Wednesday, 1 February 2012

Is Trust the New Battlefield For Success in Online Travel?

Without trust capitalism fails. That’s quite a big statement but if you can’t measure how big a risk someone is, you can’t lend them money to start a business.  

Since 2008, the established trust measurers have proved horribly faulty and the result is the worst recession since the 1930s. However a certain type of business is bucking the trend and gaining incredible levels of growth and most importantly market share. Interestingly,  the companies that are succeeding are not relying on the old measurements of trust.

I am referring to the likes of Task Rabbit, Zopa and the Lending Club. They are the collaborative marketplaces that are linking complete strangers together to do something the human race has done forever, trade, barter and do business. There are many business models behind these marketplaces but the key is the use of mobile, social and payment technologies to engender trust. The results are people renting their cars, beds, money, sports good, skills and time to complete strangers.

It seems that the risks for all the participants are considerably lower than between big business and consumers. This can be best identified in social lending default rates. They are tiny compared to the default rates of credit card companies and even existing high street banks. Either Fight Club’s rule “Don’t steal if there is an identifiable victim” is being listened too or that the openness of the social networked world is driving the hujman race to be more trustworthy and more trusting.

The travel industry is very well represented in this space and after a brief examination of what's out there I would guess must make up nearly half of these emerging marketplaces. Gidsy, HouseTrip, AirBnb, Wimdu and even the granddaddy of them all  Couchsurfing are great examples and it's time the travel indsurty took them seriously!

This is a fast growing business model. Rachel Botsman, a thought leader in this space, reports that Zopa, a peer-to-peer lending company has experienced 62% growth from 2010 -2011, Task Rabbit has taken 4.3 Billion dollars of transactions since it launched in 2008. Airbnb (which was valued at a billion dollars) grew by 1002% in a year and tonight more people will stay in Airbnb accommodation in New York than in a hotel…

The question is - what should you, as a online travel industry expert, do?  Do you compete, copy or give up in the face of one of such a fast growing business model?

This will be debated at our April show in London. We have Wimdu, AirBnb, Gidsy and Housetrip speaking so come along and meet the innovators.