regulatory environment are being sought.
The report follows two key objectives:
1. Strengthen the competitiveness of ‘regulated’ tourism businesses; and
2. Mitigate the adverse impacts of ‘unregulated’ sharing companies on the tourism
industry.
In order to achieve these objectives, there are four themes of which the report has been
structured:
1. Highlight the
benefits of
‘regulated’
businesses
2. Identify the risks
associated with
‘unregulated’
businesses
3. Promote
‘regulated’
businesses as the
preferred choice
4. Identify how the
tourism industry
may need to evolve
to maintain their
market share
As mentioned, this report is only one step in addressing the manifold relationship between the
sharing economy and tourism. The goal is to ensure the resilience and quality of the tourism
industry as the way people live and do business changes over the next few years.
2. Rise of the Sharing Economy
Also known as collaborative consumption or the peer economy, the sharing economy refers to
a recent economic model that uses network technologies to rent, lend, swap, barter and share
personal products and services. While “sharing” has typically meant undertaking such acts out
of generosity and trust, the newer models adopted by many sharing companies have turned it
into a commercial venture where sharing now comes with a fee.
Criticism for the for-profit sector of the sharing economy explains how businesses extract
profits from their given sector by successfully making an end run around the existing costs of
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doing business – taxes, regulations, and insurance. Sharing companies typically bypass
regulations by not explicitly recognising their transactions as business transactions. Salon, a U.S
news website, further writes that:
“The sharing economy is not the internet ‘gift economy’ as originally conceived, a
utopia in which we all benefit from our voluntary contributions. It’s something quite
different – the relentless co-optation of the gift economy by market capitalism”.
This evolved model of the sharing economy is changing the way people do business and the
value placed on consumerism. It adopts the basic concept of demand and supply in the
following way:
DEMAND
Consumers
wanting lower
prices for
goods and
services
Everyday
people
wanting an
income using
their existing
resources
SUPPLY
SHARING COMPANIES
Some have predicted that the sharing economy will be a lifetime trend. The key drivers of
un/under-employment, personal debt, globalization, resource scarcity, transparency and
shifting demographics will mean collaborative networks will need to form throughout our life.
KEY MESSAGE

Sharing companies will continue to expand until governments can adequately apply
regulations onto them and remove the loopholes. Tourism businesses need to also
grow, expand and innovate to maintain the greater market share in the meantime,
understanding that regulations are not the only way to keep themselves competitive.
3. The Sharing Economy and
Tourism
The relationship between the sharing economy and the tourism industry will increasingly
intertwine as visitors are given more choices in the way they travel. The 2013 CSIRO Futures
report identified some megatrends likely to affect tourism over the next 20 years, including
people increasing their networks of trusted peers who inform their travel choices, consumers
having access to increasing amounts of information in real time, and consumers taking more
control and seeking personal interactions. Sharing companies go some way to meet these
trends.
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The Digital Tourism Think Tank discusses how start-ups like Airbnb and Uber have seen
tremendous growth over the past two years, now reaching a scale where they start to compete
with mainstream hotels and transportation providers. But it seems that no sector is immune as
the sharing economy gradually makes its incursions into four key areas of the tourism
ecosystem:
ACCOMMODATION
TRANSPORT



Car-pool
Car-lending
Car parking at
private home


Sub-letting in a
private home
Couchsurfing
GUIDES AND
TOURS
HOSPITALITY


Share a meal
Social reviews of
restaurants


Locals as tour
guides
Online guidebooks
Euromonitor International estimates that in the United States, 10 million overnight stays were
sold on the lodging site Airbnb between 2007 and 2012. To put this in context, in 2012 a total of
over a billion overnight stays were sold in the U.S by all types of tourism businesses taken
together.
Just how big the sharing economy could grow remains uncertain, but there is some research on
its market potential. In an academic research project1, more than 84% of the Dutch
respondents expressed interest in participating in collaborative consumption of some sort.
Participation in Australia may not yet be at those levels, but it is certainly growing and we may
not be too far behind.
What remains important to the industry is Queensland and Australia’s tourism brand and the
desirability of our destinations to visitors. As the sharing economy is yet to reach its full
potential here in Australia, the largely unregulated environment will potentially come with a
raft of issues that may damage our strong tourism reputation. Knowing how to address these
issues and being prepared will prevent detrimental impacts.
KEY MESSAGES




The potential for the sharing economy to have impacts on tourism is considerable
without proper regulation enforcement. The better prepared industry and government
are, the better we will be at managing and sustaining our strong tourism brand.
Businesses must focus on providing quality and professional experiences that will
further separate them from individuals providing unprofessional products through
sharing companies.
Businesses must observe how technology is shifting the way people choose to travel,
and socially and commercially interact with one another. This will offer insights into
how businesses may need to evolve to keep up with the changing tourism landscape.
The way sharing companies are utilising technology can in fact be adapted to regulated
1
Van de Blind, Pieter (2013), The consumer potential of Collaborative Consumption; Utrecht University, The
Netherlands.
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tourism businesses while still abiding by the law. This includes the use of apps for
bookings and employing their innovative marking techniques.
4. The Pros and Cons
Business regulations are often the result of many years of resolving issues on consumer rights
and safety, and quality standards. Sharing companies that bypass these regulations and save on
compliance and overhead costs can generally offer consumers a price advantage on their
unregulated products. But what are the other pros and cons?
The table below looks at the perceived pros and cons of regulated businesses and unregulated
sharing companies, using the green box to show where the advantages might lie.
FACTORS
REGULATED
Tourism Businesses
UNREGULATED
Sharing companies
Price
The price of regulated products
covers all overhead costs including
licensing and permits.
The prices of unregulated products
are typically lower than regulated
products as compliance costs are not
a factor.
Authenticity
Hotel rooms, taxis, and other tourism
products provide a consistent
approach, e.g. a hotel room in
London and one in Sydney may
operate and even feel the same.
Consumers believe they are “living”
in a similar way to a local resident
and therefore believe they are
experiencing greater authenticity.
Environmental
Regulated businesses usually
consume greater amounts as
products are purchased primarily for
the consumer. This also includes the
physical buildings where businesses
operate.
Sharing companies allow people to
use their existing resources in a
higher capacity.
Communication
There are established systems in
place for response, complaints and
queries. Consumers expect that the
supplier will offer a quick-immediate
response as risk of business loss
would be higher.
Communication with the consumer is
dependent on when the supplier has
time and their willingness to
respond. No real damage is incurred
to the supplier from lack of response.
Reliability
Booking systems are sophisticated
and highly accurate. Where bookings
are taken incorrectly, alternatives
can in most cases be offered to the
consumer.
The booking system relies on the
supplier regularly updating their
profile/status. The consumer may
not be adequately compensated
when the booking is taken incorrectly
due to the detached relationship
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between the supplier and the sharing
company.
Transparency
Businesses are generally required to
identify their address, costs, detail
their product and provide
photographic or other evidence of
the quality.
The potential for false listings is
significantly higher. There is great
ease in operating under a false guise,
or provide a product that does not
exist or is vastly different to how it is
advertised.
Health and Safety
Businesses require all the necessary
licenses, permits and safety
equipment to operate, guaranteeing
the health and safety of consumers.
There are no guarantee for the
product. Consumers are subject to
risk and essentially responsible for
their own personal safety and
belongings.
Quality
A minimum standard of quality is
guaranteed through compliance with
regulations. Reviews, which often
include expert reviews, also provide
indication of the quality of a product.
The quality of the product is
unknown and cannot be guaranteed.
Peer reviews can be provided,
however these reviews are generally
controlled by the sharing companies
and therefore can be moderated.
KEY MESSAGES





It may come down to an extra $10 or $20 for the guarantee of quality and safety with
regulated businesses. Businesses must ensure that their products are seen to be worth
the price.
Authentic and personalised experiences can be found in quality tourism businesses
that are shifting from more traditional ways of doing business to a way that meets the
demands of the traveler.
Tourism businesses are adapting to the changing face of consumerism. As an industry,
we are well aware of our environmental responsibility. Particularly here in Queensland,
there’s been a strong push for ecotourism and eco-products which help reduce our
footprint.
Visitors will be offered peace of mind that they are getting the product they seek when
they use regulated businesses. These businesses have established a reputation, solid
communication channels, booking systems and a high level of transparency so that
consumers know exactly what to expect.
Tripadvisor, Lonely Planet and other independent travel review sites offer unfiltered
and independent reviews of tourism businesses. Visitors should be aware that sharing
companies have a financial interest in receiving positive reviews. With the ability to
remove negative comments as they wish, consumers may be unaware of how many
reviews have been edited or removed.
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5. Government Regulation
Government regulators are continually being challenged by new ways people are choosing to
do business – ‘transfer pricing’ by large corporations such as Google and Apple is just one other
example. It is often the case that cities around the world will only take a stand once these issues
reach a scale where the economic impacts can be felt.
Reactions from governments around the world have been varied. Some allow or at least don’t
prohibit sharing economies from operating, as others look to crack down on these unregulated
businesses. Whichever way governments are looking to move, they know that there are tax
losses, breaches of local laws such as zoning laws, and an increasing responsibility for them to
ensure that their citizens are safe from harm. Governments also have a responsibility in having
a solution for when things do go wrong – but should this be made available to consumers who
have willingly used unregulated business?
5.1 SHIFTING RESPONSIBILITIES
Some sharing companies have taken responsibility by providing insurance cover, offering to
collect taxes, as well as providing a rating system to manage any bad behavior. These actions,
while assisting their users and a small step towards regulatory compliance, is in most part
financially motivated.
Some sharing companies have shifted their responsibilities onto their users in a bid to escape
their regulatory obligations. A recent email sent out by Airbnb states that the onus of local laws
is the responsibility of each host:
“Hosts should understand how the laws work in their respective cities. Some cities have
laws that restrict their ability to host paying guests for short periods… In many cities,
host must register, get a permit or obtain a license before listing a property or
accepting guests. Certain types of short-term books may be prohibited altogether. You
acknowledge and agree that, to the maximum extent permitted by law, the entire risk
arising out of your access to and use of the site, application and services, and your
listing of any accommodations... remains with you."
But shifting the responsibility onto their users is not the right solution. Sharing companies must
accept a level of responsibility to ensure that they, and their participants, are abiding by any
laws that apply to them. These companies should work with regulators to figure out how this
can be achieved, rather than placing the onus of local laws onto its users who may not
understand they are in breach.
KEY MESSAGE

The responsibility for companies and individuals to be compliant with the law is on both
parties, and should not be shifted from one to the other.
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5.2 INTRODUCING NEW REGULATIONS
In response to industry pressures, increased cases of unacceptable conduct and a raft of other
issues, some governments have moved to enforcing new laws to try and prohibit the activities
of some sharing economies. The most publicised legal battle is that between Airbnb and the city
of New York (see Appendix A).
Without a strategy for developing regulatory infrastructure to keep business models like
Airbnb’s in check, state and federal authorities may be exposing themselves to the risk of
regulatory obsolescence.
Introducing new regulations may also have some negative effects. In Berlin for example, local
government believes that hire-apartments are tightening the already tough rental market and
could instead house Germans and Berliners. By introducing new laws this month that prohibited
this activity, the number of holiday rental properties could be cut by around one third,
compromise Berlin’s desire to become a tech hub, and change the perception of how welcomed
visitors are to the city.
KEY MESSAGES


Governments certainly have a role in the way its citizens are participating in the sharing
economy. Regulations need to find the right balance to support business models that
exist today, those emerging and those of the future.
Sharing companies must also acknowledge that governments do create safety nets and
assist in creating fair-and-balanced regulation for these industries that work for
everyone. Greater collaboration between industry, governments and sharing
companies will advance our cities rather than bringing it backwards.
5.3 FOSTERING THE SHARING ECONOMY
Probably the greatest advantage of the sharing economy for society in general is maximising
the use of underutilised assets, and governments are in fact able to adopt this approach to
public assets as well. For example, San Francisco has called for an audit of city-owned land and
rooftops to see where urban agriculture may be suitable. Local governments are also able to be
facilitators of the sharing economy by providing the service themselves similar to the way they
currently run libraries – instead of books, they can provide libraries for tools, equipment, etc.
History has shown that an entirely deregulated market has not worked in favour of creating
jobs, lowering prices or eliminating the administrative burden of controlling the quality of the
products. As with the case of Seattle’s deregulation of the taxi industry in 1979, consumer
complaints sky rocketed as residents encountered dirty cars, inconsistent (and higher) fare
rates, untrained drivers and drivers refusing short-haul rides. The public outcry convinced the
local government to reinstate fare restrictions and limit the number of taxi licenses.
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A recent solution trialed in California proposes that the California Public Utilities Commission
create a new category of prearranged for-hire companies. Each company, and not the individual
drivers, would need to be licensed by the commission. Companies must conduct criminal
background checks for each driver, train their drivers, implement a zero-tolerance policy on
drugs and alcohol, and require an insurance policy of $1 million. No doubt many cities will be
watching to see how these new laws unfold.
More and more cities are slowly adapting to the sharing economy, recognising that there are
ways that regulation could be applied appropriately. At the U.S Conference of Mayor’s annual
meeting in 2013, nine city Mayors signed a resolution titled In support of Policies for Shareable
Cities which described sharing companies as “engines of innovation” that empower citizens (see
Appendix B).
They key to successfully regulating the sharing economy is to ensure that there is “benefit for
the greater good”. Equaling the playing field between regulated businesses and sharing
companies does not mean turning one into the other. It means making sure that regulations
tailored to each category offers very little competitive advantages, but greater advantages for
the consumer by way of increased choice and assurances.
KEY MESSAGES


History would tell us that an entirely deregulated market does not achieve the best
results. Governments should look at how they can regulate new markets to achieve the
same principles and objectives as the regulations placed on existing business models.
Government’s should observe where regulated businesses are being burdened - e.g.
expensive licence fees, unnecessary red tape - and assist these businesses in these
areas.
5.4 WHAT’S HAPPENING IN QUEENSLAND
Both the state and local governments in Queensland are quiet in how they are addressing the
growing sharing economy. As similar to most other cities of the world, there is a grey legal area
that exists around individuals “sharing” their personal resources for a fee. The issue for
government lies in setting apart registered businesses providing dedicated products from the
casual, non-professional products offered by individuals and facilitated by sharing companies.
In the case of Airbnb, local governments are responsible for land use matters in their own
jurisdictions. While local laws exists for bed & breakfast businesses (including holding a permit
to use their home for a business activity, food business licensing, fire and safety regulations and
increased Council rates), Airbnb hosts have been able to bypass these local laws largely due to
their belief that the website has provided them a legitimate means of monetising their spare
resources without needing to set up a business.
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Local governments have indicated a lack of resources and the difficulty in identifying hosts as
the main barriers to enforcing their laws. This includes not being able to obtain the address and
details of the host as this is only revealed once bookings have been made. Furthermore, most
local governments do not fully understand their rights to audit and penalise hosts who are
acting under the premise of “sharing”.
As mentioned earlier, the accommodation sector is not the only tourism sector that will be
affected. As witnessed with the rise of Uber in Brisbane, there have been concerns by those in
the taxi industry about the idea of the ride-sharing app entering the Brisbane transport market.
In May, the Department of Transport and Main Roads Minister Scott Emerson had directed his
department to contact the company and investigate whether it complied with the public
passenger transport legislation.
Queensland’s governments will need to start preparing its response to the sharing economy as
more companies and more people are starting to exploit its advantages. As seen in the image
extracted from Airbnb below, the popularity of Airbnb listings in Australia is led by the southeast corner of Queensland.
Source: Airbnb.com. Image not referenced to actual data.
KEY MESSAGES


Queensland’s ambition to be Australia’s premier tourism destination means that
sharing companies will be looking at our state as a perfect place to expand their
operation. We need to make sure that our industry, as well as our state and local
governments, are well prepared to tackle the issues that will surface over the coming
years.
Queensland may find itself in a position to take a lead on how governments are dealing
with the sharing economy. Other states will be looking at us as an example and so
governments and industry need to make sure that we get the approach right.
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6. Appendix A
Business Insider Australia article by Hunter Walker, published 12:47AM on 22/05/2014.
NEW YORK'S ATTORNEY GENERAL IS GETTING HIS HANDS ON AIRBNB'S RECORDS
New York Attorney General Eric Schneiderman has scored a major victory in his quest to
investigate Airbnb hosts who are breaking state law. Schneiderman and the roomsharing
startup issued a joint statement Wednesday announcing they reached an agreement for Airbnb
to hand over host records to the attorney general’s office so he can attempt to identify users
who are violating a 2010 New York law that prohibits renters from subletting entire apartments
for less than 30 days at a time.
“Airbnb and the Office of the Attorney General have worked tirelessly over the past six months
to come to an agreement that appropriately balances Attorney General Schneiderman’s
commitment to protecting New York’s residents and tourists from illegal hotels with Airbnb’s
concerns about the privacy of thousands of other hosts. The arrangement we have reached
today for compliance with the OAG subpoena strikes this balance,” the statement said.
Schneiderman’s office has claimed illegal listings on Airbnb are widespread. The company had
been fighting a subpoena issued by Schneiderman for host records. On May 13, a judge threw
out the subpoena Schneiderman initially issued Airbnb due to what the attorney general’s
office described as a “narrow technical issue.” However, the judge’s ruling noted it appears a
“substantial” number of Airbnb hosts are violating the New York law. Schneiderman’s office
served the company with a new subpoena the next day.
Airbnb has consistently maintained it was willing to work together with Schneiderman to
eliminate illegal listings on its site. The key to the agreement reached Wednesday seems to be
that the initial user information given to Schneiderman’s office will be anonymized with
identifying information for hosts redacted. That data set is due to be given to the attorney
general within thirty days. Though the initial records given to Schneiderman’s office will be
anonymous, for the next year, the company has agreed to give the attorney general identifying
information for users who become targets for “investigation or potential enforcement action.”
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7. Appendix B
PROPOSED RESOLUTIONS
The U.S. Conference of Mayors
81st Annual Meeting
June 21-24, 2013
Las Vegas
Resolution No. 87
Submitted by:
The Honorable Ed Lee
Mayor of San Francisco
The Honorable Michael A. Nutter
Mayor of Philadelphia
The Honorable Antonio R. Villaraigosa
Mayor of Los Angeles
The Honorable Rahm Emanuel
Mayor of Chicago
The Honorable Francis G. Slay
Mayor of St Louis
The Honorable Jonathan Rothschild
Mayor of Tucson
The Honorable Charlie Hales
Mayor of Portland, OR
The Honorable Thomas M. Menino
Mayor of Boston
The Honorable Carolyn G. Goodman
Mayor of Las Vegas
87 IN SUPPORT OF POLICIES FOR SHAREABLE CITIES
1. WHEREAS, economic instability has led to increased unemployment in U.S. cities, where
income and wages have stagnated for most Americans while productivity has surged; over the past
thirty years the median US family income has only grown at an annual rate of 0.36%, while the
overall economy has grown at a rate of 2.66%; and
2. WHEREAS, the number of Americans living in isolation has doubled since 1985, particularly
amongst the elderly, as the strength of neighborhood community relationships has declined in both
urban and suburban areas; and
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3. WHEREAS, an emerging Sharing Economy is redefining the ways that goods and services are
exchanged, valued and created amongst citizens by enabling affordable access as an alternative to
ownership; and
4. WHEREAS, the placement and monetization of underutilized assets into Sharing Economy
marketplaces empowers citizens to find new ways of providing jobs, housing, transportation, food,
and improved lifestyles for themselves; provides additional income for households and local
businesses; makes city living more affordable; and generates reinvestment in communities; and
5. WHEREAS, this access to new economic opportunities promotes greater entrepreneurship and
the creation of new small enterprises, two aspects of urban life in which cities have invested
significant resources to date; and
6. WHEREAS, various forms of sharing amongst residents, neighbors and colleagues can
strengthen community ties which leads to greater resilience in times of economic and
environmental stress; and
7. WHEREAS, many cities have pioneered the Sharing Economy over the past several decades with
great success through models such as car- and bicyclesharing, ridesharing, co-working, consumer
cooperatives, home-swapping and sharing, and tool lending libraries, thus providing access to items
and space that previously might have been prohibitively expensive to some citizens; and
8. WHEREAS, new technology platforms and social tools have enabled even more citizens to
connect with each other in order to access new economic opportunities by monetizing and sharing
their underutilized assets; and
9. WHEREAS, Sharing Economy companies have proven to be engines of innovation and job
creation, driving economic development in the hearts of American cities, where joblessness is still
most pervasive; and
10. WHEREAS, the Sharing Economy can improve and make more cost-effective traditional
approaches for managing overall growth and urbanization, integrating transportation solutions,
reducing crime, designing urban spaces, creating jobs, and providing a variety of public services for
citizens; and
11. WHEREAS, balanced, equitable and clear regulation of the Sharing Economy will ensure
greater compliance and benefits to a broader, more diverse population,
12. NOW THEREFORE BE IT RESOLVED, that The United States Conference of Mayors urges
support for making cities more shareable by (1) encouraging a better understanding of the Sharing
Economy and its benefits to both the public and private sectors by creating more robust and
standardized methods for measuring its impacts in cities; (2) creating local task forces to review and
address regulations that may hinder participants in the Sharing Economy and proposing revisions
that ensure public protection as well; and (3) playing an active role in making appropriate publicly
owned assets available for maximum utilization by the general public through proven sharing
mechanisms.
Projected Cost: Unknown
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