I’m no economist. And I’m sure some of the things I’ve thought about lately are hardly revelations.
But this week I was thinking about Airbnb’s announcement it would back some kind of regulation in its own sector. That’s got to be thanks to the wider crowd, the consumer, calling time when they feel they’ve been belittled, lied to, disrespected. And they shouldn’t be dismissed in this.
It’s like when some kind of excess in a sector, with the individual becoming simply a commodity, leads to a flashpoint, followed by a gradual recovery, and a kinder and more sustainable way of doing things – led, again, by the little people.
A boom and a bust, then a clean-up.
Back in the late 1980s and early 1990s, the ‘loadsa-money’ yuppy culture was in full flow. There was a fast-moving, money-obsessed culture, where people I knew celebrated landing a client or doing a deal with a blow-out at the client’s expense – whether the client knew they were footing the bill or not! City traders I’d been studying with just a few years before were getting Christmas bonuses big enough to buy a London flat outright. And it all came with the braying, Champagne-spraying culture that seems unthinkable now. That behaviour was disrespectful, excessive, and couldn’t go on forever. The wheels started coming off the bus financially with things like the ‘outing’ of BCCI’s activities, and the Barings collapse. And there followed a mini recession. Many of my own friends in a variety of sectors, for the first time in their careers, found themselves redundant.
So a boom and then a bust.
But out of this came reforms in the banking system, and regulation was introduced with greater oversight of individual traders and banks. So, one example of cleansing following dirty dealings.
Fast-forward to the mid-2000s, and we were heading somewhere similar. Every networking event I went to had an IFA lauding 110% mortgages, some for property overseas that wasn’t even built yet, but selling off-plan for a small deposit. Which came with developers’ guarantees of rental income – you’d even get flown out for a Champagne site visit, all expenses paid, if you’d just agree to sign on the dotted line. At that time you could go into the bank for advice on non-paying customers and come out with a couple of credit cards, a consolidation loan and a shiny new pen. You could self-certify your own applications for hundreds of thousands of pounds. I can remember people handing out credit cards – real ones – as you passed through Duty Free at the airport. And then came the great global credit crunch.
And, once again, things had to clean up or not survive. Sadly it meant a lot of people ended up with half-built apartments they’d never want to visit on building sites that never got finished when developers went bust.
But it did mean that people, consumers, were acting with their feet, punishing the banks and taking their custom from the high street, and ultimately we ended up with a more sustainable way of living in the longer term. Excess and greed ending up in collapse and eventually a cleaner landscape.
Both the sharing economy and serviced apartments grew in part out of that last collapse.
People didn’t want to be ripped off any more. They broke out of the hypnosis, the habit, of only buying package holidays, only thinking of staying at hotels when they went anywhere, and they started exploring other options that allowed them the freedom of living how they normally would.
For more than a decade our own industry recovered slowly alongside the retailers, the banks, the developers. We haven’t quite hit that same level of excess in the financial world – although I do have friends worrying about their own children, in their late teens and into their twenties, who are being offered loans and credit cards out of step with their incomes, so let’s hope this isn’t going to go the same way.
But I do feel an element of unease about our industry losing touch with the people, with the more organic growth that comes from being open with the consumer and allowing him or her to make the choices, rather than being pressured into something different.
We all love to travel, and the emerging markets, the Indias and the Chinas, are having a huge influence on the way the world operates. We know, now, that the easy availability of flights and the rock-bottom prices have contributed to the climate emergency, and as the world opens up to billions of new middle classes, this can only get worse. Meanwhile over-tourism is a serious threat to some of the most beautiful parts of the world, some of the oldest cities that were never designed to accommodate 18-deck cruise ships with almost 9,000 on board.
But it’s the OTAs that are worrying me as much.
The EU has once again come down hard on the Online Travel Agencies, the Booking.coms and Expedias, for their lack of transparency around which really is the best deal rather than which has paid the most to appear higher up the list. The platforms had promised to do that some time ago, along with ending the pressure selling around the number of other people looking at the same listing, and how not hitting ‘book now’ might lead to the price going up.
These practices are dismissive and disrespectful towards the very people on whom their businesses rely. The guests, the travellers themselves. Except that these platforms are now so big, they’ve probably forgotten about the little people and their importance.
And it’s been another week of revelations. The latest Vice report shows sharing economy guests tempted with pictures for accommodation that didn’t exist, being switched to dirty, rundown properties at the last minute, or being hit with excessive repair costs for minor or non-existent damage, and there have been growing examples of jurisdictions globally looking for solutions for the way professional investors in the short-term letting sector are diminishing local housing stock. And there have once again been more deaths in so-called party houses – all of these are the very same things the sector was promising to clamp down on.
No wonder, then, that there’s a call for regulation of homestay platforms – they have to be seen to do something to get people back on side. Because while Airbnb gears up for its IPO probably later this year, anything can be replicated and possibly even bettered. Who thought we’d see the end of Bebo, Vine, MySpace, Friends Reunited, ecademy, and myriad other social networking sites that seemed invincible? And who saw TickTock coming? Meanwhile, the consumer is king and can change direction quickly and completely. Whoever thought they’d see a Greggs vegan sausage roll?
One thing none of us in this industry can be is complacent. And another is disrespectful. We seem to be in some kind of excessive boom when it comes to the OTAs, as though they’re not scared of what the consumer might do – they’re alright, Jack.
Now we’d better just hope there’s no bust.