Abacus: Sharing Economy Makes Business Travel A Breeze
When traveling to meet a potential employer, new client or to simply network, finding accommodations can be a bit nerve-wracking for those unfamiliar with their destinations. Before the dot-com boom and the introduction of the sharing economy, many consumers traveling for business only had standard methods available to them that were quite ordinary in nature. Nowadays, new platforms enable users to find more convenient listings that are not only unique, but are also more affordable and accessible.
While not universal to every industry, some employers do cover for your travel expenses. In jobs where traveling for conferences or to meet clients is necessary, your employer may have its own travel agent who will set up your accommodations for you. For purchases of food or local transportation, you can invoice your employer these expenses to receive reimbursement. Some employers who are actively recruiting to fill important positions might even cover all expenses on airfare, gas, lodging and other travel costs for their interviewees.
However, not all employees receive such benefits for their business trips and must cover most if not all their own expenses. The Tax Cut and Jobs Act further complicates this for employees as it removed itemized deductions which included expenses related to work and job search, along with other unreimbursed business travel expenses. The removal of these deductions was part of the new tax law’s effort to simplify tax filing. Thankfully, online travel platforms can ease the worries of employees and jobseekers alike when it comes to finding their own accommodations.
Formerly known as The Priceline Group, Booking Holdings is one of the world’s leading online travel agencies. They utilize “fare-aggregate” metasearch engines in all their subsidiaries, including Priceline and KAYAK, to help customers find accommodation and transportation. The company has made large efforts in the past couple of years to expand its reach through multiple online engines, finding increasing success in their revenue from its international operations. Expedia Group is a large contender in online travel bookings similar to Booking Holdings in acquiring travel metasearch engine platforms like Trivago, Travelocity and Orbitz. By providing a service that compares multiple prices for booking hotels, airlines, car rental and other travel packages, it’s unsurprising that these online travel agencies have generated much consumer interest.
Source: Bureau of Labor Statistics
According to data from the Bureau of Labor Statistics (BLS), there was a sharp increase in the Producer Price Index (PPI) for the travel agency industry in the late 90’s when these companies were founded, an increase that brought the index level up to a range between 148 and 168 points from an index level of around 100 points. Flight bookings were not included in the graph to give a more accurate depiction of the travel industry’s overall trend in PPI due to fluctuating prices in airline fares year-round. Yet, with the centralization of travel bookings in the favor of online travel agencies, there has been a steady fall in employment in this industry as less positions are needed to manage online services – contrasting with traditional travel agencies where in-person transactions were the norm.
Source: Bureau of Labor Statistics
However, this doesn’t imply that the more traditional travel agencies are obsolete. Current travel agencies, such as the more affordable Andrew Harper and Indagare, also use websites for information along with skills obtained from their trade to plan and organize itineraries to suit their clients complex schedule and assure them a great experience. Because of the far reach of technology and communications, these new travel agencies can provide more services to their clients at a speed unlike that of travel agencies before the dot-com era. They can also plan activities nearby, give you recommendations for food and leisure, and can be reached immediately for any sudden changes related to your accommodations. While some of these technologically-advanced travel agencies charge initiation fees or have subscriptions, others receive compensation as part of your booking payments.
Nevertheless, hotels have still suffered a decrease in their flow of payments as occupancy rates have gone down. According to HomeAway.com 2010 traveler survey, 10 percent rented vacation homes for their business trips with another 42 percent saying they would at least consider that kind of rental for business trips. In her statement to CNN, Corporate Housing Providers Association Membership and Marketing Director Amanda Cook reasons this could be due to home rentals typically having convenient amenities that make a business trip more comfortable.
The developing sharing economy has made headway in both travel and lodging industries by allowing users to deal directly with providers of these industry services at more affordable rates. For those unknown to this unique area of the economy, the sharing economy uses a peer-to-peer economic model to give access to goods and services through a community-led platform for exchange either through a website or mobile app. Companies similar to the famous AirBnB provide a platform that specifically uses a peer-to-peer process, where the seller has both the means of production and ownership of the product, and is in direct contact with the buyer.
Founded in August 2008 in San Francisco, AirBnB provides hospitality and property rental services worldwide. Its model is primarily peer-to-peer and is regarded the leader in alternative accommodation services. It’s noteworthy to mention the consistent decrease in the unemployment rate for the private sector of the leisure and hospitality industry that came right after AirBnB was founded during the end of the 2008 recession. It’s fair to say the online alternative rental platform had some contribution to this downward trend as the industry’s unemployment rate decreased minimally almost to the point of being stagnate in the time prior to the recession.
The company proves to show its continued growth by including hotel vacancies to its listings. Last month in San Francisco where their main headquarter lies, AirBnB announced they would include hotels and more luxurious listings at cost-friendly rates as well as their own loyalty program called Superguests that would give access to better discounts and free nights. The company is embarking in this endeavor to appeal to a larger pool of consumers, including business travelers.
Source: Bureau of Labor Statistics
But AirBnB isn’t alone in its peer-to-peer model selling point that employees and jobseekers enjoy utilizing. Uber, a transportation network company, was also founded in San Francisco in March 2009 – about a year after AirBnB launched. In June 2012, Lyft launched and became another San Francisco-based ridesharing service to compete with Uber. Like AirBnB, both companies use the peer model to provide its service of hiring drivers directly for transportation. Primarily used as mobile apps, Uber and Lyft give more accessibility to users seeking local transportation at a more affordable rate then they could get with traditional cab services, but with the same convenience as taxi cabs and more appeal to it than with public transportation. The business model these two ridesharing providers has attracted both sellers and buyers to cash-in on this alternative transportation industry, according to BLS data on expenses related to car transportation services that coincides with their years of operation.
AirBnB, Uber, and Lyft are innovations that have improved the process for business travel booking, from networking to job hunting. When combined with third-party booking platforms like Expedia and Bookings Holdings, these companies simplify the cost advantages of online travel booking against traditional travel agency services. However, the real advantage is that these platforms give the consumer ample information to make a well-informed choice on how they can book their next business trip.