Trust in the sharing economy
Industry panel takes deep-dive look at emerging travel trends
Pictured above: from l to r, are Scott Allison, Destination Canada; Emily Rayson, CanadaStays; Gino Riola, Allianz Global Assistance; Jason Merrithew, Merit Travel; and Sunil Johal, Mowat Centre, School of Public Policy & Governance, University of Toronto.
Top industry executives were on hand in Toronto last week for a panel discussion on some of the key trends that will be shaping the travel marketplace both in Canada and globally for some time to come.
Entitled “21st Century Travel in a Sharing Economy,” the roundtable session was hosted by Allianz Global Assistance and featured a panel that included Scott Allison, vice chair of the board of directors of Destination Canada; Jason Merrithew, president of Merit Travel; Emily Rayson, COO of CanadaStays; Sunil Johal, policy director of the Mowat Centre, School of Public Policy & Governance at the University of Toronto; and Gino Riola, vice president, sales and marketing for Allianz Global Assistance.
What became clear pretty quickly was that in any discussion of the sharing economy, the behaviour of the Millennial traveller would have a big influence on how things play out.
Explaining that the sharing economy has been enabled by technology and has scaled up incredibly quickly, Sunil Johal of the Mowat Centre observed: “If you look at the statistics for AirBnB, for example, in the summer of 2010, less than 50,000 people stayed at an AirBnB. Five years later – in 2015 – it was 17 million. That’s a 350-fold increase in a five-year span.”
That growth, Johal continued: “has largely been driven at the Millennial level. Young people are much more comfortable with the technology of these types of platforms that they’re using. They’re very familiar with going online and booking anything they want.”
And he emphasized that no matter which platform they’re using, “they want a unique experience.”
“A lot of the focus here is often on AirBnB and Uber,” Johal said, “but there are lots of sharing platforms out there, and most of these platforms have this trust-based mechanism where you’re rating your experience and everyone subsequently can see what the experiences of others using that platform were. That really engenders trust, and I think what you’re seeing is the trust that’s engendered online is letting people who wouldn’t have traditionally tried something like this, experiment with it.”
“Right now, Millennials represent about 20% of the travel [market],” Destination Canada’s Allison said. “It’s the fastest-growing part of the [market], which kind of makes sense. Baby Boomers have kind of plateaued… but the Millennial generation is spending in the neighbourhood of $1,500 per trip which is not insignificant and increasingly they are looking at the sharing economy.”
Allison also pointed out: “About 3% of Millennials were booking with AirBnB about three or four years ago, and now it’s a much more significant number – particularly older Millennials. So, I think that trend is part of this enormous growth in travel, and the sharing economy is taking full advantage of it.”
And, while the travel business is booming right now, Allison was quick to point out that travel is “one of the most cyclical of industries,” leading him to wonder: “What happens when the economy turns?”
Allianz Global Assistance’s Gino Riola said that as an insurance company that’s “passionate about travel, we’re always looking at the trends and changing demographics in travel.”
Riola said: “We come from the side of protection, of course, and looking at the policies that we have it [they do] does cover the changes in travel patterns for as long as it’s a commercial accommodation, but that really is the extent of what we have in terms of coverage. What we are looking to see and observe are the trends and any changes in the industry that might lead to an alteration of the policy or the coverage.”
Price is always an issue when talking about travel, but as Emily Rayson of CanadaStay sees it, for the Millennial generation, “[price] doesn’t seem to be an issue because there’s inventory on all sides of the [price] spectrum. So, on the price side, they’re [Millennials] looking for dynamic pricing, that’s one thing that [CanadaStays is] being asked for. They’re looking for instant book properties – properties that don’t require any vetting – that’s a huge draw for them. It’s more where do I want to go and how am I going to get there.”
Merit Travel’s Merrithew agreed that price “isn’t an issue at all,” before explaining that as a travel distributor, Merit focuses on providing high-touch travel services, and “our role is to connect travellers with unique experiences and Millennials are a big part of our clientele because when you look at what Millennials value, they value experiences. They also value their own time, their own bandwidth and recognize what they don’t know, and, as a result, go to people [agents] who do know these things, who are experts.”
A key focus of discussion was the question of the challenge of rewarding innovation versus the regulation and barriers to entry that are part of the legacy industry and whether a middle ground can be found.
Johal observed: “The answer is that you’ve got old rules for a lot of the legacy operators and you’ve got no rules for a lot of the sharing economy firms. That’s not a good situation because you’ve got a very unbalanced playing field.”
He continued: “The best approach is to develop new rules for everybody. I think governments and policy makers need to look at how do you level the playing field. Take away archaic rules that don’t make sense, but put in the basic rules around health and safety that everybody expects governments to make sure are in place.”
Merrithew said that his company is “advocating on behalf of our clients, and today, where there are no regulations, it means our consultants have to look at the sharing economy and say I don’t know if we’re comfortable recommending or facilitating bookings on behalf of our clients to a body that is not regulated or not regulated effectively or doesn’t play by the same rules that others do. That’s why we stay away from it.”
He said that: “What I’d like to see is rules for everybody, but I don’t think that’s realistic because I don’t think you’re going to see a single home owner that’s renting out a single bedroom submitting to home inspections.”
However, Rayson said Millennials “don’t like rules.”
“So, how do you get a Millennial not to be impacted by legislation and how do you not stop what seems to be working for a lot of people. That’s my concern. It seems to be working for people providing the sharing and it seems to be working for a generation that wants the sharing. So it is two systems and it’s almost like two paths have to be created. The balance is going to be really tricky.”
Riola observed: “I don’t think it’s ever our responsibility to regulate or to insist on rules. The way we look at it, our responsibility is to ensure that the clients understand what they’re purchasing… and that the travelling public are aware of what they’re covered for and what they need to be mindful of when they’re travelling.”
The bottomline in all this, as Destination Canada’s Allison sees it, is that “the sharing economy is going to be there.”
Said Allison: “I think our industry – and I’m talking broadly – has to be very innovative and find ways to attract that Millennial traveller. We haven’t seen the end of the sharing economy – or the trusting economy – but I think for the hotel industry, the airline industry, the only way they can respond is to be smarter and quicker. Because again, we’ve got to make it easier.”