The peer-to-peer economy may not be all it appears. Deloitte travel, hospital and leisure partner Simon Oaten explained to Ian Taylor

The boom in the peer-to-peer economy was among the biggest business and consumer phenomena of 2015.

Airbnb outgrew the world’s largest hospitality groups and taxi-app Uber reached a valuation of $50 billion.

In November, Expedia paid $3.9 billion to acquire US holiday-rental company HomeAway.

Yet Deloitte travel, hospitality and leisure partner Simon Oaten argues the sharing economy is not quite what it appears.

He explained: “Sharing assets is not new, and I’m not convinced putting Uber, Zipcar and the like in a ‘shared economy’ bucket really says what it is.

“These are not barter-type arrangements – they involve money transactions and a main asset acquired for use in that environment.

“Uber is developing into acquiring cars for drivers. Similar is happening at Airbnb, with purposely acquired apartments rather than people sharing a sofa.

“In the short term there is utilisation of an asset that would not have been shared. But in the long term you get a redistribution of assets, and it simply becomes a different distribution channel [operating] in a more conventional way.”

Airbnb conceded as much when regional manager for Europe Christopher Cederskog told the World Tourism Forum in Lucerne in April: “We’re not afraid of professionals using the platform. We don’t distinguish between professional [hosts] and those who are not.”

Oaten said: “The Avis acquisition of Zipcar [in January 2013] illustrates the point – much as if you look at eBay or Betfair you see swathes of conventional commerce.”

He argued: “The sharing economy is bringing significant disruption. It has dramatically reduced the barriers to entry in markets. It’s more fundamental than a new intermediary, but that will be where it gets to.

“At the moment, people think it’s only a step away from a barter transaction. But what it is really doing is providing efficiency in asset utilisation.

“EBay is exactly the same. In its early days it offered the sale of second-hand goods on a peer-to-peer basis. Now the vast majority of assets on eBay are new. It’s a distribution channel for core business or secondary distribution and sale of excess stock.”

In travel, the advantages of existing companies and the barriers to entry for new starters have been “in large part due to scale”, argues Oaten.

“The sharing economy says ‘you don’t need scale, we’ll provide the network to offer scale’. It undermines the competitive advantage of a hotel chain or car-hire company.

“But as the market evolves, the sharing economy will become colonised by more traditional operators who will use it as one of their distribution channels.

“It’s not going to replace more traditional models. It will exist alongside them.” Of course, this could have a negative impact on margins.

What of the immediate impact on travel?

“Growth in the shared economy has coincided with an upturn in the hospitality cycle,” notes Oaten.

“Hotel investment has increased, occupancy and rates have increased, camouflaging what is happening.

“Identifying how much more hospitality might have grown is difficult. But it’s also difficult to argue it’s not having an impact. People are travelling and spending similar amounts of disposable income as if they had stayed in a hospitality unit.

“The short-term rental of villas and holiday apartments is switching from holiday-oriented distribution channels to the sharing economy.

“But there is not much difference in the model of some apartment-and-villa booking agencies except that they operate as closed networks and peer-to-peer companies as open networks.”

Oaten believes the peer-to-peer economy “will take longer to penetrate” corporate travel, “the same as it took the low-cost carriers longer”.

But he argues: “It’s wrong to think corporate travel is protected from the sharing economy, because between the leisure and corporate markets is the SME and contractor-to-business segment and there is increasing peer-to-peer penetration in that market.

“The reason is that a lot of contractors work in secondary locations. The price point per night is not as different as people think, but on a square-foot basis it’s significant.”

The key question for the industry, government and regulators is how to address safety, consumer protection and other regulatory issues, as well as tax.

The Sharing Economy Review commissioned by the Government in 2014 proposed a consumer protection kite-mark for the sector in the UK.

Yet barely a day passes without a court ruling somewhere in the world for or against Uber, which is the subject of a class action lawsuit over its employment practices in its home state of California.

Oaten said: “There is a line to be trod between supporting free-market enablement and not overlooking the need for regulation.

“Health and safety in hotels is a good example. The regulations for a 250-room hotel and a single Airbnb unit should differ, but large apartment units should be regulated the same as a hotel.

“There won’t be a single solution. Licensing regulations differ for taxis, for example.

“Regulation will evolve in individual areas. But it’s highly unlikely existing regulations will be relaxed. There needs to be regulation of the sharing economy to bring it up to the existing level.

“The debate between traditional bookmakers and bookmaking exchanges was not dissimilar, and online regulation has come much closer to that of a conventional bookmaker.

“We’ll see the same happen in travel. There is a range of regulatory requirements in travel and hospitality under different jurisdictions in Europe. It’s not a level playing field, but it operates within a paradigm and the sharing economy currently sits outside.

“It will move within this paradigm – and this will happen a lot quicker than people think.”

He believes: “Too much resistance will probably increase the regulation.

“Coming up with effective ways to provide safety is challenging. Rating systems are vulnerable to fraud. But operators which shrink from taking responsibility will find consumers react negatively.

“The consumer will be more powerful than the asset seller – the Airbnb host or Uber driver. If people suffer injury or unwanted sexual advances it will have a highly negative impact and too much of it will suppress growth.

“As networks become more commercialised, regulators need to focus on the commerce rather than the network.”

However, Oaten believes the sector will prove a boon to tax authorities.

“If anything, the sharing economy will increase the amount of tax collected by reducing the difference between the grey and the regulated markets,” he said.

“The access to market Airbnb and Uber provide is so much greater than any savings from not paying tax. Those using Airbnb will expect to pay tax and Airbnb will process the payments.”

This is an extract from the Travel Weekly Insight Annual Report 2015