Travel market to lead an acquisition spree in sharing economy

As the sharing economy increasingly becomes more influential in the travel market, be it home rentals or cat lets, the larger players in the non-sharing industry are likely to drive an aquisition spree to expand their own presence in the new social landscape of collaborative consumption. With a UK government advisor recently stating that Britan can lead the world’s sharing economy. London corporate finance could play a significant role in industry exits going forward.

Travel in itself is a social activity, but the social aspect permeates all the way through the supply chain. In the age of social media, consumers are the heart of business activity, be it brands engaging with consumers on Facebook, Twitter, LinkedIn, Pinterest et al or consumers doing it for themselves by renting out, trading in/up, selling on or sharing.

There is great debate about how much of a threat P2P companies like Airbnb pose to the mainstream, with many in the travel industry of the opinion that what happens on the fringes is of no immediate concern due to the dominance of large-scale operators. However, with collaborative consumption on the up, it is time that hotels and airlines took a gamble, just like car rental players, and dipped their toes into the new sharing economy to test the waters.

Car rental players quickly realised that the car sharing phenomenon struck a chord with consumers, with fractional ownership the way for consumers to adapt to the new economic pressures. This allowed consumers to free up precious disposable income and dip in and out of an aspirational lifestyle on their own terms. Car rental players clearly recognised when dealing with a commoditised product that the model cannot stand still; it needs to move and respond to competition from different models.

Avis’s $0.5 billion acquisition of Zipcar in the US illustrates just how important car sharing is to Avis’s long-term strategy, with it acquiring Zipcar’s almost 800,000 members. Hertz opted for the organic rather than acquisitive route with Hertz on Demand, providing greater flexibility to its customers in terms of rental duration.

Car sharing is going social. Zipcar itself invested in Wheelz Inc in 2012, a peer-to-peer car sharing company based in Palo Alto, California, which focuses on the university market. Thanks to new technologies, the model is continuing to evolve and traditional players like Avis Budget are ahead of the curve. Having captured the innovation, it is now a question of making the model profitable over the long term.

Like the car rental players before them, the best way for hotel chains to pre-empt major future disruptors to distribution is to turn a potential threat into an opportunity. In the same way that the global hotel chains launched RoomKey in response to increased competition from intermediaries, investing in one of the P2P platforms or creating their own would enable them to assess how viable a threat the new model is. Likewise, tapping into their loyalty member base to share products/services/skills would help build a rapport outside the standard customer-hotel supplier relationship.

 

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