Impact of House Sharing Economy
Word Count: 798 words
Impact of House Sharing Economy
The UK hospitality industry has recorded impressive growth for a couple of years. It has however faced serious disruptions from the concept of a home sharing economy which is synonymous with Airbnb. This model involves the interaction of people through social media and one party agreeing to host the other for a small fee. Such arrangements have seriously dented the profitability of numerous hotels because of lower rates of bookings. It is apparent that a large section of the population has shifted from the traditional preference of hotels and adoptedthis new trend. The house sharing economy has lowered financial prospects of traditional hospitality entities in the United Kingdom.
Studies indicate that the house sharing concept is facilitated by social media photographs and profiles which help in creating a certain level of trust unnoticeable in the hospitality chains across the country. Hotels pride themselves in offering comfort and luxury but this new trend surpasses them in creating a bond between the parties (Boland, 2017). As such, many people have abandoned making hotel bookings which is a financial drain for the various establishments. The UK hospitality industry is grappling with ways of attracting different demographics as a way of compensating for the low number of guests. The huge influx of people on the home sharing platforms has negatively affected their bottom lines.
Residential properties in different parts of the UK, especially in London have experienced a higher rental valuation and house prices. The large appeal for home sharing amongst the populace has significantly reduced the number of houses available for letting. This has ensured that such houses fetch higher prices. In fact, this outcome has increased the value of different properties in such jurisdictions. Hotels located in such areas have to contend with higher property prices. This annual payment has become costly to the hotels but home sharing platforms such as Airbnb are not subjected to these charges. As such, the operational expenditure of most traditional hospitality outlets has become a liability which forces a restructuring of the companies.
The home sharing economy in the UK has skewed enforcement of certain laws for the benefit of its members at the expense of hotel chains. For instance, the latter are regularly subjected to intense safety and health standards. Such provisions are worth millions of pounds in the fittings, signage and fixtures. Home sharing platforms such as Airbnb are not subjected to such rigorous standards and only depend on the will of the host to have a clean and safe home. Hotels therefore spend more money on the cleanliness and safety of their premises than individuals on home sharing groups do. This negatively impacts their profitability and reduces the return on investments for different stakeholders.
This phenomenon has heightened evasion of tax by a majority of the population. The home sharing concept is predicated on hosting strangers in one’s house. The charges for accommodation are agreed in advance and are negotiable (Mathews, 2016). In effect, these mutual arrangements are business deals which indicate the alteration of terms of residency in these homes. Under such circumstances, the homes have been turned into businesses. These entities do not pay tax or acquire insurance as traditional hotel chains do. In fact, the latter are forced to make such payments even with the current low rate of client bookings. It is therefore clear that the home sharing economy has an edge over the members of the hospitality industry in the UK.
Landlords have also circumvented the existing regulations by converting long-term lets into short-term holiday stays. They are motivated by the prospects of attracting a higher number of tourists who prefer the home sharing concept. A careful analysis of this trend reveals that such landlords use this route as an escape from their tax obligations. They are able to save more money for their personal use. It is however a tall order for hotel chains across the UK who have to fulfill their contractual obligations by making such payments to the government. The hospitality industry is therefore starved of cash while the home sharing economy is awash with money.
The latter heavily relies on information about the locality from the local community.This provides prospective customers with a glimpse of their destination and helps in the decision-making process (Baum, 2012). The trend has disrupted the traditional hospitality concept which only relies on the hotel’s management and repeat guests for information regarding the establishment. The exodus from such hotels into the home sharing platforms has increased financial suffering of the former leading to the realization of lower profits in the UK. It is therefore clear that the new concept has shaken the hospitality industry in the country and stalled its growth by attracting more people to its platforms. The trend has also significantly reduced its profitability.
Baum, T. (2012). Migrant workers in the International Hotel Industry. Geneva: ILO.
Boland, H. (2017, October 4). Airbnb Looks to Grab Bigger Slice of Business Trip Market. Telegraph. Retrieved from
Mathews, D. (2016). House Sharing is shaking up the UK Hotel Sector. Raconteur.
Retrieved from https://www.raconteur.net/business/house-sharing-is-shaking-up-uk-hotel-sector .
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