Share and Share Not Alike

           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...