Benefits and Risks of the Sharing Economy in Managed Travel Programs

Sharing economy suppliers are frequently described as “disruptors” due to the impact intended on conventional ground transportation and hotel suppliers. As sharing economy providers steer into the corporate travel market, it is timely for travel managers to begin discussions with travelers and program stakeholders. The sharing economy involves peer-to-peer products and services and the top suppliers for business travel are Uber and Airbnb. Other providers include Lyft, and BlaBlaCar.

There are five significant concerns to assess, which will aid a company in determining how the sharing economy fits into their program. For all of these problems, there are strengths and weaknesses of incorporating sharing economy suppliers into a managed program. The following is an outline of the substantial issues to consider and benefits and risks of utilizing sharing economy providers in a managed program:

1. Cost and Savings. Cost guides the attraction and growth of sharing economy in corporate travel.

a. Accommodation

i. Benefits. Sharing economy suppliers are frequently lower than traditional hotel options. After factoring incidental expenditures for food, the entire cost of a trip can usually be considerably lower.

ii. Risks. Travelers are typically not making true evaluations while staying at sharing economy lodging. Amenities beyond Wi-Fi access that are usually offered at a hotel; e.g. breakfast, room service, business center, or gym are not often available at sharing economy properties. There are also unknown costs that include time spent searching for shared economy lodging and starting a relationship with the host further surpasses the quick booking made through a preferred supplier hotel. When usage at sharing economy providers increases, a company’s hotel program can be impacted by reduced discounts at preferred properties.

b. Ground Transportation

i. Benefits. Throughout 2014, Uber and Lyft strongly lowered rates to weaken taxis and they reacted by reducing fares in some areas. In peak times such as rain, utilizing a service like UberX increases the possibilities of receiving a ride than a taxi. However, if is a peak period, then fares are higher.

ii. Risks. Sharing economy transportation does not always provide similar or reliable rates as a metered taxi. Travelers will frequently need to trust quotes from the provider and should clearly comprehend the fares before getting in the car.

2. Traveler Happiness. Keeping travelers satisfied is important to travel managers and access to shared economy suppliers might improve their experience.

a. Accommodation

i. Benefits. For travelers that are not bothered by inconsistency, strengths can include staying in a house rather than hotel, a true local experience, and better options for locations. Numerous property owners will make a significant effort to guarantee travelers are happy and will write a positive review.

ii. Risks. Many companies and travelers want consistency in properties and services. Travelers need to focus on work and not have to worry about if a property will meet their needs. The quality of shared economy properties is not scrutinized and travelers need to trust users’ opinions.

b. Ground Transportation

i. Benefits. Travelers that select sharing economy suppliers name driver rating systems, simple apps, and fast replies as strengths.

ii. Risks. Ride sharing and carpooling are not the best option for trips that are unplanned and/or shorter rides. Service can be an issue and drivers’ quality is uncertain.

3. Duty of Care. Traveler security is crucial when using shared economy providers.

a. Accommodation

i. Benefits. Scoring systems assist with recognizing and eliminating dangerous owners or properties. Burglaries or vandalism against the hosts’ property can be an issue. However, hotel crime is also a concern.

ii. Risks. Though travel managers often request hotel safety data, shared economy providers do not offer this level of information. Properties are not examined for fire compliance and other regulations.

b. Ground Transportation

i. Benefits. Many shared economy suppliers perform driver background checks and others review driving records and reject applicants with criminal records.

Several companies retain US$1 million liability insurance. The wait time for drivers is often shorter than traditional ground transportation.

ii. Risks. Shared economy suppliers do not typically demand specialized training or a license. Ride-sharing companies depend on user reviews to evaluate drivers. Uber has hired drivers with criminal records, including reckless driving.

4. Rules. Global laws are a concern in a sharing economy environment.

a. Benefits. The growth of shared economy suppliers has caused oppositions and concerns, which led to the examination of proprietors and drivers who were unethically evading the rules and taxation imposed on traditional suppliers. Shared economy providers claim their brand is unlike traditional suppliers, and consequently they must not be subject to the equivalent rules. The rise of sharing economy is urging conventional providers to make enhancements in crucial areas.

b. Risks. Global organizations are struggling with how to operate with the shared economy providers and these suppliers have ongoing legal battles and examinations. Bigger corporations can encounter issues should they promote utilization of sharing economy providers.

5. Program Incorporation. Combining shared economy suppliers into corporate travel programs has made some improvements.

a. Benefits. The incorporation of sharing economy providers into travel programs has made developments, especially with Concur and the ability to obtain data from Airbnb and Uber. Many providers are now requesting credit card payments through their apps.

b. Risks. There are still improvements to fully combine these providers, specifically those corporations that partner with a travel management company.

After absorbing the strengths and weaknesses of incorporating sharing economy suppliers into a managed travel program, a company may decide that at this time, an impartial view of sharing economy is best for their program. To assist corporations even further with the evaluation of shared economy providers, we created a guideline that provides the subsequent phases in the process. Click the link below to download our white paper on Roadmap to Sharing Economy in Managed Travel Programs.

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