Discovering new trends in tourism
In Malta, the tourism industry is a burgeoning one with total inbound tourist trips for last March estimated at 101,769, an increase of 4.1 per cent when compared to the same month last year and now a new record with almost 0,5M passengers in May at Malta airport with an increment of almost 10%
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Travellers nowadays have a craving for adventure and an ongoing desire to experience new encounters with exciting and diverse cultures. So when they are planning future travel itineraries, they are constantly clamouring for an authentic yet fulfilling travel experience.
For places visited, apart from booking excursions to interesting places, they also prefer to get to know better the habits of the local people, their traditions, their meals and their orientations. And there is no better and authentic way to get to know people than to share their life by booking not in hotels but in private licensed homes.
In order to serve this need a network was founded in 2004 called couchsurfing.org. Couchsurfing connects travellers within a global community of 10 million people, all disposed to share with residents common interests and get to learn about life styles and culture, thus making travel a truly social experience.
Couchsurfing started as a community activity without any intention to make a surplus but later in 2011 it was converted to a for-profit corporation, but only because of tax regulations. Initially users only pay a registration fee, then create a profile and use the service to connect to other communities.
Certainly many who used the service comment favourably about the sharing experience, which they describe as beneficial. As stated earlier at the outset the sharing scheme was not a financial experiment to make a profit but a golden path leading travellers to make new friends, improve language skills, learn new world cultures and experience at close quarters different religious beliefs.
Most remarked how it was a rewarding group experience as they laughed, sang and even cried together, making intimate new friends in the process. An innovative trend in a subset of tourism which is facilitating dialogue with residents, as these find no difficulty to share living quarters, try new food, listen to folklore music and feel at liberty to discuss topics personal both to their native countries and more interesting topics concerning their own lives.
In the share economy or the peer to peer economy anybody who possesses personal assets, or even a paid-up service like wi-fi can exchange and share with the community. When travellers lodged in licensed homes have free time, they can help out in domestic chores by delivering groceries, help in shopping or occasionally doing the dishes.
Owners typically rent out something they are not using such as a car, guest room, flat, bicycle, boat, dog-kennel, car-parking space or even kitchen appliances to a stranger anytime when it suits them.
This is a new revolution in touristic patterns which hotel owners and other investors are closely watching taking over some of their custom. It goes without saying that this new trend in sharing is amply helped by technology, which has reduced transaction costs, making sharing assets cheaper, easier and more available than ever.
There are websites like Uber, Airbnb, Lyft, SnapGoods, JustPark, TaskRabbit and Fon which match up peers or owners and renters, while there are online payment systems like PayPal, 2Checkout, Stripe and Google Checkout which can speed up the handling of payment flows. The participants in this innovative touristic scheme are comfortable and able to check up or connect with each other, thus building trust through dialogue using social networks like Facebook and Twitter and finding it convenient to surf websites looking out for recent reviews.
Any reputable service provider aiming to create a community with the ability to secure deep interpersonal skills and trust building abilities has to provide a secure platform for tourist exchanges. However the need for transparency of operation by the various groups is imperative as lack of trust reduces the appetite to share. That is why for example Airbnb recommends for first-time users that they do not set expectations too high.
The sharing economy encompassing collaborative consumption has several benefits: the most obvious is that property owners make money from sharing their rooms, meanwhile renters pay less than they would if they bought or rent a hotel room direct. It is certainly no coincidence that many peer-to-peer rental firms were founded between 2008 and 2010, in the aftermath of the global financial crisis, when travellers asked themselves why they were paying for hotel common facilities that are not essential but by sheer comparison the sharing community can provide a direct link to friendship and better hospitality.
Moreover sharing also can be beneficial to the environment – renting something when you need it instead of buying it means more countryside and less damage to the ecology. For the participants (besides savings) the remarkable sharing experience is the most important advantage. Furthermore sharing is good for the economy as well: it enhances competition and revolutionises new trends in industries like restaurants, transport, entertainment centres and hotels.
These are waking up to the challenge and cannot avoid to ignore the competition from this growing market. Companies built on the concept of sharing have in the past decade proved to be more successful than investors involved in mainstream conventional tourism.
For example Airbnb allows owners to rent out spare rooms or vacant houses but in the initial period it experienced barriers to access capital as it was rejected by almost every venture capitalist but now the worst is over and it is valued at $13 billion, almost half as much as Hilton worldwide, without owning a single hotel. Moreover Airbnb has just won a bid to provide 20,000 extra rooms for the 2016 Summer Olympic Games in Rio de Janeiro.
But it is not a rose garden as it suffers from a principal drawback, which is regulatory uncertainty: to start with, residents in a licensed hotel are protected by health and safety authorities on food control, security, safe buildings with fire escape plans, insurance etc. but an Airbnb room enjoys none of these.
Although after some bad publicity Airbnb launched an €800,000 guarantee for hosts against property and furniture damage as in many cases sharing services find themselves in conflict with the complex rules, and hence almost all peer-to-peer services are still in a legal grey area. In Amsterdam, city officials have used Airbnb’s website to track down illegal rentals.
People who rent out rooms should pay some form of tax, of course, but they should not be subject to the full rate of standard hotel taxes. For example, Airbnb is working with governments around the world to clarify the regulatory, legal and tax framework that applies to its hosts.
Meanwhile the big hotel chains recognised the threat of the apartment-sharing services and have started to focus more on millennials, which is expected to be the biggest group of hotel customers by 2020 according to a survey conducted by the industry.
The hotel industry came out with new branding and launched unique boutique hotels where travellers can mix with the locals, feel the lifestyle and enjoy locally sourced food. So guests get the authentic travel experience and the safety of an established hotel at the same time. Still, those in favour of sharing prefer the individualised experience to luxury rooms in hotels.
In Malta, the tourism industry is a burgeoning one with total inbound tourist trips for last March estimated at 101,769, an increase of 4.1 per cent when compared to the same month last year, according to the National Statistics Office. Arrivals from January to March numbered 250,565, a respectable increase of 7.7 per cent over the same period in 2014.
All this has contributed generously to GDP as total tourism expenditure since the beginning of the year was estimated at €192.1 million, 8.9 per cent higher than that recorded for the same period last year. One asks if the local property owners are sufficiently aware of the potential of the sharing economy and the answer is that gradually the movement is mushrooming with over 1,000 properties listed on the Airbnb website.
The island has had a strong short-let market for several years and is well-positioned to be one of the most legislatively-advanced jurisdictions in relation to the residential rental industry. The government is encouraged to start cooperating with Airbnb and thus ensure that such booking engines collect the VAT and that listings will only be uploaded on the website subject to having a valid Malta Tourism Authority reference number.
In conclusion, the blossoming of the sharing economy is an interesting and attractive business model and it is worth paying attention to, noting that this model is disruptive enough for regulators and established brands to have risen like a Pheonix from the ashes. Surely, countries like Malta can only gain when websites similar to Airbnb showcase properties on the global radar, enabling more people to reach out for a holiday experience that is both culturally and emotionally satisfying.