The sharing economy has become a prominent part of society across the world. From the buying and selling of used goods, to renting out empty rooms to sharing a car journey, people have moved away from traditional elements of travel and tourism towards more innovative means that revolve around the concept of ‘sharing’.
What is the sharing economy?
Most people have heard of companies such as Airbnb and Uber, but fewer are familiar with the wider concept of the ‘sharing economy’ that they belong to. This article explains what the sharing economy is, key trends, examples of sharing economy companies in tourism, and the positive and negative impacts.
In its simplest form, the sharing economy is a socio-economic ecosystem that is built around the sharing of human, physical and intellectual resources. To accurately and truly define the sharing economy, however, is a debated and ambiguous task.
Also known as collaborative consumption or peer-to-peer-based sharing, the sharing economy is a concept that highlights the way in which people rent or borrow goods and services rather than buying or owning them. This notion of ‘sharing’ has disrupted many traditional commercial operations, such as taxi firms or hotel chains, as prospective consumers opt instead for a ‘shared’ transaction.
Whilst traditional tourism operators (and indeed those in other industries too) might miss out on business as a result of the growth of the sharing economy, this has opened the door for SMEs, independents and budding entrepreneurs, who can profit from sharing their services or assets.
According to thepeoplewhoshare.com, the sharing economy is a sustainable economic ecosystem, which is made up of 10 building blocks.
- People– people are at the heart of a sharing economy; they are also suppliers of goods and services; they are creators, collaborators, producers, co-producers, distributors and re-distributors.
- Production- People, organisations and communities produce or co-produce goods and services collaboratively or collectively or co-operatively.
- Value & Systems of Exchange– The sharing economy embraces alternative currencies, local currencies, timebanks, social investment and social capital. It is based on both material and non-material or social rewards and encourages the most efficient use of resources.
- Distribution– Resources are distributed and redistributed via a system that is both efficient and equitable on a local, regional, national and global scale.
- Planet– The sharing economy operates in synergy or harmony with the available natural resources, not at the expense of the planet.
- Power– The sharing economy empowers people economically and socially.
- Shared Law– in a sharing economy, the mechanism for law making is democratic, public and accessible.
- Communications- Information and knowledge is shared, open and accessible to all involved.
- Culture– The sharing economy promotes a WE based culture where the wider community and the greater good are considered.
- Future– The economic system based on the notion of sharing is built around a long term vision, always considering the impact and consequences of present day actions on the future by looking at the ‘big picture’.
As Tom Slee discusses in his book What’s Yours is Mine, the nature of ‘sharing’ has developed in parallel to the growth of the sharing economy. With many people realising the economic potential of their sharing behaviours, there has been a movement away from the philanthropic ideals of helping each other out to notions of self-interest and greed.
Sharing economy trends
The growth of the sharing economy can largely be attributed to the rise in Internet usage and applications.
In years past, people would have found and shared services and assets through classified ads, for example in a local newspaper, or by word of mouth. However, the advent of Web 2.0, mobile applications and m-payments, has facilitated the growth for a number of sharing economy platforms; making the possibility of sharing transactions easier than ever before.
Whether someone needs a babysitter while on holiday, a shared ride to the airport or second-hand clothes for a trip, the sharing economy has made these transactions easier than ever before.
Not only has the growth of the sharing economy been fuelled by the Internet, but a significant contributing factor is the change in societal views and behaviours. As pointed out in this Forbes article, it has become less trendy to own lots of stuff and more ‘cool’ to have experiences.
Many young adults have become disillusioned with consumerism. They are often more environmentally conscious and more aware of the impacts of their actions, and many prefer to see the tangible benefits of their spending, for example by booking a homestay or a private tour with a member of the local community.
Whilst the sharing economy isn’t really a new concept (people have always shared), it has developed in a way that has never been seen before. Thanks to technological advancements, big data and algorithm analytics, the size of the sharing economy has increased at an exponential rate. PwC once forecast that the sharing economy would generate revenues of around US$335 billion by 2025, as illustrated in the figure below from the World Economic Forum.
Whilst the growth of the sharing economy is evidence of changes in society, it is important to recognise that the sharing economy is also the causation of change, as Steven Miller explains in his TED talk.
Sharing economy Airbnb
One of the best-known examples of a sharing economy business is Airbnb. Founded in 2008 in San Francisco, Airbnb quickly became a global phenomenon and now lists millions of properties in more than 220 countries and regions.
Airbnb is an online marketplace that allows people to rent out their properties or spare rooms to guests. It earns money through service fees: under its split-fee model hosts typically pay around 3% and guests around 14% of the booking, while many professional hosts pay a single host-only fee of around 15%.
Accommodation-sharing platform Airbnb is often considered to be a sharing economy exemplar. The biggest company of its kind, it has gained a reputation on the one hand for helping middle-class residents gain and retain a foothold in expensive housing markets, whilst on the other hand for playing a key role in the gentrification of global cities. Airbnb has led the way in the development and growth of home sharing of this nature and there are now a number of companies offering similar services. It has also faced growing regulation: for example, New York City introduced strict registration rules in 2023 that effectively banned most short stays under 30 days, Barcelona plans to phase out all tourist apartment licences by 2028, and an EU regulation on short-term rental data applies from 2026.
For a more detailed explanation of what Airbnb is, along with the positive and negative impacts that it is associated with, take a look at this post- Airbnb explained: What is it, how does it work and is it safe?
Video: How does Airbnb work? The Airbnb business model
Sharing economy Uber
Founded in 2009 and launched in San Francisco in 2010, Uber has become the best-known alternative to the traditional taxi. It now operates in more than 10,000 cities across around 70 countries, and ‘getting an Uber’ is widely understood around the world.
The concept of Uber is simple. Passengers book ad-hoc journeys via their Smartphone app. The company relies on this smartphone technology to dispatch drivers and manage fees.
Uber drivers usually use their own vehicles. Licensing requirements vary by country and city – in London, for example, drivers must hold a private hire licence – but the model has made it easier for people to start earning as drivers, helping the company to grow. Uber has also faced legal challenges over drivers’ employment status, and in 2021 the UK Supreme Court ruled that Uber drivers are workers entitled to the minimum wage and holiday pay.
As with many aspects in the tourism industry these days, Uber relies on reviews to operate successfully. Passengers will review their driver and the driver will review the passengers. This contributes to the decision to book a journey or to pick up a passenger and helps to maintain high standards of professionalism throughout the business.
Other sharing economy companies in the tourism industry
Airbnb and Uber are the best-known examples of the sharing economy, however there are in fact many more companies which operate on the premise of sharing within the tourism industry. Below are some examples, although it is important to note that this list is not exhaustive and that new companies are starting up all the time.
Freelancing
If a business requires some ad-hoc work undertaken, they can easily find freelance workers in the sharing economy. For example, a hotel may wish to hire a website developer or a destination management organisation (DMO) may be in search of a content writer. Sites like TaskRabbit, Fiverr and Upwork are becoming very popular for this purpose.
Coworking
WeWork is an example of a company providing coworking spaces in cities around the world, although it went through bankruptcy restructuring in 2023-2024. Freelancers, entrepreneurs, remote workers and digital nomads can rent a desk or office without the cost of leasing an entire building.
Car sharing
Similarly to Uber, companies such as Lyft, Bolt and DiDi allow individual drivers to earn an income by driving people to their destinations, while BlaBlaCar matches drivers with passengers making long-distance journeys.
Zipcar allows people to rent cars by the hour or day.
Peer-to-peer platforms such as Turo allow people to rent out their own cars to others, while bike- and e-scooter-sharing schemes are now common in many cities.
Accommodation sharing
Accommodation sharing platforms, such as Airbnb, Vrbo (formerly HomeAway) and HomeExchange, connect owners with people who need a place to stay. Couchsurfing is another option, where hosts offer travellers a sofa or spare room free of charge.
Peer-to-Peer lending
Peer-to-peer lending platforms allow people to lend money to individuals or businesses, often at better rates than traditional banks. Several early platforms, such as Lending Club and Zopa, have since become banks, while platforms such as Funding Circle focus on lending to small businesses.
Fashion
Clothing rental platforms, such as By Rotation and Rent the Runway, allow people to borrow outfits for special occasions or trips.
There are also many websites and apps for buying and selling second-hand clothing, such as Vinted, Depop and thredUP.
Resource sharing
Apps such as Olio allow neighbours to share surplus food and household items, while community ‘libraries of things’ lend tools, kitchen appliances and equipment.
For those considering starting a business in the sharing economy, The Business of Sharing: Making it in the New Sharing Economy by Alex Stephany includes examples of sharing economy businesses and tips on operating in this competitive industry.
Positive impacts of the sharing economy
There are many positive impacts of the sharing economy. These advantages are evident throughout the tourism industry, but also in other areas of commerce too. There are four prominent advantages: goods and services are available at lower prices, income is provided for people who otherwise may be unemployed or have little money, it has opened up the market to a range of new and diverse opportunities and it has provided an enhanced sense of community.
1. Goods and services are available at lower prices
The sharing economy is built on the premise that the sharing of goods, services, and skills provides a more efficient and effective transaction. Prices are often lower than they otherwise would be (staying in an empty holiday let via Airbnb is likely to cost less than booking a private villa from a holiday company, for example).
Using something or someone only when you really need it means that you often won’t need to deal with the headaches or costs of ownership and employment, such as car insurance or maintenance.
Effectively, the sharing economy cuts out the middle man and provides a simpler transaction that typically costs less.
2. Income is provided for people who otherwise may be unemployed or have little money
The growth of the sharing economy has brought with it huge income potential for people who may not otherwise have many employment opportunities available to them.
It can also help people to bring in a little extra disposable income that they otherwise wouldn’t have. For example, a person might choose to use a car that would otherwise be sitting in the driveway or make use of a talent that wouldn’t be utilised in their day job.
The sharing economy can help those involved yield a little additional income or it can facilitate the development of an entire new occupation or business.
3. It has opened up the market to a range of new and diverse opportunities
The sharing economy has opened up the marketplace in two regards.
Firstly, it has provided the opportunity for new businesses to emerge and for people to more easily set up new organisations, sell new products and offer services that may have previously been unavailable.
Secondly, the sharing economy has provided access to a range of products and services that may not have previously been available to particular people. This includes people who live in remote areas or who have limited cash.
4. It has provided an enhanced sense of community
One of the biggest advantages of the sharing economy is the enhanced sense of community that it provides.
Many sharing economy platforms, including Uber and Airbnb, have built-in ratings and reviews that help keep providers and consumers honest. Coworking and freelancing marketplaces are built on the idea of interpersonal collaboration and the sharing of resources. Sharing encourages communication and collaboration.
Negative impacts of the sharing economy
Awareness of the negative impacts of the sharing economy has grown considerably in recent years.
Many travellers who use platforms such as Airbnb may not consider the wider implications of their accommodation choice for the society and economy of the destination, or the potential safety implications and lack of guarantees. These issues are explained below.
1. It causes economic disruption
Whilst staying in an Airbnb that is cheaper than a hotel room or booking an Uber for less than a taxi ride would cost is great for the consumer, it isn’t so great for the organisations that are missing out. In fact, there is a wider ‘butterfly effect’, whereby the overall economy is impacted by the growth of the sharing economy.
If you book a hotel room you will likely pay some kind of taxation (which varies by destination). The hotel will pay taxes. Those taxes will be collected by the government and reinvested in the community . The hotel employs a cleaner to clean your room and a chef to cook your breakfast. Both the hotel and the staff pay employment taxes. The staff spend the money they earn in the local store. And so it goes on…
The problem with the sharing economy is that the money that would be invested into the local economy is no longer there. Furthermore, the very presence of the sharing economy can cause further distortions to the local economy.
One particular complaint is that Airbnb invokes gentrification. When people begin to recognise that they can earn a nice little income from renting out their property to tourists, for example, they may buy additional properties in the area. The increase in demand for real estate then results in increases in prices. This then pushes people out of the area who can no longer afford to live there.
A study by Barron, Kung and Proserpio, published in Marketing Science in 2021, found that in the USA a 1% increase in Airbnb listings led to a 0.018% increase in rents and a 0.026% increase in house prices. While these effects appear small, they add up in neighbourhoods with high concentrations of listings, demonstrating the real-life impact that sharing economy companies can have on local communities.
2. Many people have privacy/safety concerns
Another issue is that of safety and privacy. Many people have voiced concerns or reported inappropriate activities when taking part in sharing economy activities. There are many horror stories on the Internet including people who have found hidden cameras in their bedrooms to Uber drivers who have sexually harassed their passengers.
Asher, a popular travel blogger, discusses some research that he did into horror stories from people who have had bad experiences with Airbnb… and he found 1021 examples!
3. There are no guarantees
Another problem with the sharing economy is that there are no guarantees (well usually, anyway). You may buy a Playstation from a second hand selling site but get home to find that it doesn’t work. The person that you hire from a freelancing website may not do the job as well as they had agreed to or your car share may not take you to your intended destination.
Consumers in the sharing economy have fewer rights than they do in the traditional marketplace and therefore, transactions here do carry with them a certain degree of risk.
4. It relies on cooperation
The sharing economy relies on the cooperation of all parties involved. Passengers should not leave litter in the car that they are taking a ride in, guests should respect the privacy of the owner’s living in the property that they are occupying and workers occupying a coworking space should be considerate of others and keep the noise down.
If everybody cooperates and is considerate of one another then the sharing economy is great, but unfortunately there are all too often some people who do not.
Conclusion: The sharing economy
The sharing economy has become a prominent and important part of the global economy. Based on the premise of ‘sharing’, the industry has expanded exponentially and now covers a range of sectors including transport, accommodation, coworking, freelancing, peer-to-peer lending and fashion.
Whilst there are many positive impacts of the sharing economy, such as lower prices for consumers and an enhanced sense of community, the sharing economy also has disadvantages. Gentrification and the disruption of local economies, safety concerns, a lack of guarantees and the reliance on mutual cooperation all pose problems for the successful operation of the sharing economy.
The sharing economy has huge potential, offering flexibility, choice and income opportunities. However, careful management and regulation are needed for it to operate fairly and sustainably.
The sharing economy: FAQs
Below are answers to some of the most common questions about the sharing economy.
What is the sharing economy?
The sharing economy is an economic system in which people rent, borrow or share goods, services, skills and spaces, usually through online platforms, rather than buying or owning them.
What are examples of the sharing economy in tourism?
Examples include Airbnb, Vrbo and Couchsurfing for accommodation, Uber, Lyft and BlaBlaCar for transport, and coworking spaces and freelance platforms.
What are the advantages of the sharing economy?
Advantages include lower prices for consumers, extra income for providers, new business opportunities and a greater sense of community.
What are the disadvantages of the sharing economy?
Disadvantages include disruption to traditional businesses, higher housing costs and gentrification, safety and privacy concerns, fewer consumer protections and lost tax revenue.
How is the sharing economy regulated?
Regulation varies by destination. Many cities now require short-term rental registration, limit the number of nights or ban certain lets, while ride-hailing drivers often need licences.
Further reading on the sharing economy
Useful books on the sharing economy include What’s Yours is Mine: Against the Sharing Economy (Tom Slee), The Business of Sharing (Alex Stephany), Platform Economics: Rhetoric and Reality in the ‘Sharing Economy’ (Cristiano Codagnone, Athina Karatzogianni and Jacob Matthews), The Future of Airbnb and the ‘Sharing Economy’ (Jeroen Oskam) and Tomorrow 3.0: Transaction Costs and the Sharing Economy (Michael Munger). If you found this article helpful, the following posts may also be of interest:
- Airbnb explained
- Homestay tourism
- What is Couchsurfing?
- What is overtourism?
- The economic impacts of tourism
- Digital nomad jobs
