While the rise of the sharing economy for everyday travel is well documented, perspectives on implementing sharing economy options into corporate travel programs are mixed at best. Some striking thoughts from corporate travel managers in a 2015 research white paper from ACTE Global and American Express Global Business Travel illustrate the controversy. A Head of Global Category in the UK says, “I see the sharing economy as a big opportunity to drive down cost and engage people with a new way of working…We’re already using sharing economy options within our ground transport scope. We’re pushing travelers towards it.” On the other hand, a Travel Management analyst asserts, “We do not recommend our people use [sharing options]. Insurance and liability is an issue: what if there was an accident?”
Insurance and liability are important concerns, and there are many other reasons that travel buyers should be wary about the sharing economy. Yet, it also poses potential benefits to companies, including savings and increased traveler satisfaction. Even if the problems outweigh the benefits, companies need policies that address these platforms. Without clear policies, travel managers cannot control traveler safety or company costs with any measure of reliability.
Is the Sharing Economy Really Sharing?
The “sharing economy,” put simply, is made up of businesses that are built around the notion of sharing resources—often at a cheaper price than traditional retail options. Applied to travel, the term “sharing economy” is typically synonymous with platforms such as Airbnb and Uber. Recent media coverage indicates problems with this term, however, suggesting that it is a misnomer because many sharing economy platforms have little to do with sharing—they are, after all, profit-making companies. It’s also been suggested that the term “sharing economy” is problematic because it represents a “broad range of things that don’t necessarily all look like each other,” according to Arun Sundararajan, author of The Sharing Economy, in The Atlantic. Sundararajan suggests that “crowd-based capitalism” is a more apt term because it invokes the middle-ground position of these platforms as being “somewhere between the 20th-century organization and even the 18th-century one-person shop selling to an individual market…It’s not a pure sort of marketplace.”
It’s important for travel managers to consider the implications of the term “sharing economy” because the positive branding associated with the concept of sharing can avoid the potential safety concerns these platforms can pose for travelers. Sundararajan’s use of “capitalism” also reminds us that Airbnb and Uber are for-profit organizations that require travel managers to consider the potential impact on a company’s finances. Yet, because “sharing economy” has stuck best, according to Sundararajan, this might be the best term to use with travelers as you consider these concerns and create or update policies.
Reliability, Safety, and Savings: The Pros and Cons of Sharing Options for Business Travel
Before creating a plan of implementation, it’s important to understand the benefits and challenges associated with sharing economy providers for accommodations and ground transportation—not only the benefits for travel managers but for travelers and their satisfaction with these services, given that travel managers should aim to keep travelers happy.
Cost – One of the most often-cited benefits of sharing economy accommodations is that they tend to save companies money, as compared with regular hotel options, although this trend does not always hold true. While the price of one evening at a hotel may be more than an Airbnb stay, Certify SpendSmart Report data show that corporate travelers stay twice as long in Airbnb accommodations, on average, compared with hotels, and they spend more than twice the amount on their Airbnb accommodations (likely because they stay longer). These costs could be major detriments to travel managers, but corporate travelers apparently love their Airbnb stays—with satisfaction ratings at 4.3 stars, on average, compared with 3.79 for hotels.
Expense Reporting – An interesting benefit of sharing options is that business travelers are probably less likely to commit expense reporting fraud or fib on their expense reports because there are not as many ancillary items that could be added to a hotel bill, such as in-room dining or movies. A potential con is that some sharing economy providers may make expense reporting more difficult, as travelers may have to book themselves; may not be able to use a company card; or travel managers may have a difficult time tracking expenses. However, established providers such as Airbnb are working to make this easier. Through Airbnb Business, travel managers can keep track of total spend and link a company credit card.
Amenities – Many sharing economy properties lack amenities business travelers are used to, or even rely upon, such as a fitness center, business center, or in-room dining. Even the always-forgotten toothbrush may not be a phone call away anymore. Yet, having a full kitchen at an Airbnb property may encourage travelers to cook on site (saving on food expenses), and Business Travel Ready properties have WiFi, a workspace, shampoo, and more.
Consistency/Quality – Travel consultancy Advito says in “The Sharing Economy: Does it Have a Place in Your Managed Travel Program?” that consistency can be a problem with providers such as Airbnb. The study argues, “With more than 500,000 different listings on Airbnb’s business site alone, mainly provided by hospitality amateurs, there is no way it can vet quality itself.” If travel managers, instead, book at branded hotels, they know there’s a level of consistency amongst the hotels in the chain. The stakes are perhaps especially high, then, for Travel Management Companies (TMCs) that want to retain clients; happy travelers are typically a part of that equation. While platforms like Airbnb have review systems that can help travel managers ascertain quality and consistency, combing through reviews is likely a more time-consuming process than trusting a known hotel chain. The effort involved in ensuring consistency, however, may need to be balanced with traveler satisfaction, since corporate travelers are rating Airbnb properties higher than hotels.
Supply – Additional supply is another benefit of sharing economy accommodations. If a travel manager needs to find a hotel at the last minute on a busy weekend, for example, sharing economy options simply open up your options. A challenge is that home sharing can violate laws. For example, Skift reports that New York State legislators recently passed a bill that will fine hosts on short-term rental sites (like Airbnb) that violate the state’s short-term rental laws. The impact of these kinds of legislation on business travel remains to be seen, but if travel managers become too reliant on sharing options, they could lose out on negotiated rates with brand hotels and then find short-term options dwindling in key cities on home rental sites.
Cost – Mobile apps such as Uber and Lyft typically cost less than traditional cab rides. A Pew Research Center Study of 4,787 U.S. adults, which was released in May 2016, supports this, showing that users “broadly agree” that ride-sharing options are less expensive than traditional taxis—although cab companies are beginning to lower costs to maintain business. At the same time, some ride-sharing options have surge pricing, which means a traveler’s ride cost could be much higher during peak times—a major potential con.
Convenience – Business travelers often find that Uber or Lyft are quite convenient. Travelers don’t have to worry about someone stealing their cab, and they typically catch a ride quicker—especially in cities where cabs aren’t used prevalently. According to Certify’s SpendSmart Report, Uber and Lyft have beat out taxis for being business travelers’ preferred choices, and Pew Internet research shows that users are in near-universal agreement that ride-hailing services save them time and stress. From a travel management perspective, it’s less likely these companies will take travelers on a more costly, out-of-the-way route, which some cabbies tend to do in order to earn more cash.
Reliability – While ride-sharing options are typically convenient, a traveler can never know if a car will be available when she needs it. If a business traveler is trying to arrive promptly to a meeting, asking a hotel to have a taxi called at a certain time might be a more reliable option. Also, some regulatory issues could be a cause for disruptions in certain markets, such as when Austin voters refused to pass a measure overturning regulations on ride-sharing, which caused Uber and Lyft to temporarily quit operating in the city. The challenge for travel managers, then, is to determine the best policies for use based on these challenges and to always have backup plan.
Safety in Accommodations and Ride-Sharing
Safety is really a key concern for accommodations and ground transportation. Shapse Jakob, Director of Business Development & Legal Counsel for Travgroup.com, tells us that the major safety concern regarding sharing economy platforms and their providers centers around insurance coverage. According to Jakob, “A homeowners, renters or landlord policy, or a personal use car insurance policy, may justly deny claims made by an Airbnb guest or Uber rider. However, the platform providers are fully aware of the need to protect their customer and provider base. Uber offers its drivers and riders new policies protecting them in case of an incident, and new homeowner’s/tenant policies are being offered by insurers for Airbnb type short-term rentals.”
Jakob suggests that users are “fairly well protected” and that established sharing platforms “protect the consumer enough that from a duty of care standpoint, we have been confidently modifying our corporate travel policies where necessary to allow for Uber and Airbnb options.” The concern may come in a minority of cases when users have “claims greater than, for example, the Uber $1 million liability and an additional $1 million in underinsured or uninsured policy protecting the passenger,” Jakob says. “Beyond this coverage, a typical Uber driver has no further protection and the pockets probably don’t run too deep.”
In addition to insurance coverage, some TMCs also express concerns about traveler tracking and security, important aspects of a travel manager’s duty of care. Yet, Jakob informs us that Uber is now “integrating with TMC tools to help capture and track employees and Airbnb is offering streamlined expense reporting options to help reimbursement and traveler tracking.” More established sharing economy providers keep adapting, in order to attract corporate clients and help TMCs ensure quality and safety.
Should Travel Managers Adopt the Sharing Economy?
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It’s clear that the sharing economy offers both benefits and poses problems. So, should internal travel managers, TMCs—or even companies creating minimal reimbursement policies for open booking—jump on the sharing economy trend, or should they ban sharing options altogether? Net Trans strategic advisor Philip C. Wolf has some prescient advice about TMCs ruling out sharing economy options. He says while TMCs might be tempted to advise clients to ban travelers from using sharing economy accommodations providers, it’s not likely to hold back travelers from wanting to use these options. “The word ‘ban’ is bizarre in this context,” he tells NetTrans. “Travel managers ‘banned’ online bookings for a few years when they launched in the mid-1990s until their folly became embarrassingly narrow-minded.” At the peril of not keeping up with trends in the industry, travel managers need to address the sharing economy. Certain options will not be right for your travelers, but since travelers are not likely to be held back, as Wolf argues, travel managers need to intervene and address these issues in their policies. Being aware of the pros and cons is the first step towards implementing effectively.
Check out our article, “‘Business Travel Ready’: How to Implement the Sharing Economy into Your Corporate Travel Policies,” where we explore in more depth how travel managers can make informed decisions about the sharing economy and adapt their policies accordingly.