Every time the world is going to change, managers call for statutory regulations to secure their own status. For quite some time, lobbyists have been trying to torpedo the Sharing Economy, a phenomenon reflecting our changing society. Taxi companies and the hospitality should no be affected by Uber, Airbnb & Co. But is this the right approach? Is it smart to ignore the changes and call for regulations? Wouldn't it be better to face the situation, despite the challenges some will not be able to cope with?
I recently attended a panel discussion of the "Central Real Estate Committee" in Berlin. Wolfgang Kubicki (FDP) and Michael Groß (SPD), two German politicians, have also been on the panel. My statement was "Regulations are no solution, they only extend the suffering!" Admittedly, this statement was quite provocative, but shouldn't companies have a right to exist in the market? And wouldn't it be better if the government acted more proactively and set the course for the future? At the end of the day the Sharing Economy is all about competitiveness.
Take Switzerland: Form any years, it has been ranked first by the World Economic Forum (WEF) when it comes to competitiveness, despite higher prices and exorbitant salaries compared to other countries. How is this possible? Swiss entrepreneurs have to constantly be better and prove themselves. Nothing is kept artificially alive without break-even, but new possibilities are explored. Swiss companies do not have the possibility to hide behind legislation or regulations; the market regulates economy. The interesting thing is that the country has come out of every crisis stronger than before, for example, after the collapse of Lehmann Brothers. This will probably change during the current crisis with the Swiss Franc.
Already three years ago, the head economist of the Swiss Trade Association heavily criticized the subsidy policy of the Swiss National Bank. And he proved right! The hospitality has been artificially subsidized through the regulations, which prevented necessary changes. After the switch to free floating exchange rates as a result of the monetary policy of Mr. Dragi, hoteliers had to react quickly and try to compensate what they did not have to do during times of regulations.
I believe that we will see a similar situation, if Germany politics will try to regulate the Sharing Economy. Companies based on Sharing Economy operate similar to data-driven companies. They use Big Data to execute their business models. Just look at the market capitalization of data-driven companies like Priceline or Airbnb. The market value of these companies is several times higher than Marriott or Starwood, just because of their data capital. It seems like data nowadays has a higher value than gems. Information about the clients and the management of client relationship are much more important than the actual product. In my opinion, regulation is a waste of time; time which is needed to adapt to the changes.
It is certainly not okay that private persons rent out their apartments on Airbnb without paying taxes. That is an absolute no go! But on the other hand it is ludicrous that a private person who occasionally rents out his apartment should fulfill the same requirements as a hotel. As a next step, car-sharing agencies would have to verify the cars of the drivers, ensure that they follow the traffic rules, etc. Where would that lead?
Airbnb should not be seen as a threat, but as a new player on the market. The Sharing Economy will not disappear by regulations. Not every guest will leave and not everybody wants to stay in a private apartment or room. Airbnb should be seen as a motivator to do our job better. The hotels suffering from Airbnb have a more profound problem, which is only deferred but not eliminated by regulations. At the end of the day, it is all about competitiveness. Shouldn't the market regulate itself, instead of keeping companies live artificially and extend their suffering? This is a question everybody has to answer for himself.
I am very happy though to see that our clients are future oriented and ready to face the challenges proactively. Complaining has not helped anybody!
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Operating at the intersection of business and technology, Dr. Michael Toedt helps hoteliers with the software dailypoint™ to use the tremendous increase of data in order to become data-centric. Dr. Michael Toedt has over 25 years of experience in operations, technology and marketing. He is the author of several books – among others the German version “Big Data – Herausforderung und Chance für die Hotellerie (ISBN: 978-3-8751-5305-7) and “Data Revolution – How Big Data Will Change the Way of Doing Business” (ISBN:978-3–7375-1688-4) and his articles are published by journals on a regular basis. Dr. Toedt holds a doctoral degree in management science. He is lecturer at several universities and assistant lecturer at the University of Applied Sciences of Munich for the subject “Customer Relationship Management in Tourism”. Apart from this he speaks at various hospitality events and fairs such as ITB, HITEC, Internorga, Austrian Hotel Society ÖHV or Cornell Hotel Society.