Opening doors, or peer pressure?

What we say - Article

Contact


Opening doors, or peer pressure?

Online asset sharing sites, such as Airbnb, which connects people who have spare accommodation to those that need somewhere to stay, now give consumers another option when it comes to their travel arrangements.

The sharing, or peerto-peer, economy allows property owners to offer their spare rooms or properties to others for a fee; and enables holidaymakers to travel around the world booking accommodation with private individuals rather than traditional hotels and accommodation providers.

And it doesn’t stop there. Individuals are also sharing their cars, parking spaces and other assets, such as boats. This raises a number of issues for travel businesses, both from a regulatory and financial perspective.

DIY holidays
Sourcing and booking elements of your holiday yourself, rather than using a travel agent or tour operator, is not new. Consumers have been booking their accommodation, transport and other associated services separately for years, however the suppliers of such booked services have traditionally been businesses, rather than private individuals.

Currently, there is a lack of clarity and understanding over the regulation of private individuals sharing their accommodation, for a fee, with travellers. It is possible that private individuals may start purchasing assets solely in order to share them, and, with privately-let accommodation options potentially more affordable than traditional hospitality providers, we could see a rise in peer-to-peer distribution of travel services.

Regulatory considerations
“Home sharers” are often unclear as to what regulations apply to them, which include minimum standards for health and safety.

There are also taxation issues and problems relating to appropriate insurance cover.

As peer-to-peer distribution becomes more prevalent, this could impact on the travel industry, both where regulation of private individual providers is developed and where it is not. Without proper regulation of private providers, some consumers will be discouraged, instead favouring the perceived protection and security offered by a traditional provider. If regulation of private providers is introduced and, as a consequence, the number of traditional suppliers reduces, travel agents and tour operators might look to engage the services of private individual suppliers for accommodation or other services.

Travel agents and tour operators will need to consider carefully the impact of any new regulation when collating components for package holidays. Under the Package Travel, Package Holidays and Package Tours Regulations 1992, organisers are liable to the consumer if the private individual fails to provide the accommodation or if something goes wrong.

Additionally, indemnities in supply contracts signed with private individual owners may be difficult to enforce.

Managing risks
In order to manage their risk of both financial and reputational loss when engaging private individual suppliers, travel agents and travel operators organising holiday packages should consider carrying out thorough due diligence on any private suppliers they may engage.

Organisers should carry out risk assessments on any components of packages that may be supplied by private individuals, ensuring appropriate standards are in place for health and safety, and that adequate insurance is arranged to cover any losses the package organiser may suffer in the event of default by the private individual supplier.

Even if travel agents or tour operators do not engage private individual suppliers to provide elements of their holidays, there is still a regulatory headache with peer-to-peer distribution in relation to DIY holidays, together with potential risks to consumer’s security over payments, health and safety.

Peer-to-peer distribution models can provide access to a wider range of goods and services and so there is a balance to be struck over potential risk and reward. Businesses and consumers alike should consider the potential risks in light of consumer rights under applicable regulations. Industry bodies such as ABTA, or other legal advisors, may help to assess those risks and ensure consumer protection is achieved in a peer-to-peer environment. 

This article was published in the Travel Trade Gazette on 17 September 2015. 

To download the article, please click here.

Published: 21 Sep 2015


Subscribe to all articles and news:
Email: