Air BnB and Uber...Is this the beginning of the future

Air BnB was founded in August of 2008 and based in San Francisco, California, Airbnb is a trusted community marketplace for people to list, discover, and book accommodations around the world. They say "Whether an apartment for a night, a castle for a week or a villa for a month, Airbnb connects people to unique travel experiences, at any price point, in more than 34,000 cities and 191 countries. "
 In 8 years Air BnB has become the largest "real estate brokerage" company or online accommodations bookings site and they do not own a single piece of property. the model could not be more ingenious, have individuals list their spaces and charge a commission from the rented spaces.

AirBnB's estimated company valuation is $20billion USD wherein 2015, the total room booking was estimated at $6 Billion with revenues of $675million dollars with an 11% take rate.What does this mean, though? AirBnB is growing at an exponential rate and the business model only predicts that further growth. AirBnB provides an alternative to just staying in a city...it provides an opportunity to live in the city for at the night.

but let's look at the choices that a consumer would have, to rent an apartment for the night may provide a better chance to experience a city than a hotel room. the facility may offer a host's hospitality and meals which add another layer of authenticity to a destination as opposed to a hotel. The tradeoff may be the luxurious nature of the hotel accommodation as opposed to the apartment or house within which the consumer may stay.

A few downsides are that you may have to share the apartment with the owner, their pets, children etc, and for the most part, it's literally just a place to stay....

Would You try AirBnB? 


Secondly, let's talk about Uber.

What started as an app to request premium black cars in a few metropolitan areas is now changing the logistical fabric of cities around the world. Uber is way to get people where they want to go by connecting partners(drivers) with riders. Uber says "that women and men who drive with Uber, our app represents a flexible new way to earn money. For cities, we help strengthen local economies, improve access to transportation, and make streets safer. When you make transportation as reliable as running water, everyone benefits."

In other words, Uber is selling a way for transportation to become more convenient and more efficient. The business model has partners, therefore, Uber itself does not have to own any of the motor vehicle inventory which means major savings in maintenance and gas. Uber, however, does own vehicles but only a few in comparison to the many partners it has. The model is not necessarily there to replace public transportation in larger cities but provides an added layer of transportation where additional privacy may be required. 

The downside to Uber, however, is that you may have to ride with other passengers which are not usually a feature in regular city taxis if privacy is your main concern. Also, Uber on the financial side has not been performing as well as Airbnb but that is largely due to their growth strategy and their business model. They receive revenues after paying the drivers, which we have to wait and see if they can turn significant profits in the years to come.

Would you take an Uber?

Uber and Airbnb are champions of the Shared Economy, The Sharing economy  is a hybrid market model (in between owning and gift giving) which refers to peer-to-peer-based sharing of access to goods and services (coordinated through community-based online services).

#CollegeEconomist