The trend of the sharing economy has boomed in the past couple of years, it isn’t until now that we are seeing the side effects of such a bubble. The sharing economy is a fairly new term generated with the rise of companies like Airbnb where buyers and sellers are essentially at the same level: just people sharing with other people. Fantastic in theory, but just as the rise of any new marketplace, there is bound to be side effects that are magnified once the dust settles, good and bad.
The most prominent criticism of the sharing economy is in the economic logistics of people switching from their traditional paid jobs to taking on the brunt of demand shocks and price cuts as their source of income changes. Of course, the sharing economy puts use to underutilized resources, allowing people in the Airbnb environment to fill empty rooms and capitalize upon them, which is helpful to fill gaps in income or simply develop relationships.
There is also a huge liability with the increased risk of vandalism and nuisance as well as competition with hotel services as Airbnb has met complication with the New York City government for renting “illegal hotels.” In New York, one cannot rent out a room or apartment for less than 30 days, especially if the tenant’s rent is stabilized. Airbnb has also met complications with vandalism, a two-day drug binge at a home in Calgary, Canada. After damages were reported to local police and Airbnb, the couple who rented out their home were reimbursed for one million dollars, thus creating the Airbnb $1-million host damage guarantee.
Benefits prevail yet, Airbnb is incredibly attractive to travelers on many levels: less expensive, an authentic experience in whatever country one chooses to visit, conducive to meeting new people. TIME sent one of their staff writers to experience the sharing economy to figure out just why people trust strangers with their stuff. TIME’s article has determined that millenials are doing something right for once, now intrinsically understanding that experiences are far more beneficial to happiness than purchases, fueling the experience economy. The sharing economy makes people nicer. Nearly everyone who deals with customers directly, even customers are more respectful. Comparing Airbnb with a hotel service, nearly everyone hangs their towel after use in an Airbnb accommodation.
With the magnitude of people involved in the sharing economy, the continuous harnessing of data, learning from it along the way, the marketplace will grow and thrive.