I. Introduction
Over the past several years, the term “sharing economy” has fully entered the lexicon, where it is now mostly associated with companies like Airbnb and Uber. The ongoing expansion of the sharing economy—or what some refer to as the “so-called sharing economy”—has received a lot of critical attention (John, 2016). A new economic paradigm that placed more emphasis on sharing resources than ownership was created by the shared economy. It gave services with new possibilities for individuals to buy, use, and reuse items of daily use as well as other properties and belongings, and it revolutionized the way people think. The phrase “shared economy” was used at the time to describe this phenomenon. Through this recent development, the economy switched from ownership to sharing (Polisetty & Kurian, 2021). According to economic theory, the sharing economy increases economic efficiency by lowering the frictions that lead to underutilization of capacity, and the rapid expansion of sharing platforms (such as Airbnb for home-sharing) attests to the underlying demand for such marketplaces (Barron et al., 2020).
The phrase “sharing economy” has gained popularity recently and is frequently used to refer to global leaders in the sector like Airbnb and Uber. In this essay, we examine the advantages and disadvantages of the sharing economy, using Airbnb as a key case study. This phenomenon has provoked heated arguments and discussions.
II. The Pros of Shared Economy with Airbnb
A. Economic Benefits
Airbnb has developed into a potent tool for hosts to make money, providing extra income, business prospects, and the ability to support the local economy.This sharing economy model enables many people achieve economic benefits and significantly improve their income because it not only offers financial advantages but also promotes cultural interchange and revenue diversification. More than half of Airbnb hosts said they couldn’t stay in their homes without the financial benefits of the sharing economy, according to research gathered by Airbnb (iGMS, 2018).
This graph demonstrates how concentrated the potential advantages of Airbnb’s inception and growth are for property owners.
Visitors have the opportunity to reduce their lodging expenses by using Airbnb’s shared economy platform, which also meets a range of financial needs.
By providing inexpensive listings, flexible pricing options, the ability to split costs among groups, discounts for extended stays, and access to kitchens for self-catering, Airbnb enhances the affordability and customization of travel experiences, making it a popular choice for tourists on a tight budget and seeking the best deal.
Therefore, Airbnb has transformed not just how hosts make money, but also how countless people may support their homes and improve their financial security by participating in the sharing economy. In addition, it has given travelers a variety of cost-saving options, helping to democratize travel and accommodate different financial tastes.
B. Resource Utilization
The shared economy is impacted by Airbnb in a way that makes the best use of vacant premises. The latent potential of underused areas is unlocked by Airbnb, which permits hosts to offer spare rooms, vacation houses, or temporarily vacant residences. This essentially transforms these underutilized spaces into assets that can generate cash. In a world where space is frequently at a premium, this not only helps hosts financially but also maximizes the use of already-existing infrastructure, promoting resource efficiency and sustainable urban growth.
In the past, Airbnb introduced the Office of Healthy Tourism, a program dedicated to promoting authentic, sustainable tourism in various countries and cities across the globe.
Airbnb’s shared economy model also champions environmental benefits by encouraging eco-conscious travel practices and mitigating the typical environmental impact associated with traditional hotels. An impressive 88% of Airbnb hosts worldwide have integrated eco-friendly initiatives into their hosting endeavors, encompassing practices such as the use of environmentally safe cleaning products, support for recycling and composting, promotion of public transportation, provision of bicycles, and even the adoption of solar panels. Airbnb has expanded its offerings of sustainable travel experiences for guests, including activities like kayaking with penguins in Cape Town, exploring urban farms in Sydney, embarking on dolphin-watching adventures off the coast of Maui, and immersing in the lush forests surrounding Havana, among other environmentally responsible options. (Airbnb, 2018).
III. The Cons of Shared Economy with Airbnb
A. Safety and Trust Concerns
Like many other sites in the sharing economy, Airbnb has experienced problems with trust and safety. These worries center on matters like confirming the legitimacy of hosts and visitors, making sure that property ads are accurate, and dealing with incidences of property damage, theft, or safety violations. Users frequently worry about the possibility of fraudulent listings and the security of their personal information. In order to allay these worries, Airbnb has put in place procedures including host and guest identification verification, user reviews, and customer support channels.
James (2018) has mentioned that only 80% of houses reported having a smoke detector, according to the study. However, just 58% of respondents said they had a carbon monoxide detector, 42% a fire extinguisher, and 36% a first aid kit. Since there was no way to confirm that each advertisement truly featured the amenities it claimed to offer or that they were in excellent working order, the authors speculate that the true numbers may be considerably lower.
B. Impact on Traditional Industries
The growth of Airbnb in recent years has completely changed how people travel and find lodging. The traditional hotel sector has been significantly impacted by this revolutionary platform, which offers hoteliers throughout the world both opportunities and challenges (Margaretha, 2023). It has changed how people find and book lodging by enabling individuals to rent out their residences to tourists. This change has put the traditional hotel sector’s supremacy under pressure, forcing it to reevaluate its pricing policies, services, and clientele to remain competitive. Additionally, Airbnb’s business model has promoted a sharing economy mentality that transcends the housing industry and influences other industries as well, such as dining and transportation, further altering consumer expectations and behavior.
The traditional hotel industry has been disrupted by Airbnb’s recent spectacular development, which has fundamentally altered how people travel and locate lodging. For the reason to remain competitive, it has forced hotels to reevaluate their price, offerings, and clientele. Additionally, Airbnb has an impact across businesses and shifts consumer expectations by promoting a sharing economy ethos. This change shows the sharing economy’s broad effects on our contemporary world.
IV. Conclusion
In conclusion, Airbnb’s explosive development has changed the travel and housing industry, bringing with it both opportunities and difficulties. Although it encourages resource efficiency and gives hosts greater economic power, safety issues are raised. Additionally, it upends the conventional hotel sector and affects consumer expectations in a variety of industries. This exemplifies the sharing economy’s significant influence on our contemporary environment.
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