Introduction exchanging and sharing already owned goods and

Introduction

In different
industries nowadays technology plays a huge role and with the help of that
there has been inventions that no one was able to think of before. These
inventions have been innovative but also disruptive, meaning they have destroyed
or replaced old technology. Change is good but in the other hand it might be
crucial to some industries and some individuals’. Up to recent years hotels and
hostels have been providing travelers places to stay outside their home cities
and providing some luxury services that are not everyday lifestyle. However,
couple years ago new digital platforms such as Wimdu, Airbnb and couchsurfing
have evolved and started to provide similar services to the society. On their
platforms people are able to rent or lease a property for short-term in order
to earn money except in couchsurfing in which people stay at other peoples
couch for free. The term to describe these peer-to-peer sharing/lending act is
“Sharing economy”, which can be defined in many ways but the one used in
this paper is the act of exchanging and sharing already owned goods and
services between private individuals. (Kumar, Lahiri & Dogan, 2017) This essay will look into one of the
digital platforms called Wimdu in more detail and its relation to the hotel
industry.         

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              Since these digital platforms are
growing and spreading all around the world people start to rent vacation stay
places from them instead of hotels and renting their places there; it has
slowly started to take over the hotel business. This paper is manly focusing on
this question; To what extent has Wimdu disrupted the existing hotel industry?
This is important as it is affecting the industry in many ways and some people
as well if they work in this industry, however it has a lot of positive aspects
as well to the society. These different aspects will be discussed later on in
the paper. The fact that technology is evolving makes this topic relevant as
well as everything in the society is slowly moving to a digital form and there
has been a lot of discussion whether it has a positive or negative effect on
the society and this is one of those forms. Also the use of technology and the idea
behind this will be looked in more depth to be able to understand the whole
concept of Wimdu and what it is doing. This paper is conducted by using
secondary investigation online by looking at literature reviews consisting academic
articles and also some newspaper articles about Wimdu, digital platforms and
sharing economy.

          Next this essay will discuss more
information about Wimdu and how it actually works and explain definitions if needed.

Then it will move on to discussion part where the academic articles will be
looked in to point out information about the effects in hotel industry in the
past years. Also information about the industry will be compared to Wimdu to be
able to analyze the question whether Wimdu has an effect on the industry. In
the end there will be a conclusion summarizing the discussion part and there
will be an answer to the research stated before.

 

 

General information about Wimdu

Wimdu is a
digital marketplace where people are able to rent or lease their properties for
short-term for others in return of money. It was founded in March 2011 in
Berlin, Germany, and has been going strong since then. It has been able to
spread to over 150 countries with more than 350 000 properties. In total they
have over 10 million booked nights around the world so far with 2.5 million
users and the number keeps increasing. 2016 was eventful year for Wimdu as they
became part of Novasol and Wyndham vacation rentals. Though, it is not the only
platform that allows people do this as mentioned; it has many competitors and
the biggest one is Airbnb, which operates almost identically the same way as
Wimdu. (Wimdu, 2011) They business model they use is peer-to-peer offline
services. (Täuscher &
Laudien, 2017) The most important aspect and goal of Wimdu is to match their
supply with demand in other words properties with travelers. When a customer
starts to find accommodation on their website they need to first name a city
they want to look at and then certain features they need require in the place
they want to rent. People that rent their places on the website have put up all
the information once they put their property there. This makes it easy for the
system to offer right properties for right customers and satisfy all they needs
they want. When viewing a property it will also include photos, reviews from
previous visitors and also personal note from the property host. (Huber, 2017) Listing
a property on the website is free but when a person rents out they can choose
themselves for how much they want to rent it out for, though a processing fee
of 3% is inquired. (Wimdu, 2011) Also, when renting a place a processing fee of
15% applies, which is a lot higher than what Airbnb charges, which is between
6-12%. (Airbnb, 2008)  By having processing
fees for users Wimdu is able to generate profits, as operating freely would not
work for-profit company. Even though the processing fees are not high, especially
for the hosts, it will add up to a high profit since more than 10 million
nights has been booked through them already and more will come. (Wimdu, 2011)

            This type of a digital platform has
gained customers as it makes people to be able to make money while they go on a
holiday by making them able to rent out their own place and with that money
rent something for them in another city or country for a similar price and
needs. (Brignall, 2013) Comparison to hotels these properties are more home alike
as often they include a kitchen and other home decor, which makes travelers
more interested as then cooking is possible and also having supplies that a
normal home would have as well. Especially for big families these are very
suitable as they can find big homes and do not have to concern about booking
more than one expensive hotel rooms. However, these are not very suitable for
people looking for room service and all the time service in general as those
will not be included in these peer-2-peer rentals as they are very home alike. In
addition, business travelers are also not the main targets of peer-to-peer
rentals.

           Advertising for digital platforms
like Wimdu is very easy nowadays and has played a huge role in their success
today. Social media is all that is needed to get people familiar about their
services and opportunities. Most of the people today have an account at some well-known
social media site and that way it is easy to advertise there and create a page
in each one of them for the company. (Key, 2017)

 

Wimdu and the hotel industry

The hotel
industry has been affected by the peer-2-peer rental companies as some of the
hotel customers have chosen to change from normal hotel culture to more “home
alike” traveling. (Akbar , 2018) However, its said that for
example Wimdu and Airbnb only operate in a niche market meaning that the
customer variety is not that big and their growing is estimated to flatten
eventually. (Guttentag, 2013) Though, it is hard to estimate the future of this
industry, as no one knows the future technological changes that might affect
it. (Richard & Cleveland, 2016)

           Wimdus services can be considered
illegal in some countries/cities as for example; San Francisco has said that it
is illegal to rent property for less than 30 says without if the place is not
licensed and correspondingly New York has said the same with one exception that
the rentals are allowed less than 30 days if the host remains at the property
as well. (Guttentag, 2013) In Amsterdam the Dutch munipalicity has created a
law that the people are allowed to rent out their houses only up to 60 days a
year that they do not start to run permanent, unregulated hotel. (Frenken, Meelen, Arets, & Van De Glind, 2015) Even though other cities have similar
regulations still most of them do not have laws like this which does not really
affect this business as there are so many places where they can operate
legally. The business would only be disrupted if these regulations would become
effective worldwide.

          Another point that has been out there about
companies like Wimdu has been tax obligations. Every hotel charges for accommodations
tax and/or occupancy tax and sometimes even some other taxes. When renting a
place through Wimdu such a tax is not included which makes these people “free
riders” as they still benefit from same things as the hotel guests just without
paying the tax. For example, in New York these taxes can be up to 15%, which
can bring a lot of extra costs. This is one factor that attracts customers to
choose peer-to-peer services. (Guttentag, 2103) In the end, even if those taxes
would be added to Wimdu it would not decrease the number of customer by a lot
since it is just one side of them with many other positive factors that people
are interested about.

          Furthermore, many digital platforms, as well
as Wimdu, claim to be green and environmentally friendly as physical products
are not produced and no harm happens to the environment, as the properties used
already exist and demand for new goods does not increase. This can attract
certain people for example green activists or other people to be
environmentally friendly and switch from normal hotel business to this more
green way of doing it. Though, it is said that the effects to the environment
from these sites are complicated and there has not been a study yet to prove
that they would be more ecological. (Schor, 2014) However, as the websites
advertise them being green people will believe that as many of them will not
bother to search if it is confirmed to be true, as it seems that any harm
cannot come from that service.

            It is
also argued that Wimdu would not affect the high class hotels instead it is
only affecting hostels and low cost hotels as Wimdu would not compete with the
high quality as the hotels. (Guttentag & Smith, 2017) Still, on the Wimdu
website you can find variety of different types of location from a small low
cost house to a big very modern luxury properties so there should something for
everyone. Also Hilton is considered to be one of the high end hotels and they
have lost market share and about 10% of their customers which shows that they
do not just effect low cost hotels or hostels. (Abelmazov
& Engström, 2016) To continue, Hilton is not the only hotel that has lost
market share and customer base.

           With the information gathered in this paper
it seems that Wimdu has been able to disrupt the hotel business in many ways
and obtain a good customer base, which is increasing all the time. The future
though is hard to predict although if it continues the same way then the
customer base in hotels will start decreasing even more as these people are
able to get what they want somewhere else for lower price. There seems to be
positive and negative effects to the industry and the society. Limitations to
this paper are that there are no environmental researches made or prove shown
whether peer-to-peer digital platforms for accommodation are greener than
actual hotels. More research should be conducted before analyzing this further
on. Also all the regulations regarding these peer-to-peer accommodations should
be looked more in depth to be able to analyze the legality of them. To give
more detailed answer to the research question of this paper it should be
conducted to only given area or country thus the findings would be more precise
and easier to understand as the state will not be the similar everywhere. A
suggestion for a further research question could be for example; To what extent
has Wimdu disrupted the hotel business in Spain? That would be easier to answer,
however information about that might be harder to find since there are not too
many studies made about this topic so primary investigations would need to be
involved. The answer would be very detailed about which cities are most
affected which are most likely to be the biggest cities in Spain including
Barcelona and Madrid. However, conducting this research might take a lot more
time.

 

 

Conclusion

 As digital platforms in the sharing economy
business are growing and the number of them is increasing there will be more
discussion about this. Until today there has been a lot of benefits rising from
them but also a lot of legal issues especially with Uber in some countries.

There is no say whether there is always positive impact on it to the society as
the use of it rises. Also a lot of research has to be made to have more
knowledge about the effects to the society as everything is still new to
everyone and many people like to use these new platforms, as they are the
rising trend now.

           
The goal of the paper was to find out if Wimdu has disrupted the
existing hotel industry. The discussion part covered information about Wimdu
and the industry to help to answers the question, however, all the information
is not specific enough to have a clear answer. To conclude, Wimdu and similar
platforms to it can have a huge impact on the hotel industry in the future if
they keep growing the way they have now but also the growth could stop as it is
also said that they are only working in a niche market which will not grow
forever and finding new customers will be hard soon. In the end, Wimdu
contributes to the sharing economy well and is able to bring individuals
together to share properties in exchange for money for people that do not own
something at the area they would like to visit at but want to feel like a local
and want to stay in a home alike place. In general it has a positive effect so
far but at one point it might turn the other way around.

 

 

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