The Sharing Economy in Tourism - Opportunities and Challenges for Stakeholders - Essay Example

THE SHARING ECONOMY IN TOURISM: OPPORTUNITIES AND CHALLENGES FOR STAKEHOLDERS Name Course Professor University Location Date The Sharing Economy in Tourism: Opportunities and Challenges for Stakeholders Puschmann and Alt define the sharing economy as an array of practices, simulations, and programs that, with the use of technology and society, enables people and corporations to, at best relatively, share the right of use to commodities, services and involvements (2016, 93). It comprises of non-profit and for-profit policies that have materialized from an initially vivid sharing economy, peer to peer, and non-profit associations (Cheng 2016, 62). The sharing economy consists of two different approaches; the type of product or service alignment (peer to peer contrasted with business to peer) and the platform arrangement (non-profit to for-profit). The global sharing economy estimation as of 2013 was $26 billion; the greatest percentage linked to tourism. The sharing economy has since then had significant impacts on tourism with more than 491 initiatives (Puschmann & Alt 2016, 94). Therefore, even though the sharing economy is productive through encouraging innovativeness and fast growth, it also presents challenges in the tourism sector primarily in regulations, safety issues and interruption of established economies among others (Brouder 2014, 5). Concerning Stigler’s theory of economic regulation, this paper explores the opportunities and challenges that the sharing economy creates for tourists, traditional tourism suppliers, destinations, and local communities while providing recommendations on what social-cultural and institutional transformations, as well as legislative changes that would be necessary. According to Stigler, the central advantage that the state controls is the power to compel, and because most people are self-interested, anyone that can influence how this power is used can benefit (Nunkoo & Ramkissoon 2016, 557). The sharing economy has provided several opportunities as it has managed to control how states utilize the power to coerce. The program has started numerous new organizations that evidently have been able to discern disgruntled consumer requirements and allowed the utilization and validation of available private resources. Various states for the longest time, seek several means to enhance growth in the tourism sector, and the fact that sharing economy offers the fulfillment of this need, quickly allows the administration to support it. As a result, the stakeholders benefit in various ways. For instance, local communities can have employment (Law, Buhalis & Cobanoglu 2014, 735). Unemployment is a main economic issue in most countries. The sharing economy through participant organizations in the tourism industry like Uber has provided a source of income for the local people. Additionally, the locals can work as tour guides and hotel attendants among other positions available through the platforms (Dredge & Gyimothy 2015, 289). Therefore, the sharing economy is significant in creating more employment opportunities that add economic benefits to countries at large. The sharing economy provides an efficient way to increase the value to an individual’s property especially those that provide homes for tourists to stay in during their vacations. Therefore, many people have been able to earn from renting out their homes to tourists through the platform owners. Similar benefits extend to hotels, as individuals can quickly make a reservation through various online sites. Therefore, the sharing economy has made it easier for property owners to acquire customers traveling to different destinations. Transport companies such as Uber also benefit from the business as they carry tourists to various destinations. In the long run, the system creates opportunities for growth of the tourism industry. The development is mainly due to more advertising and easier processes in reaching the destinations. The increase in tourism also leads to the development of local communities especially through infrastructure to facilitate transport and stay of tourists in the regions (Cheng 2016, 66). However, what seems to be an efficient and cheap manner to promote tourism, create employment, and foster community developments pose various challenges to the stakeholders. The sharing economy may have numerous problems for the current traditional suppliers in the sector in different areas. There would be unfair competition due to imbalanced tax and control programs that may let the platforms to stand out among others in a particular region impeding quality services and employment. The existence of fair competition offers different organizations the chance to improve their products and services to sustain their presence in the industry. Based on Stigler’s theory of economic regulations, the state should utilize its power to coerce to ensure appropriate controls that support economic growth (Brouder 2014, 6). However, in a case where there is unfair competition in the tourism sector, the players will not have the chance to enhance the services offered, and in the long run, it will be of poor quality. Additionally, the traditional tourist suppliers would have to lay off their employees due to lack of consumers and finances resulting in unemployment, a major economic hardship (Law, Buhalis, & Cobanoglu 2014, 292). The safety of the sharing economy systems is also a matter of concern. For instance, the business that may look like an effective way to add value to one’s assets may turn out to be a way for platform owners to use them for their benefit. As Stigler’s theory explains, those, who can regulate how the state utilizes their power to impel have an advantage. The platform owners, by understanding the regulations and contracts that bind with the property owners may use it to make more money. The providers get an unstable amount of cash caused by an intensifying competition and declining financial and industrial dominance. As a result, there may be no funds put aside for maintenance and improvement. The tourists are also subject to safety and security issues. Traditional tourist suppliers unlike the sharing economy platforms, have to adhere to certain policies to ensure reliability. However, with platform owners, it is hard to establish who is accountable in case of any issues. Airbnb, for instance, provides safety suggestions for registered properties even though they do not assess them as evidenced by the situation in 2013 where a woman passed on due to carbon monoxide poisoning in their housing. Uber also experiences liability disputes with various local authorities in Australia and the USA among other nations. The organizations may extend feedback and rating programs that enable the tourists to tell their encounters, however, the challenge still arises on whether the evaluations are sufficient to build trust (Nunkoo & Ramkissoon 2016, 557). The fundamental notion of a completely free sharing economy brings about significant challenges due to lack of regulations. The need for some control has become evident through issues with inequality, safety, accountability, and excellence. Some rules will be necessary to enhance fair competition and security in the sharing economy in tourism. The taxation process, especially, is significant in ensuring reasonable competition among different players in the industry. Traditional tourism suppliers are subject to higher tax rates unlike the case for platform owners. As a result, platform owners are at a better chance to earn more profits than the local tourism companies, thus unfair competition (Dredge & Gyimothy 2015, 295). Therefore, based on the opportunities and challenges that the sharing economy presents in tourism, there are various sociocultural, institutional, and legislative transformations to ensure stakeholders benefit from the program. Commercial actions in the sharing economy distort differentiations between personal and professional. For instance, most Airbnb property owners are not expert hoteliers. Placing a controlling system to these industries may generate an entry obstacle. Lack of regulatory systems can cause job-sharing resource thus creating a self-regulatory resolution. Hence, before instituting government involvement, self-regulatory strategies should be initiated in sharing economy businesses. Self-regulation is not a depiction of an absence of control; instead, it is a restructuring of administration to stakeholders. Responsiveness and tractability create worth to the peer to peer establishments’ consumers. In such situations, the customer-retailer connection is smooth and to some extent redefined. Hence, self-regulatory methods should urge a system where delivery of quality service is continuous (Cheng 2016, 75). Additionally educating consumers on the probabilities and quality of peer to peer dealings can be a significant factor in regulation. Additionally, sharing economy organizations should in an ideal world be inclined to give out their business information to the government to build trust between the organization and administrative bodies in the tourism industry. There is a clear need for more transparency in the industry. The massive amount of user information that the companies have could bring about a lot of challenges; these data should be confidential. Ratings and feedback alone are not sufficient to give information on the reliability of different platforms. Therefore, there is a need to establish analytic techniques. Furthermore, the owners should be able to guarantee consumer safety and take responsibility in case of any issues; this is especially because the tourism industry has various foreign customers that may not understand the local systems in the event of an emergency (Law, Buhalis & Cobanoglu 2014, 732). Hence, the biggest difficulty would be in reducing the societal challenges that the sharing economy in tourism brings about, for instance, weak competition and ensuring a balance between the traditional and sharing tactics. Modern day legislation has its foundations in the ownership-based economy and could easily restructure to regulate the sharing economy. There is also need for the organization between various levels of government to put in place harmonized policies that promote tourism and enhance healthy competition in the sector. Self-regulatory in combination with anticipatory governance would be suitable in ironing out the challenges of the sharing economy in tourism (Puschmann & Alt 2016, 97). Therefore, the distinctiveness of the sharing economy models several opportunities as well as challenges for stakeholders in the tourism industry. The sector offers employment opportunities for the local people and growth of the tourism industry. It also allows for innovativeness and reduces costs in the business. As a result, more foreign and domestic tourists get to know about tourists destinations and can easily access the places they would prefer to visit. However, the approach also leads to challenges such as safety and regulatory matters. Several platform owners are not accountable for any issues that arise thus putting the consumers in danger. Traditional tourism suppliers face unfair competition due to the different rates of taxation for the two types of businesses; the sharing economy is subject to lesser tax (Brouder 2014, 6). Due to the unfair competition, there are lowered chances of comparing and enhancing quality service delivery. The essential goal of controlling such sectors is to inspire competition that will ultimately encourage innovation, reduced prices, and quality products and services. Self-regulatory together with anticipatory governance would facilitate better regulation of the sector, just as Stigler emphasizes, the power to coerce is essential in the shaping of any economy. References Brouder, P., 2014. Evolutionary economic geography: a new path for tourism studies? Tourism Geographies, 16(1), pp.2-7. Cheng, M., 2016. Sharing economy: A review and agenda for future research. International Journal of Hospitality Management, 57, pp.60-70. Dredge, D. and Gyimóthy, S., 2015. The collaborative economy and tourism: Critical perspectives, questionable claims and silenced voices. Tourism Recreation Research, 40(3), pp.286-302. Law, R., Buhalis, D. and Cobanoglu, C., 2014. Progress on information and communication technologies in hospitality and tourism. International Journal of Contemporary Hospitality Management, 26(5), pp.727-750. Nunkoo, R. and Ramkissoon, H., 2016. Stakeholders’ views of enclave tourism: A grounded theory approach. Journal of Hospitality & Tourism Research, 40(5), pp.557-558. Puschmann, T. and Alt, R., 2016. Sharing Economy. Business & Information Systems Engineering, 58(1), pp.93-99. Read More