What’s really driving the growth of the sharing economy?

By Alex Dichter and Nathan Seitzman, McKinsey & Company

The sharing economy is challenging to define. The impact on incumbents is difficult to measure. But most importantly, the customer needs driving the success of the sharing economy are relatively unexplored.

Companies across numerous industries, including travel and tourism, are constantly seeking to better understand and respond to the growth of the sharing economy. Some responses are designed to directly capitalise on this growth while others are more defensive in nature. AccorHotels is a helpful example of this spectrum, with strategies ranging from acquisition (of high-end rental provider onefinestay) to new concept development (of the Jo&Joe brand that includes collaborative kitchens and other community elements).

Our clients from across the travel industry often ask: How can we most effectively respond? We believe there is a better place to start, whether the potential disruption in your sector is present today (e.g., lodging, ground transportation) or an unclear prospect (e.g., air, cruise): What deeper, unmet customer needs are really driving the growth of the sharing economy?

The traditional perspective is that this not-so-new sharing trend (see: Craigslist, Wikipedia, etc.) is rapidly expanding and disrupting industries due to:

· Under-utilised assets and labour

· Aggressive technology adoption

· Pushing the regulatory and legal envelope

If these were the only or primary drivers, then sharing success would be difficult for incumbents to learn from and respond to: the narrow path would likely focus on acquiring successful players or legal challenges and other largely defensive measures.

But a closer look suggests several deeper unmet customer needs that sharing economy leaders have identified and built their businesses around solving, including:

· Desire for authenticity, active discovery and being connected

· Distrust of many large institutions and brands

· Expectation of transparency and flexibility

· Appreciation for feedback loops

· Eagerness for simplified interactions and payments,

Understanding and identifying these needs among your own customers opens an alternative path: addressing these customer needs in your core business. This is easy to write and harder to execute because the exact response must build on your existing sources of strength (e.g., brand positioning, operational excellence, loyalty programmes, and customer data). As a starting point consider the following strategies and illustrative examples:

Strategy

Developing streamlined digital experiences across platforms that allow customers to quickly navigate and act

Enabling digitally-integrated customer journeys to improve transparency into processes like flight status and service requests

Introducing instantaneous, single-click peer/customer feedback with proactive customer service to improve agent accountability

Creating personalised service through more opportunities to connect people, like recommendations from local staff

Designing authentic, non-commoditised experiences, like differentiated cabin or room designs with stories and background

Drastically simplifying payments (and expanding the range of payment options) while providing full transparency into costs and fees

Sharing economy example

Indonesia’s Go-Jek provides a single platform for ordering transportation, food, and personal services like cleaning and hair styling

Food delivery services like PostMates and DoorDash offer real-time order and driver tracking

Transportation apps like Uber and Lyft provide single-click driver and rider rating systems

Airbnb is expanding into peer-to-peer tours, activities and location guides

onefinestay’s expanding portfolio of vacation rental properties focuses on distinctive homes in major cities like London, New York and Paris

Small air carriers like Rise and Surf Air operate subscription-based models that give customers the option for streamlined, all-in payments

Incumbent example

Virgin America’s mobile app shifts from emphasising booking to focusing on check-in beginning 24 hours before a scheduled flight

Numerous brands including Booking.com, Expedia, Hyatt and KLM have introduced messaging platforms and bots at various stages of the customer journey

Marriott’s “M Live” social media team engages in real-time conversations to deepen personal relationships with guests

Delta uses a handheld “guest service tool” to help flight attendants identify key information like frequent-flier status and tight connection times and connect with travellers

AccorHotels has begun distributing independent hotels through AccorHotels.com and plans to reach thousands of properties over time

Carnival’s Ocean Medallion device can be worn as a wristband or necklace and enables simple onboard payments, among other uses

While some of these initiatives may already be on your roadmap (and other actions like M&A or building sharing capabilities may still be part of the solution), their potential to form the foundation of your sharing economy response makes them worthy of re-evaluation and prioritisation. Given the strong future outlook of sharing businesses, the best (and maybe the only) long-term approach for incumbents is to truly address these underlying customer needs.

Alex Dichter is a senior partner based in the London office and leads McKinsey’s Air & Travel practice. Nathan Seitzman is an associate partner in the Dallas office.

This article was contributed by a WTTC Industry Partner and published in March 2017 as part of the annual update to the Economic Impact Research from WTTC. The full report can be found here.

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