The Sharing Economy is Here to Stay
December 6, 2019
- Author: Jim Harris Contributing Author
which has six million listings in 190 countries and 81,000 cities. By contrast, Marriott operates 7,000 properties
with one million rooms in 130 countries. Airbnb has grown six times larger than Marriott in one tenth the time.
November/December 2019
More articles in this issue:
If you're a fan of Uber or Airbnb, we got some good news for you. Its here to stay. It’s cheaper, more convenient and a better experience. Take a look at Airbnb, which has six million listings in 190 countries and 81,000 cities. By contrast, Marriott operates 7,000 properties with one million rooms in 130 countries. Airbnb has grown six times larger than Marriott in one tenth the time.
In September 2019, Marriott was valued at $41.5 billion while Airbnb, which is still private, was valued at $38 billion based on 2019 private stock transactions.
Unique Experiences
Airbnb is increasingly overlaying experiences on top of property listings. For example, when you rent the stone farmhouse on Airbnb from Chef Hebert in Provence, France, you can also choose experiences to go with it. Chef Hebert will take you to visit the kitchens of his Michelin-rated friends and you can sit at a chef’s table in the kitchen to enjoy your meal.
Sharing Construction Equipment
Kevin Forestell used to own a construction company. He was on a beach holiday in Florida staying in a $3 million Airbnb home paying $500 a night. He thought, “This is crazy. I have access to this multi-million-dollar asset for a few hundred dollars a night. And it has far more value that staying at a hotel.”
Then he thought, “I have million-dollar pieces of heavy construction equipment. I need them in case I win a bid for a job, but most of the time they’re idle. Why don’t I create an Airbnb of heavy construction equipment?”
So, he did. It’s called DOZR — like bulldozer — and it’s so successful that he sold his construction company. He now has $300 million of construction equipment for rental and thousands of contractor customers.
A benefit of the sharing economy is that it allows owners to get value from underutilized assets. And for those who rent from Airbnb or DOZR it allows them to get access to expensive assets at a tiny fraction of the capital cost of ownership.
No More Traveling Alone
ARK Invest predicts the explosion of the autonomous vehicle market in 2021. The cost of vehicle ownership has remained consistent from 1934 to 2016 at about 70 cents per mile. With the emergence of autonomous fleets of vehicles — whether it’s Uber, Lyft, Tesla or Waymo — the cost per mile drops to 26 cents a mile, about three times cheaper than car ownership and 10 times cheaper than a taxi. At that point, demand for car ownership likely will collapse. What will replace car ownership is Mobility as a Service (MaaS).
The chart on Uber and Lyft shows how profoundly the sharing economy is impacting industries. It also shows reimbursed corporate expenses so it’s easier to see the impact Lyft and Uber have had on cab companies and car rental firms.
If something is easier, cheaper, faster, more convenient and offers superior value, don’t be surprised if consumers shift to it. And the shift can be quite rapid.
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