The Ups and Downs of Sharing Services

Writing for the New York Times,  Ginia Bellafante cites examples of abuses resulting Featured Image -- 13152from the use of sharing services such as shared workspaces (e.g., WeWork) and Airbnb.

Unfortunately, it’s a superficial article. There are issues, but she doesn’t necessarily know what they are. There are also benefits, obviously, otherwise these services wouldn’t have prospered to the extent that they have.

Shared services allow users to reduce cost, especially when the pricing for services from traditional suppliers has become out of line with what many people can afford. In a market economy, when prices get too high, you expect new competitors to enter and undercut the prices of existing vendors. That’s happened to hotels, who are now trying to use regulators and tax authorities to reduce or eliminate the newcomers.

Among other issues, hotel owners have overpaid for property, and overpaid on mergers and acquisitions. Investment bankers work like real estate agents, in some cases selling deals that are bad business for their clients, collecting their commissions and leaving the scene. Corporations are just now coming to grips with how bad those deals were.

OK, Marriot took over Starwood. Why? What’s the point? I used to be a frequent stayer with Marriott and I haven’t used them in years. That’s not going to change. They’re just too expensive.  However, there’s an investment banker who made a bundle on the deal.

So hotels need to change their business model and cut their prices, and that may mean hits at executive compensation and stock price. So be it. That’s the way the market works.

Are there problems? You bet. But not what you expect. We’ve become an Airbnb host and user, as well as Uber user.  Our experiences include:

  • Having a female guest make a pass at my wife. She came down to breakfast dressed in a thong. We’re pro LGBT, but my wife wasn’t ready for that, much less before her morning coffee.
  • Guests with an entitlement syndrome who don’t think house rules apply to them.
  • An Ivy League undergrad who trashed the room and left used condoms in the bedding.
  • Inexperienced Uber drivers who are clueless about how to drive in bad weather.
  • Hosts who don’t honor promised discounts.

Airbnb is actually quite good in dealing with issues. You can get to a live person. Not only do guests review hosts, but hosts also review guests for use by other hosts, and a guest can be blacklisted for misconduct. Short of blacklising, other hosts can see reviews of guests when they apply for reservations, and opt to refuse the reservation to people who cause problems.

I haven’t seen the kind of “keg party” issues that Ms. Bellafante talks about with the shared office space. Alcohol and work don’t go together, and if you mix them, abuses are like to occur. I don’t understand a company opening itself to that kind of liability. It’s insane.

 


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