Impact of Sharing Economy on Tourism

Introduction

In the recent era of globalisation, all the business firms in the tourism and hospitality industry aim to digitalis the operational activities and improve their contribution in the economy by working efficiently (Litvin, Goldsmith and Pan, 2018). The hotels try to attract the tourists across the globe by providing quality accommodation, other facilities and good food and place which further maximise the values of the customers. The study is helpful to understand the tourism industry and the business activities of TurnKey which is trying to expand their business across the country by providing room in a rental basis. This is a new business concept in sharing economy, where the organisation aims at expanding their operations and generating high profitability successfully (Lu, Chen and Law, 2018). TurnKey is a part of sharing economy and it is growing rapidly year by year. In the recent years, the tourism and hospitality industry in the UK is growing at a rapid rate and additionally, the sharing economic activities are also increasing tremendously. For example, in past two years, it was growing rapidly by generating revenue of €3.6bn and facilitating €28bn of transaction (Altin et al., 2018). Hereby, it is a good opportunity for the organisation TurnKey to utilise the growth in sharing economy and promote their business in the country. On the other hand, it has diverse impacts on the tourism industry as the hotels may lose their profit volume as the customers may prefer to hire rooms on a rental basis (Chen and Law, 2016). In this context, the first part of the study is related to the activities of the company Turnkey which helps to improve understanding about their concept of the business and the strategies to expand the firm. On the other hand, the second part of the study will provide a scope to recommend some suitable suggestions that is required in hotel industry to mitigate the potential impacts of TurnKey (Xiang et al., 2017).

Evaluating the success of TurnKey

Concept of TurnKey:

TurnKey was launched in the year of 2012 and the founders of the business are John Banczak and T.J. Clark. The major concept of the business is to provide rooms and quality accommodation to the consumers at a rental basis and this may attract the customers in long run. The founders thought that the vacation rental industry was missing where most of the travellers are valuing the concept of rental accommodation. The company aims to attract the customers by providing diversify services through providing accommodations at a rental basis. The sharing economies of the UK are growing faster and the founders are efficient to utilise the sharing economy and establish the business so that they can strengthen their customer’s base. In this regard, the product diversification is the major business strategy of TurnKey which further provides a scope to the company to establish the services and represent the firm in the market innovatively. The major service is quality accommodation at affordable price where the travellers can pay rent for the rooms and the customers also can choose the days or particular hours for which they are willing to hire the rooms (Stansbie, Nash and Chang, 2016; Hassi, 2019). Hereby, the business is innovation and the strategy of product diversification is effective or the business to strengthen their customer base by retaining long run customers for the affordable rooms in the market. As per the business concept of TurnKey, the company provides rooms for which they hire affordable amount from the customers and the customers can hire the rooms on a rental basis and this innovative idea further attracts the tourists where the demand for the rental services is also increasing day by day for the travellers and foreigners who are willing to give rent for hiring the rooms.

Disruptive innovation:

The company TurnKey mainly focuses on disruptive innovation and creativity in doing the business and establishing the brand in the market. In this regard, the company focuses on implementing the latest information Technology (IT) for the safety and security o the travellers as well as implement the Information and Communication Technology (ICT) for enhancing internal and external communication. In the recent era of digitalisation, all the corporate firms in the travel and tourism industry prefer to digitalise the business and implement the latest technology for better performance and develop collaborative consumption patter in the business firm. Through implementing the latest technology and developing the creative solution for the business, the company TurnKey can establish the business in the market where the organisation is able to target the customers from different culture and economic status and retain them for the quality accommodation. The service innovation and business idea further contributes positively in the sharing economy where the renting rooms idea is good to attract the travellers win which the consumers can hire the rooms as per their preferences and budget constraint (Gomezelj, 2016; Olya et al., 2018). In addition to this, the business TurnKey does not provide key exchange facility, rather it focuses on creating door codes instead of key, where the consumers can hire and can leave according to their preferences and choices. The own rental property of the business TurnKey is effective to manage the customers where the business leaders are able to maintain the quality of the accommodations and provide clean place to stay. It is an innovative business idea where there is disruptive innovation and utilisation of the technology and innovation to establish the firm in the market and the business idea is efficient to attract the busy travellers and eliminates the problem of loosing key and other formalities to hire rooms.

Occupancy rates:

Occupancy rate is the ratio of rented or user space to the total amount of available space. The occupancy rate for the rental basis rooms is considered to be high, as the travellers can choose the rooms according to their choice and preferences. In the recent era of globalisation, the percentage of travellers travelling around the globe is increasing at a rapid rate and the concept to the business of TurnKey is beneficial to target the customers in the market and help them to choose the right rooms according to their needs and preferences. The business is able to target the customers who are busy travellers as well as the business also targets the customers who are medium economic class. the affordability of the rooms and personalise decision making practice further attract the consumers to hire the rooms on a rental basis and thus the occupancy rate for the rooms of TurnKey is high where there are busy traveller and other consumers who are willing to hire the rooms on a rental basis according to their needs and preferences. Suitable place, behaviour of the staff and quality accommodation further attract the customers and it further provides a scope to the organisational representative to improve digital connectivity and develop customer loyalty in long run (Marasco et al., 2018).

Impacts of TurnKey’s business on hotel industry:

There are potential impacts of the business ideas and activities of TurnKey, where the business is efficient to run their service innovation in the market ad provide a scope to the travellers to hire rooms on a rental basis according to their preferences. The positive impact are such as utilisation of the property of TurnKey, enhancing innovation and technological advancement, digitalisation of the business and product diversification and service innovation, which pare helpful to expand the business and make positive contribution on the economy of the UK. The business also contributes positively in enhancing the activities of the sharing economy and generates profitability in long by strengthening their customer’s base. On the other hand, there are some negative impacts which are such as deterioration of the activities of hotel industry, decrease in the demand of the customers for the hotel rooms which generally charges high and decrease in the profitability of the hotel industry as a whole across the UK, where the customers my prefer to hire rooms on a rental basis according to their preferences (Nieves and Osorio, 2019).

Recommending the suggestions to stabilise the hotel industry

It is essential for the hotel industry to develop appropriate strategic planning to mitigate the potential impacts of the business idea of TurnKey. In this regard, the hotel industry needs to diversify the services and introduce other additional facilities in the hotels to attract the customers in long run. The hotels need to introduce other additional facilities such as Wi-Fi, quality accommodation, regular home service, swimming pool and television and interior decoration. These are effective additional facilities that may attract the customers in the hotel industry. In this regard TOWS Strategic Matrix is effective to identify the capabilitiy of the hotel industry in the UK.

Apart from that, product diversification provides a scope to distinguish different rooms and provide a variety of rooms to the customers such as deluxe, ultra deluxe etc. where the consumers can have the option to select the appropriate rooms according to their choice and preferences as well as budget constraint. In addition to this, implementing ICT and upgrading the IT in the hotel further enhances the operational efficiency and improving communication which further satisfies the customers in the hotel industry which in turn helps to have global; connectivity (Martin-Rios and Ciobanu, 2019). Moreover, the creativity and innovation in the technology further enhances the efficiency in the service and it is beneficial to target the customers. The hotel industry must focus on innovation and creativity in order to mitigate the potential impacts of the business idea of TurnKey. The hotel industry must develop online website for digital connectivity, so that the consumers can access all the relevant information about the hotel rooms, accommodation, services and price range of the rooms. Hereby, digitalisation of the business is important for the hotel industry to target the audiences and attract the travellers for the services of the hotels and retain them for long run. Online service and improving communication are effective for the hotels to develop trust and loyalty among the customers. Online communication further helps to provide efficient services to the customers online and it further influences the decision making practice of the consumers across the globe. On the other hand, premium pricing policy is effective strategic practice which needs to be implemented in the hotel industry to offset the potential impacts of the business TurnKey. The hotels need to set effective price for the rooms and additional facilities at the hotels, so that the consumers can afford the services. Moreover, the hotels need to strategies the business by providing seasonal offers and holiday packages which is another effective way to attract the tourist parties and expand the business efficiently (Evans, 2015). Hereby, in the recent era of globalisation, the hotel industry needs to be innovative through technological advancement and creative solution by introducing additional facilities at the hotels, setting effective price and introducing seasonal offers and holiday packages which can attract the consumers and reduce the potential impacts of the business idea of TurnKey. Additional services and offers are effective as well as the online activities and management of safety and security of the travellers are also appropriate strategic planning which may ensure future growth of the hotel industry where the hotels are able to strengthen their customer’s base in long run and generate profitability.

Conclusion

It can be concluded that, the business idea of TurnKey is innovative where the business is efficient to serve the consumers creatively by providing quality accommodation at affordable price. In the recent years, the number of travellers and tourists are increasing and the business idea to providing quality rooms at affordable price on a rental basis is beneficial for the business TurnKey to retain the long run consumers and strengthen their customer’s base. However, the growth of the business like TurnKey may offset the growth and development of the hotel industry though the business idea of TurnKey may contribute positively in the sharing economy. It is necessary for the hotel industry to develop effective strategic planning to mitigate the potential impacts of the business TurnKey. The strategic planning of service innovation and premium pricing policy as well as technological advancement and introducing other facilities are effective for the hotel industry to sustain in the growth and economic development and retain the long run consumers successfully.

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