The advent of "sharing economy" can offer a solution to the extreme supply and demand mismatch in the hotel industry during both peak season and off season. Much like Uber that draws in part-time drivers during the surge in pricing hours, AirBnB and its rivals allow a city?s supply of temporary accommodation expand, when more people want to stay there
A case in point is the Berkshire Hathway conference in Omaha that has started drawing in almost 40,000 guests now from just 12 in 1980. With hotels in the city unable to meet the surge in demand, prices in recent times have shot up to $400 per night leading to an outraged Mr Buffet threatening to move the conference to Dallas. AirBnB has come to the rescue in this scenario with many people opening up their homes to guests, bringing down the average price to $209.
Whilst spare room rentals and hotels are not perfect substitutes, by easing temporary supply squeezes, room rentals may change the economics of the hotel business, at least in the smaller cities. If hotels can no longer double their prices when demand peaks, that could drive weaker properties out of business. Those that stay afloat may need to increase rates at other times of year, which could
further depress off-season travel and hurt complementary businesses such as restaurants and taxis.
