Sharing Economy— Airbnb and its Kingdom

Airbnb, an online marketplace arranging short-term lets, is commonly discussed as an excellent example of the “sharing economy”. It was valued more than $31 billion in 2017. Before we talk about Airbnb, we must discuss the following questions: what is sharing economy, why does the sharing economy exist, and how does/will it change our life? 

The sharing economy is poorly defined as a phenomenon. In my interpretation, sharing economy is a way to exchange value out of idle items without hiring employees. In the article “Sharing Economy“, the author Thomas Puschmann says, “the ‘Sharing Economy’ is built on using and sharing of products and services among others. The principle per se is not new…” In other words, he agrees that sharing economy is not a new concept but a second way to trade that is not based on ownership. Similarly, Airbnb defines itself as a house-sharing community, but in fact, it is also part of the traditional economy of short-term letting. Airbnb makes short-term letting happens online and connects hosts and guests which means it plays the role of the third party in this business. Airbnb doesn’t own any of the real estate listings and all its employees are hidden behind the platform. 

In the past decade, the term “sharing economy” became more and more popular. According to the article “New Forms of Economies: Sharing Economy, Collaborative Consumption, Peer-to-Peer Economy“, sharing economy develops fast for the following reasons: technology allowance, environmental concerns, global recessions(especially after 2018), and community re-connection. The improvement of technology allows Airbnb to better serve its community online. If there’s no technology supported, Airbnb will have a hard time to build up the market online. Airbnb focuses on major cities (such as New York, London, Hong Kong, etc) that need tourism but rents are generally high. Due to the global recession, the Middle class who own houses would like to get extra income, and tourists are willing to find a cheaper place to live. Besides, hosts can make their own decisions, for instance, select the date to rent out, fitter guests, arrange prices, and set rules. This freedom lets more house owners join the Airbnb community, and they can have a chance to meet with people around the world too. Many guests consider Airbnb as an alternative and a fun place to explore. As for me, I have a wonderful experience living with two cats during my trip through Airbnb. Comparing to a hotel, Airbnb houses will always bring me joy. We are expected to have standard things in a regular hotel room, but we can see new and fun things in Airbnb. As a cat person who never owns a cat, I enjoyed the days spending with two cats together. That will never happen if I chose a standard hotel.

There is a dark side of Airbnb unfortunately. In April 2019, there was a camera scandal in which a hidden camera was found in an Airbnb in Irland. Besides, hosts are concern about their properties’ safety and cases are showing that discrimination happens when hosts select guests. Shortly, Airbnb came out with regulations to solve them. Brian Chesky, the CEO/co-founder of Airbnb, says “[discrimination] is the greatest challenge we face as a company.” We can see that Airbnb puts efforts to solve this issue. However, Airbnb has removed some properties from the long-term rental market, thus, accelerates the shortage of housing. Airbnb was founded in San Francisco, where its rent was declared to be the highest in the world; but now it negatively affects the market while creating more short-term rental opportunities. 

The problems that Airbnb facing also challenge other post-sharing-economy platforms such as the safety issue, discrimination, effecting the traditional market, and so on. Airbnb succeeds as a post-sharing-economy product (not a 100% sharing economy product). It has extended its business kingdom globally and does well so far. It seems not hard to predict its future. Professions think that the sharing economy is “a social movement more than a business model” (Slee 2015). In other words, the existence of sharing economy is the trend of the world. As the urban population growing fast, sharing economy seems like a good way for us to save and distribute the limited resources. The way that people live right now also shows that they care less about the ownership comparing to the last generation. Even though there’s no real sharing economy product now, it will exist in the future. Thus, Airbnb will keep extending its kingdom until “the real sharing economy” substitution exists.

Now we turn to another question: why do we care about Airbnb and the sharing economy? It does not matter if everyone has participated in the sharing economy. It already changed the world around us. Now, maybe the sharing economy is not mature enough, it can be developed. Not everyone owns a car, so Uber makes urban life more convenient. Not everyone is satisfied with their income, so Airbnb helps them to rent a part of/one of their houses out to make some extra money. Taking the economy as a whole, it increases our total revenue. Sharing economy makes us better off.