The power of community marketplaces: the case of p2p travel

Would you let a stranger sleep in your home? Surely most people’s answer to this question would be no. With the power of “reputation capital”, peer-to. peer (p2p) community marketplaces are revolutionising the way its members enjoy unique travel experiences and make new connections online and offline.

Back in 2007, two friends and I were planning a short holiday in Pamplona (northern Spain) to attend the famous San Fermín festival. It was a last minute decision and after trying many hotels and hostels we were unable to make a reservation, as they were all fully booked for those dates.

We were on the verge of cancelling our trip, but I then checked loquo (Spanish site similar to craigslist or olx) and luckily we found someone who had a spare room available for rent. The lady was even happy to add a mattress on the floor so we could squeeze 3 people in the room, which was perfect – we found a place in the last-minute. Our stay turned out to be great, the place was clean and our host was attentive and friendly.

Before our arrival, we knew nothing about the person who was about to host us – we had no references from other people, no reviews from previous guests and no agency in between to make the transaction seem more trustworthy. At the same time she knew nothing about the people she and her family were about to host. Apart from a 2 minute phone call to discuss the details of the deal, there was a lot of uncertainty on both sides.

Satisfying a need

In the past months an increasing number of specialised platforms have emerged (such as airbnb, wimdu, 9flats, etc) that enable anyone to rent out extra space in their homes to travellers that are looking for accommodation.

Not surprisingly, in all cases trust and safety are one of the main concerns for their users. There are several ways in which these platforms are trying to build trust: a considerable amount of information is provided through personal profiles and people can read reviews of each other written by previous guests or hosts. Most platforms also use secure payment system which retain money for 24hours in case there are any issues. Hosts are protected by insurance policies that cover a considerable amount of possible loss or damage due to theft or vandalism.

Providing added value

What makes these platforms so successful? Being hosted by a stranger isn’t just a last minute option as it was in our case back in 2007. Travellers often prefer the experience of being hosted by a local, getting recommendations from them, doing things that locals do and going to places where locals go. This way enjoy “local” instead of the common “tourist experiences.”

Having a good reputation in these P2P marketplaces is key, as it makes you more “valuable” within the community. For instance hosts that have received good reviews from previous guests are more attractive for travellers and are able to charge more for their service, while at the same time travellers with good reviews from previous stays will appear to be safer and/or more appealing. This also means that more people will be willing to host them on their trips. This motivates hosts to provide a good service to travellers to recieve good reviews from them, and makes travellers more eager to be decent guests. It’s often said that this need for good online reputation brings out the best of people.

The oldest example of this kind of system is couchsurfing.org, founded in 1999. What’s different about this platform though is that people host travellers at no cost. As a community member, people who have hosted others can travel across the world and be hosted by other “couchsurfers”, without any exchange of money. People in the couchsurfing community are especially interested in travelling, connecting with one others and establishing cross-cultural relations. It’s a community in which members regularly meet and host people while sharing experiences and learning from each other. Since travellers do not pay for their stay, they return the favour by doing simple things like introducing the host to their cuisine by cooking or sharing a skill (anything from yoga to kung-fu to guitar), thereby often forming lifelong friendships.

Going mainstream & facing the future

A true fact that shows the increasing worldwide use and acceptance of these platforms is the remarkable growth of Airbnb. This community marketplace for private accommodation was founded in 2008 and has very impressive figures, making it one of the hottest startups in the world. Since its founding it has already reached 10 million nights booked all over the world (a considerable amount of nights being from the current year 2012).

In 2011 it went through spectacular growth and expansion in Europe (growth rates: Italy 946%, UK 748%, Spain 719%, France 425%). Airbnb is present in 192 countries(and increasing), even though in 2009 their apartments were only advertised in the US. Of course  Airbnb is more popular in some countriesthan in others, but the company’s outstanding growth across the globe is clearly proof of the power of worldwide connections and social media in the 21st century.

The hotel industry is also becoming increasingly aware of Airbnb’s success as it’s gradually affecting their business, and cities like San Francisco (one of the first ones to experience their high growth) have even introduced a 14% hotel tax on Airbnb transactions. The downside of the growing popularity of such platforms worldwide is that we may start seeing similar regulatory measures by tax authorities in other mayor cities. There have been similar controversies with P2P ridesharing services such as Lyft and Sidecar, which compete with cabs while not facing the same regulations as them. Still, ridesharing can have many advantages for cities and, in the case of San Francisco, could help tackle the problem of having a lack of cabs.

The increasing use and importance of these platforms around the world is very clear. For some people it’s an easy way to earn extra cash that they can use to pay their expenses. More than that, these platforms are helping people interact online and offline, thereby establishing worldwide connections, cultural exchanges and community values among their members. Behaving well towards others is in the best interest of both hosts and travellers, since it helps them gradually become more regarded within the community and improve their online reputation – which in turn increases the likelihood of having good experiences on such the platform in the future. As Rachel Botsman clearly emphasized in her last TED talk, we can observe a growing importance of “reputation capital” in the 21st century.

Guest post written by Kunal Chabaldas.

Founder of LinkingPositive, a blog about collaborative consumption where I dedicate part of my spare time. I’m passionate about the sharing economy and inspired by how people, the internet and technology can potentially boost values for a better world.

A version of this article originally appeared on the author’s personal blog linkingpositive.

Photo credit: gnuckx on Flickr, CC license