The And Its Effect On The Hotel Market

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According to Investopedia, “A sharing economy is an economic model in which individuals are able to borrow or rent assets owned by someone else” (“Sharing Economy”). This kind of model is becoming more and more popular today as people are finding ways to connect and fully utilize their assets. Hotels are being rivaled by Airbnb, a website that connects individuals looking to rent out a space in their homes or apartment with individuals or groups who would like to stay there. Airbnb, as well as other similar websites and programs, have been creating a disturbance in the hotel market. The main group that has been affected by the introduction of Airbnb is lower-end hotels and hotels that do not cater to business travelers. Since Airbnb is not…show more content…
Convenience is key in any consumer market, and technology allows for an easy transmission of data and information to and from users of collaborative markets. Improvements in technology have reduced transaction costs dramatically and created a pathway for physical assets to be transformed into services worldwide. The sharing economy involves items that are owned by many, but generally expensive to purchase individually (Economist). It is especially attractive because it allows owners to generate income from their underused assets, while allowing consumers to live a life they desire while remaining within their budget (Boesler). Based on these two perks, it is no wonder that the sharing economy started to really establish a firm ground during the financial crisis of 2008. The collapse of the housing market in addition to the reduction in disposable income began to encourage consumers to take advantage of the opportunities presented by peer-to-peer renting. Companies capitalized on these factors by introducing applications and websites that made it easier to take advantage of what the sharing economy had to offer. “Millennials,” a generation known for their need for convenience, took ahold of the opportunities and contributed to the astounding growth of collaborative consumption (Boesler). Airbnb is a product of the sharing economy that has become so prevalent. Created in San Francisco, in August of 2008, it offers listings for people to rent during
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