How Technology is Shaping Travel, Lodging
Everything these days is instantaneous. From banking to online shopping, the world is at the palm of your hands. As people utilize technology more and more in their everyday lives, applications used for ride-sharing and house-sharing have gained in popularity.
Uber and Lyft are both ride-sharing companies that allow drivers to pick up passengers at their own will, to work when they want and to drive where they want. Passengers can get a ride at the touch of a button on their smartphone, without even carrying cash.
Uber was founded in March 2009 in San Fransisco, California and has seen explosive growth nationwide and internationally since then. It is estimated that Uber will generate $10 billion in revenue by the end of 2015. Lyft was founded in 2012, also in San Fransisco, and is continuing to expand nationwide.
Another company with a similar vision is Airbnb. Airbnb uses the same idea of connecting people and places, but through house-sharing instead of ride-sharing. The company started in 2008 when college students came up with the idea to begin their own air mattress/bed and breakfast to earn a few extra dollars. Since then Airbnb has expanded both nationally and internationally.
Who uses these services?
So just who is using these ride-sharing and house-sharing companies like Uber, Lyft and Airbnb? Is it millennials or is it Generation X? Ana Mahony, the general manager of Uber New Jersey, said it is hard to give one demographic of the people who use Uber "because they are people just like you and me."
Uber and Lyft are not ordinary ride-sharing services, they are much more personal.
"Lyft is your friend with a car, it could be your neighbor, it could be your classmate, we've heard countless stories," said Lyft's Communications Manager Paige Thelen.
In order to really understand how these companies work, you need to think about vehicles for hire in a whole new way.
"People are just using Uber in ways that they didn't necessarily think in the past they would use a vehicle for hire system for," Mahony said.
Airbnb has grown by 46 percent in the past year, according to Wrede Peters Myer, the general manager for New York and the New York area of Airbnb. He said that Airbnb has expanded the places that tourists have the ability to travel.
"We are helping more travel which is good news for everyone, and we are bringing incremental tourism. We are bringing incremental interest in experiencing cities and neighborhoods to places where hotels do not traditionally operate," Myer said.
What are the advantages?
Uber, Lyft and Airbnb have many advantages for all economies in which they operate - traveling around the world and connections to places that are otherwise impossible and quality assurance.
These companies are in fact helping the economy, according to Brett Anitra Gilbert, an associate professor of entrepreneurship at Rutgers Business School.
Gilbert said that because of the nature of the companies, she sees it "opening up more market opportunities for people and putting money directly into the hands of other consumers."
Another advantage of companies like Airbnb is it exposes travelers to destinations that are not typically tourist locations.
"With Airbnb, travelers get to live like a local. They get to explore neighborhoods and small businesses they might have missed if they stayed in a hotel," Myer said.
Ride-sharing also makes travel more convenient for consumers.
"Residents experience increased mobility, access to previously under served areas, and more connections to public transit," Lyft's Paige Thelen said.
According to Uber, the system allows the driver and the rider to rate each other to ensure that only high quality experiences take place on their platform. The fact that consumers are involved in their personal experience with the company, allows them to be confident in the services provided.
"They also help to provide a certain level of trust in these services that I think encourage people to use them more and more," Gilbert said.
What's the impact on more traditional companies?
Are companies like Uber, Lyft and Airbnb playing by the rules when it comes to taxes and fees or are they hurting traditional hotel and taxi services?
In New Jersey, all hotels are required to pay taxes to the state, but Airbnb does not need to pay these taxes. Some of the taxes that hotels pay are allocated to promote New Jersey as a destination for travelers.
According to Joe Simonetta, the executive vice president from the New Jersey Hotel and Lodging Association, because they do not have to pay the same taxes, "Airbnb has a 15 percent advantage over a comparable hotel room or lodging facility."
Hotels are scrambling to keep up with the low rates that Airbnb advertises, while Airbnb basks in all of the benefits of promoting New Jersey as a destination without paying into the system. Therefore, it is not a level playing field, and the New Jersey Hotel and Lodging Association has already called on the state to address this.
"When you put more rooms in the pool for rental, you have to be competitive. So hotels are seeking that competitive parody, that leveling the playing field," Simonetta said.
Uber and Lyft are also hurting taxi companies. Rebecca Walls, a spokesperson from the "Who's Driving You?" campaign that aims to educate the public about the danger of ride sharing companies, said when you take an Uber, you are directly taking money out of the hands of a taxi driver.
"Uber and Lyft are flooding the street with an unlimited number of vehicles. Right now, they don't need to have a cap on the number of vehicles that are out on the road at one time," Walls said.
What about regulations?
As more consumers discover Uber and Lyft, the New Jersey Legislature is getting involved to ensure that these services are safe and reliable resources for all riders and drivers.
New Jersey Assemblyman Jack Citterelli (R-Somerville) is co-sponsoring a bill that will ensure that there is a fair and level playing field among all the players in any given marketplace. The bill would require transportation network companies to obtain permits from motor vehicle commission and maintain insurance coverage.
"I don't think there is a single legislator in New Jersey that wants to put Uber out of business," Citterelli said. "The whole purpose of introducing the bill is not only to effectuate good public policy, but also to initiate a dialogue."
He added that with ride-sharing companies, there are safety risks that must be taken into account.
"Do we want our citizens contacting Uber through the application that sits on somebody's iPhone? Having the car show up at their house, and the person gets in the car, and the driver is not subject to background checks," Citterelli asked. "I think not."
Ana Mahony, general manager of Uber New Jersey, said the company already has strict insurance policy requirements in place.
"We have a commercial liability coverage policy of up to $1.5 million per incident which is 42 times that of the state requirement for taxi companies," Mahony said.
The legislation is purely in place to keep the playing field level, according to Citterelli.
"This is another opportunity to ensure that there is a fair and level playing field amongst all the players in any marketplace," Citterelli said.
What does the future hold for these companies?
With companies like Uber, Lyft and Airbnb growing, it is exciting to look to the future to see what else these companies have in store.
Wrede Peters Myer, Airbnb's General Manager for the New York and New York area, said that his company meets people where they are and allows them to travel as they choose. A major opportunity Airbnb is seeing is around major events.
"We expanded Rio's tourism capacity during the World Cup by 75 percent almost overnight," Myer said. There is a rise in this sort of tourism because Airbnb "democratizes, it distributes the benefits of that inbound demand, that travel, to the entire community."
Thelen agreed that these companies will continue to grow.
"The transportation market in the U.S. is a two trillion dollar market. This is a huge opportunity, and there is plenty of room for multiple options," Thelen said. "This isn't a zero sum game."
Looking toward the future, Lyft plans to bring a service called Lyftline to New Jersey, a carpool system that will match passengers with others heading in the same direction. As for Uber, there may be a delivery service called Ubereats coming our way.