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BUSINESSAgenda | Autumn 2017
EU Policy
The Rise of the
Sharing Economy From providing accommodation to collaborating on car journeys, the strength of the ‘sharing economy’ is on the up. Jo Caruana asks three hospitality industry experts to give their opinions on how this is changing the way business is done.
C
hances are you have contributed to the sharing economy in some way. As a consumer, you may have used a website to book holiday accommodation directly with the proprietor, or have called a cab owned directly by the person driving it. As a service provider, you may have rented your home out to someone visiting Malta on holiday, or contributed to a crowdfunding campaign to help get a project off the ground. All of these aspects fall under the relatively-new concept of the collaborative – or sharing – economy, which has emerged rapidly across Europe. On the one hand, it has provided exciting new opportunities for citizens and innovative entrepreneurs. However, on the
other, it has created tensions between new service providers and existing market operators. Together, these challenges have led the European Commission to look at how we can encourage the development of new and innovative services, while also ensuring adequate consumer and social protection.
“More needs to be done to ensure a level playing field.” Kyle Borg “The collaborative economy has been developing at a rapid pace over the past few years, and entering into areas
which are not solely limited to accommodation but also related to areas such as transport and even catering,” explains Leslie Vella, the Malta Tourism Authority’s Chief Officer for strategic development and deputy CEO. “It has led to the development of new tourism products and services that have resulted in the strong demand for a category of consumers willing to experience such new products.” “The development and growth of the collaborative economy in Malta has also taken place in response to the record year-on-year tourism performances that have led to strong annual increases in tourism volumes. It is important to note that, in Malta’s case, this new type of demand has not grown to the detriment of collective
accommodation facilities, but rather as a seasonal alternative form of accommodation when demand for collective accommodation facilities is at its peak,” he asserts. “In fact, NSO data clearly indicates that, whereas demand for private accommodation (which incorporates facilities under the sharing economy) features the lion’s share of incremental demand being registered in peak season, the inverse occurs during the quieter months when there is more availability of collective accommodation facilities.” Kyle Borg, the Vice President for the Malta Business Bureau and a hotelier, believes that the collaborative economy is here to stay, and says it has brought more positives than negatives. “Primarily, it has created new business and allowed people to trade resources easily and quickly, without the bureaucracies of large conglomerates,” he says. “Online portals have given a boost to smaller independent hotels that could never build a brand internationally, and which can now piggyback off big brands such as Expedia and Book-
Kyle Borg ing.com. This has, in turn, given power to the hotelier, who is no longer at the mercy of the tour operator. Online portals have also enabled small hotels to have more cash in hand, increase their profitability and, in turn, has given them the courage and finances to better the product provided.” Having said that, Mr Borg stresses that a balance needs to be struck between online and traditional bookings, as “one cannot put all eggs in one basket. Big online portals can, at any