Impact of Economy Sharing Platforms on the Hospitality Industry - Coursework Example

Impact of Economy Sharing Platforms on the Hospitality Industry Name Institution Affiliation Impact of Economy Sharing Platforms on the Hospitality Industry Introduction The impact of new technological platforms on the business environment cannot be overestimated. Technology creates new ways of doing business that upsets the order of business models in the world by changing the modes of communication, movement, payments and associated costs. This particular study seeks to examine the impact of new technology-driven sharing economy platforms such as HomeAway, Roomorama, FlipKey and VRBO in the hospitality industry. The sharing economy platforms have been found to revolutionize operations in the industry through a variety of ways that influence the business operations in the industry. According to McDonald (2015), the use of new economy sharing platforms such as HomeAway, FlipKey and Roomorama have had a great impact in the industry by influencing the nature of information relayed concerning tourist destinations, accommodation costs, currency rates, transport costs and provision of varieties. It is, therefore, important to examine the impact of the new economy sharing platforms to examine the mechanisms through which they impact the hospitality industry and analyze the response from the traditional hotels to this relatively new technology. This study is further informed by the fact that “many tourists use the internet, smartphones and tablets to plan or purchase travel” (EPRS, 2015). Purpose of the Study The purpose of this study is to examine the impact of new economy sharing platforms such as FlipKey, HomeAway, VRBO and Roomorama in the hospitality industry. In essence, the overriding objective is to ascertain how the adoption and use of these new platforms have altered operations and revenues in the hospitality industry and clearly isolate the means through which they have influenced such operations and revenues. Moreover, this paper, in achieving the key objective stated above, will seek to analyze how traditional hotels have responded to the adoption of these economy sharing platforms in the hospitality industry. Achieving these objectives will necessitate this paper to undertake a critical review of literature materials in this discipline to augment from such studies, not only the impact of such technologies but the insights concerning their rational and their future prospects in the hospitality industry along constructs such as increased use of internet and globalization. In summary, the objectives of the study are: I. To examine the impact of new economy sharing platforms such as FlipKey, HomeAway, VRBO and Roomorama in the hospitality industry. II. To assess the response of traditional hotels to the adoption of economy sharing platforms in the hospitality industry III. To provide insights on how the efficacy of the economy sharing platforms can be enhanced. Significance of the Study By studying the impact of new economy sharing platforms such as FlipKey, HomeAway, VRBO and Roomorama in the hospitality industry will yield invaluable knowledge in the discipline given that previous studies have focused on the impact of a single platform, mostly Airbnb. Additionally, by revealing the intensity and magnitude of change occasioned by the sharing platforms, the paper is likely to have a great practical impact on the decision-making organs of traditional hotels that are contemplating the adoption of these new technologies. Providing information concerning the impact of such technologies in the hospitality industry will make this paper a handbook for both hotel managements and clients owing to the fact that “most goods and services offered by the hospitality industry are experiential in nature, it is hard to predict their quality before the purchase” (Seth, 2012, p. 14). Literature Review This section of the paper provides a systematic review of empirical literature materials to examine the perceived impacts of economy sharing platforms in the hospitality industry as espoused by empirical outcomes in the discipline. To achieve the objectives of the study highlighted in the preceding section of the paper, the review will be conducted along the constructs of economic, social and special treatment benefits as well as service quality and customer satisfaction and customer loyalty. Economic Benefits Empirical studies have been conducted to examine the economic benefits of economy sharing platforms, and such studies have yielded interesting outcomes. According to McDonald (2012), economy sharing networks such as Airbnb, FlipKey, HomeAway, VRBO and Roomorama reduce overhead costs of hotels and increase operational efficiency in payments and reservations thereby enabling the businesses to optimize their proceeds. In a survey conducted by PWC on the impact of economic benefits of economy sharing platforms in different sectors, the statistical outcomes in the hospitality industry were particularly startling. For instance, the survey ascertained that the sharing economy consisting HomeAway and Airbnb has had a disruptive impact in business models and that in 2014, the two sharing economies averaged 425,000 guests every night, which was 22% more than the annual worldwide Hilton Hotel guests (PWC, 2015, p. 14). Moreover, the adoption of economy sharing platforms such as Airbnb increases revenues in the hospitality industry by enabling hotels to access more people easily and cheaply, and also leads to increase in tax revenues in the jurisdictions in which they are adopted thereby leading to industry and general economic growth (Zervas et al., 2015, p. 10-11). In essence, from the review of literature materials, most economic benefits of economy sharing networks result from their ability to reduce operational costs considerably thereby maximizing profits in the industry for the organizations that adopt it. Nonetheless, from a general economic perspective, it has also been espoused that the adoption of economy sharing networks such as Airbnb, FlipKey, HomeAway, VRBO and Roomorama increase the levels of unemployment in the economy (PWC, 2015; Lehr, 2015; Zervas et al., 2015; PWC, 2015). Social Benefits The sharing economies have also had immense social benefits as it has enabled people with socially diverse backgrounds to receive services without discrimination and victimization that had for a long time characterized the hospitality industry (Pavkovic & Stajduhar, 2015). The adoption of economy sharing networks such as VBRO and HomeAway have also improved interrelationships between organizations and their virtual community of clients that stretch beyond spatial boundaries through conditioning social interactions that can also facilitate direct marketing in structuring an effective customer relationship management (CRM) with customers (Trivett & Staff, 2013; Stokes et al, 2014; Zadeh, 2016). It has also been shown that social benefits of economy sharing platforms like Roomorama and Airbnb can only be augmented because of “a transparent pricing, verified listings and background checks, and assured delivery of services will reinforce consumer faith in these platforms” (EY, 2015, p. 5). The use of economy sharing platforms has immense social benefits to organizations and the virtual community of shoppers alike in that it provides a medium through which businesses can take into account the different consumer profiles that enable them to provide the best services to societies that they serve and enhance social interrelationships (Pavkovic & Stajduhar, 2015). Special Treatment Economy sharing platforms enable customers to acquire specialized treatment from organizations since through the consumer portal, customers are able to provide details concerning the type of service they want. According to Abramova (2015), customers are the greatest beneficiaries from the sharing economies since they are not only able to get a variety of services to choose from but also have the ability to use the consumer portal to place requests for tailored services that suit their unique needs (Quattrone et al., 2016). The economy sharing platforms also offer customers special treatment by providing them with access to specialized travel and accommodation advice. For instance, Flipkey provides clients with a free expert advice and travel ideas on its website from which the customers get travel inspiration, insights and many other professional consultations that would make the customer experience special (Flipkey, 2016). In summary, literature materials examining the special treatment benefits of economy sharing platforms in the hospitality industry note that such platforms lead to special services through enabling customers to provide more details of their needs and provision of supportive services that work to make the entire experience special. Service Quality The most effective means through which economy sharing platforms influence the hospitality industry is raising service quality through the facilitation of feedback acquisition of customer perceptions of hotel operations through means such as SERVQUAL questionnaires that are provided on the respective websites (Devi Juwaheer, 2004). According to a survey conducted to examine the impact of economy sharing platforms in the European tourism industry (hospitality industry), it was ascertained that the economy sharing platforms such as Airbnb, VRBO and HomeAway improved the service quality in the industry through “personalization, authenticity and contacts with local citizens” (EPRS, 2015, p. 4). Intuitively, economy sharing networks enable service providers in the hospitality industry to profile customers and identify their needs to increase service quality as perceived by the customers themselves. It is important to note at this point that the emphasis on service quality is ostensibly due to its positive correlation with revenues and customer satisfaction. Customer Satisfaction and Loyalty Economy sharing networks facilitate the conditioning of customer satisfaction and loyalty by businesses through enabling the establishment of direct contact with customers which leads to an effective customer relationship management (CRM) structure. According to EPRS (2015), economy sharing platforms have a magnetism of innovative digital technologies (p. 3) and such technologies, therefore, facilitate the adaptation of services to suit customer needs, therefore, ensure customer satisfaction. Moreover, through profiling of customers, economy sharing platforms can facilitate market segmentation which can be used to achieve customer satisfaction and customer loyalty by tailoring services to match the profile of a particular market segment (HCH, 2015, p. 1-2). According to Taylor (2016), customer satisfaction and loyalty can be achieved through feedbacks provided by customers, and that since technology (read sharing economy platform) allows the use of QuestionPro online survey tools, it is possible to provide immediate service to that customer based on their responses. It is, therefore, clear from empirical literature materials that feedback provision and prompt response are the mechanisms through which economy sharing platforms facilitate achievement of customer satisfaction and loyalty. References Abramova, O., Shavanova, T., Fuhrer, A., Krasnova, H., & Buxmann, P. (2015). Understanding the Sharing Economy: The Role of Response to Negative Reviews in the Peer-to-peer Accommodation Sharing Network. Devi Juwaheer, T. (2004). Exploring international tourists' perceptions of hotel operations by using a modified SERVQUAL approach-a case study of Mauritius. Managing Service Quality: An International Journal, 14(5), 350-364. EPRS (2015). The sharing economy and tourism. European Parliamentary Research Service. Retrieved on March 14, 2016 fromhttp://www.europarl.europa.eu/RegData/etudes/BRIE/2015/568345/EPRS_BRI%282015%29568345_EN.pdf EY (2015). The rise of the sharing economy: the Indian landscape. Retrieved on March 14, 2016 from http://www.ey.com/Publication/vwLUAssets/ey-the-rise-of-the-sharing-economy/$FILE/ey-the-rise-of-the-sharing-economy.pdf Flipkey, 2016. Find the Perfect Vacation Rental: Expert advice, great travel ideas. Retrieved on March 14, 2016, fromhttps://www.flipkey.com/ HCH, (2015). Sharing Economy; and the Tourism and Hospitality Sector in Greece. Retrieved on March 14, 2016, from http://www.grhotels.gr/GR/BussinessInfo/News/Lists/List/Attachments/538/Sharing%20Economy%20GRHOTELS%20ENG.pdf Lehr, D. D. (2015). An Analysis of the Changing Competitive Landscape in the Hotel Industry Regarding Airbnb. McDonald, J. (2015). The sharing economy: impact and considerations for private short-stay accommodation providers in Australia. Lexology. Retrieved on March 14, 2016, fromhttp://www.lexology.com/library/detail.aspx?g=6ddd0220-227d-4a58-a05d-23426adb1b64 Pavkovic, I., & Stajduhar, I. (2015). Semantic approach to accommodation & booking related Web services. In Information and Communication Technology, Electronics and Microelectronics (MIPRO), 2015 38th International Convention on (pp. 419-424). IEEE. PWC (2015). The Sharing Economy. Retrieved on March 14, 2016, fromhttps://www.pwc.com/us/en/technology/publications/assets/pwc-consumer-intelligence-series-the-sharing-economy.pdf Quattrone, G., Proserpio, D., Quercia, D., Capra, L., & Musolesi, M. (2016, February). Who Benefits from the 'Sharing' Economy of Airbnb. In International World Wide Web Conference. WWW (pp. 11-15). Seth, G. (2012). Analyzing the Effects of Social Media on the Hospitality Industry. Retrieved on March 14, 2016, fromhttp://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=2338&context=thesesdissertations Stokes, K., Clarence, E., Anderson, L., & Rinne, A. (2014). Making sense of the UK collaborative economy. Nesta. Taylor, I. (2016). Customer Satisfaction Strategies for the Hospitality Industry. Retrieved on March 14, 2016, fromhttps://www.questionpro.com/blog/2012/11/customer-satisfaction-strategies-for-the-hospitality-industry/ Trivett, V., & Staff, S. (2013). What the sharing economy means to the future of travel. Skift. Zadeh, J. 2016. How is Airbnb different from HomeAway and VRBO? Quora. Retrieved on March 14, 2016, fromhttps://www.quora.com/How-is-Airbnb-different-from-HomeAway-and-VRBO Zervas, G., Proserpio, D., & Byers, J. (2015). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Boston U. School of Management Research Paper, (2013-16). Retrieved on March 14, 2016, fromhttp://questromworld.bu.edu/platformstrategy/files/2014/07/platform2014_submission_2.pdf Read More