Before I start getting into my East Coast Adventure 2.0, I
think it wise to discuss a very recent development in the world of travel and
getting around: the “sharing economy” as demonstrated by the success of Airbnb,
Uber, and such apps.
First, what
created the demand for services such as these?
What did their entrepreneurs see as opportunities? Here's how I see it:
1.
The price of taxi fares. These can seem like highway robbery at
times, in some cities more than others.
The fare of a taxi from the Sacramento Train Station to my place, for
example, was just short of $50, not including the tip. This fare, in theory at least, can be halved
with a service like Uber, if you’re not caught in the high-demand periods that
trigger Uber’s notorious “surge pricing”;
2.
Idle cars and idle car owners. Why have cars just sit unused, when the
time they sit, and the time their owners otherwise sit, can be used to generate
revenue for themselves and a dispatch organization like Uber? Or for that matter, a homeowner who can use
the extra cash and has an extra room in his/her house can rent out that room
through a service like Airbnb? Empty,
sitting cars and empty, sitting rooms equal potential revenue opportunities;
3.
The consumer, by booking through Airbnb, stays
in a private home (much like a Bed and Breakfast), getting to know the owner of
that home, potentially saving money over a comparable hotel, and getting to
know the area on a more personal level.
I’m all in
favor of economic and technological innovation. These two apps are certainly representative
of this innovation which capitalism can breed.
For example, I was tempted to use Uber in at least a portion of my
recent East Coast jaunt. I didn’t in
part, because of habit, but also because of a bit of uncertainty about the
“product” I was purchasing if I go through Uber: how familiar are the drivers
with the roads and the short cuts? Will
he/she need to constantly refer to a GPS app or device, or do they know the
area like the back of his/her hand?
What about insurance – is there any difference between a taxicab and an
Uber car in this regard, and if the car should be involved in an accident, will
I be held liable in any way? Taxis were
more of a known quantity to me, and for the most part, the drivers I worked
with knew where to go and how to get there.
I’ve yet to use Airbnb, so I can’t comment about that specific service. The hotels I have stayed at, for the most
part, have represented what I feel to be good values for my travel dollars –
though they have had their quirks and have been far from perfect. I’m sure that Airbnb listings may be the
same way, in their own ways.
“Disruptive”
is a word commonly used to describe the impact of these new apps. This word is an understatement if there
ever was one, as witnessed by the recent violent reaction to Uber by taxi
drivers in France. The attorney general
in New York has launched an investigation into Airbnb, subpoenaing information
from Airbnb in what the organization described as a fishing expedition. A similar situation erupted in San
Francisco, which led to the passing of a new city ordinance allowing for the
short-term rental of rooms through services such as Airbnb. Whether New York and other cities make a similar
move remains to be seen, depending on the relative strength of the high tech
lobby vs. the hospitality companies such as Hilton, et. al.
Taxi
drivers have especially felt this disruption.
It isn’t just that Uber drivers can undercut typical taxi pricing. Taxi drivers, and taxi companies, pay for
the right to drive taxis in municipalities through the purchase of medallions,
which can cost hundreds of thousands of dollars each. When the drivers retire, they sell the
medallions, which often represents a substantial part of their retirement
savings. This entire system is under
threat by the Uber business model.
Hoteliers,
similarly, see the new business model offered by Airbnb as cutting into their
profits. When one compares the
offerings on Airbnb to those of a comparable quality hotel in a given locality,
it’s often easy to see why – an Airbnb listing will typically not carry the
same costs as a hotel room run by a business (labor, overhead, etc.). Additionally, Airbnb has been blamed for
declines in affordable housing in certain areas such as New York City, further
driving up rents and forcing those unable to afford those rents out of those
cities.
So, what to
do? Who is right in this?
Here’s my
take. When a new technology such as
Airbnb or Uber comes into existence and “goes viral”, all affected sides must
be taken into consideration for there to be a smooth transition with as little
impact to people’s livelihoods as possible.
The business community and markets will handle their profit drive just
fine, but who is looking out for the consumers and those businesses and
individuals whose livelihood will be adversely affected by this
“disruption”? Who is speaking for
them? This is typically the role of
government agencies and the regulations they enforce, which in the United
States is a patchwork of differing laws from state to state and city to
city. These laws are just now starting
to address these technologies (see San Francisco’s response to Airbnb), and
will need to continue to be addressed, with
government involvement, if all sides are to get along in this
transition.
What do you think of these new arrangements? Please comment...
