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Your Friends in Bolivia

Tech & Innovation | September 28, 2015

“Hola. You’ve got friends in Bolivia.” These words, scrawled across the homepage of Couchsurfing.com in large, bold text, invite you to explore the 1,000,000+ listings worldwide the site has to offer. Couchsurfing isn’t revolutionary so much in its concept as it is in its modern implementation—with 10 million “friends” to connect with and over a million “couches” available to sleep on, the possibilities abound. Airbnb, an online service that lets residents rent out some part of their home to travelers, offers a similarly benevolent message: “Welcome home. Rent unique places to stay from local hosts in 190+ countries.” With either of these services, you can browse in the morning and sleep across the world the following evening.

The rising popularity of these websites within the past decade sends a clear message: travelers, particularly those of today’s youth generation, are steering clear of traditional online booking methods like hotel websites in favor of quick, cheap, and accessible alternatives that link them directly to an individual host. With Airbnb, booking is as simple as contacting a host and determining whether a match seems appropriate. Couchsurfing goes a step further, as co-founder Dan Hoffer described the process of creating a full personality profile and matching with other travelers/hosts as being akin to “online dating.” Thus, the thrill of finding a host or residence that uniquely suits your criteria is inherent in this experience.

With young travelers seeking lodging to accommodate flexible travel schedules and a sense of youthful spontaneity, sites like Airbnb and Couchsurfing fit the bill. As Palmer Fritschy recounts in a blog for the Spectator Tribune, the benefits of using Airbnb over traditional hostels for students touring Europe on a budget are numerous. The best aspects of a hostel remain intact, as student travelers can meet others with similar ambitions and expose themselves to unfamiliar cultures. Tufts University sophomore Maude Plucker reminisced on her experiences one summer traveling Europe with friends, “We became more immersed living in a residential neighborhood…The owner of our apartment in Barcelona gave us a list of local places where tourists never go.” Unlike hostels, however, homey living rooms and private bathrooms take the place of standard shared common rooms. Versatility prevails as one can choose to book anything from a shared apartment to a private flat, at any time, while the apps’ remote payment features ensures optimal convenience and security.

This is not to say that there aren’t drawbacks. The lack of a front desk means that waiting for flaky owners could be an issue. For hosts, there is concern over the liability of travelers—one infamous Airbnb incident includes one couple’s home interior being destroyed in the aftermath of a drug-induced orgy. As for Couchsurfing, the quality of a traveler’s experience can be highly contingent on the particular host. While an ideal host may enlighten travelers to the ins and outs of a city or offer a local’s perspective on the surrounding area, the prevalence of “sexsurfing,” a term used by some travelers to describe incidents of sexual activity between travelers and hosts, has been sufficient to make some pause and reconsider.

But on a broader scale, what does the use of these sites mean to us as consumers? Knowingly or unknowingly, this new breed of travelers is constructing a model that has economists fascinated: the “sharing economy.” Described by Forbes contributor Tomio Geron as an “economy in which asset owners use digital means to capitalize the unused capacity of things they already have,” young consumers are now turning towards their peers as opposed to established businesses for services like accommodations. This may be attributed to an underlying growing distrust of corporate enterprises. Additionally, Geron believes there are holistic “economic, environmental and lifestyle reasons” at play; passive income has now become as easy as ownership of some rentable good, facilitated by the vast networks of the World Wide Web.

Considering recent history, the eruption of the sharing economy may come as little surprise. Take a look at groundbreaking consumption platforms of the 21st century in online marketplaces. eBay made it possible for anyone to sell anything, as asset ownership equated profit. Sites like Craigslist gave rise not only to massive audiences for goods for sale, but also to a freelance “gig economy,” where one could offer services to others for a fixed price without having to go through the hassle of a middleman or agency. Take this a step further, and the recent establishment of Uber as a formidable force within the transportation industry has allowed users to share their vehicle for a profit. It would be a short time before tech engineers would capitalize on the potential of this “sharing for profit” concept to expand to other industries—in this case, travel.

But is the sharing economy truly fiscally viable for companies involved? It depends. In spite of Couchsurfing’s massive popularity, especially in years prior to the explosion of Airbnb, their original model stressed too much social capital (i.e. connecting travelers) and not enough fiscal capital; its lack of revenue led to its near demise. If anything, a business model based solely on social connections is perhaps more utopian than it is sustainable.

As a distinctly for-profit company, however, Airbnb tells a different narrative. With a $25.5 billion valuation as of June 2015, exceeding that of both Avis and Hertz car rental companies, Airbnb has dramatically disturbed the hospitality industry. Reactions to its success and tentative economic effects have ranged from praise, to vehement objection, to plain uncertainty, with particular attention paid to who benefits and who suffers.

For economics journalist Paul Mason, the sharing economy entails both disruptive and yet socially positive implications. With individuals involved in Airbnb acting as both producers (hosts), and consumers (travelers), the corporation handling the transactions is the only thing stopping the individual from reaping all the profits. Thus, if individuals were to gradually take greater ownership of the controlling side, greater economic inclusion would be achieved. The result? A society built off of greater social justice and economic opportunity for everyone. It may sound idealistic, but the visions of early 20th century socialists would be better realized with this sharing model than they would be via traditional versions of capitalism.

Others, however, have been swift to protest the already visible negative economic effects of Airbnb. While those involved in major hotel chains remain surprisingly unfazed, with Marriott CEO Arne Sorenson going so far to call the website a mere “interesting experiment,” lower-priced hotels have already been adversely affected. Thus, owners have voiced demands for fair regulation of the company (as cities like Barcelona have already implemented), since they have been forced to slash rates to survive amidst industry changes.

But criticism has also been brewing amongst a much larger group: residents. In an article for the New York Times, Nicole Gelinas scorns local politicians for the lack of regulation on Airbnb, with rent prices in major cities—including New York and San Francisco—climbing in the past year as a likely result of the business. With a 13.8 percent increase in Airbnb listings over the last year, a subsequent decreased supply of apartments (as some reserve use of their residence exclusively for Airbnb) in high demand areas has meant an inevitable rise in real estate costs.

These changes may be far-reaching enough to alter the way we look at business in the future. Whether these occurrences are the result of classic capitalistic competition or an indication that the sharing economy is going to necessitate some government-induced changes is only for time to tell. Sometimes convenience comes at a price—it is this generation that will decide what that price will be.