Airbnb, Uber, WeWork … the largest companies in the sharing economy have been badly hit by COVID-19. Has the sharing economy reached the end of the line?
In April, Airbnb applied for loans totaling two billion dollars: the company finds itself in the tricky situation of having to honour the cancellations made by its many clients, but at the same time it has to somehow safeguard Airbnb hosts whose bookings have been canceled (among other measures, the company established a 250-million-dollar relief fund).
The COVID-19 emergency has had a huge impact on the short rental giant. The CEO of the California-based company, Brian Chesky, announced a 25% cut in its workforce. Of its 7,500 employees, 1,900 will lose their jobs. The San Francisco company justified this move by estimating a 50% loss in 2020 earnings year on year and a 90% drop in bookings in April alone. Communicating the news to employees, Chesky stated that the company has had to take stock of the fact that the impact on the travel industry will be dramatic and not short-lived. As a result, Airbnb has to restructure and adapt. The plan is to scale back investments in Hotels and Lux, cut advertising and marketing spend and go back to focusing on the human connection with those who host their homes.
Like the peer to peer rental giant, Uber is also in trouble. Some estimates talk of expenditure on the App having fallen by 83% in the USA in the month of March. The ride-hailing colossus announced that it will reduce its workforce by around 14%, laying off 3,700 employees out of a total of 26,900, above all in its customer support teams. In an email to employees, CEO Dara Khosrowshahi also said that further “difficult adjustments” could not be ruled out in the coming weeks.
In February, Uber had forecast income of over 16 billion dollars for 2020. A few days ago, the company announced that given the current situation, they were unable to make updated forecasts for the year.
But as the saying goes, these things come in threes. WeWork, the US company that leases co-working spaces all over the world, is in very serious difficulty. Before coronavirus it was already having problems, leading to more than 2,000 redundancies. Now it finds itself operating on a market where co-working has been replaced by smart working and where unemployment is soaring to very worrying levels.
The situation in which Airbnb, Uber and WeWork find themselves has become a refrain: the sharing economy is in trouble. But is this really the case?
“To answer that question, I think that first of all we should ask ourselves what the sharing economy is,” explains Marta Mainieri, author of “Collaboriamo!” (Let’s collaborate), the first book about the sharing economy published in Italy, founder of Collaboriamo.org, a platform offering services for the sharing economy, as well as curator of Sharitaly, Italy’s first event fully dedicated to the sharing economy.
“Because when we talk about the sharing economy, these giants are just one of its many manifestations and not necessarily the most representative form of the phenomenon. Let’s be clear, there is a form of sharing economy which is more concerned with providing services, is more of an organizational model and these large-scale international platforms fit this description. These models are undoubtedly in trouble, like many other companies and sectors of the economy. But then there is a form of sharing that starts lower down, in communities, and its aim is to respond to real needs.”
In Mainieri’s opinion, this second version is anything but in trouble. “I would even go so far as to say that is has shown just how efficient it is, emerging from the COVID-19 crisis stronger than before,” Mainieri adds. “We have all realised that collaboration is a win-win. Coronavirus has taught us that when we collaborate, we are stronger. In care, welfare, and mutual aid, what has always worked was collaboration among peers. I’m thinking social streets, voluntary work, and all those neighbourhood support mechanisms based on relationships.”
There are many more examples. “Just take a look at portals like Milano Aiuta. The concept is to pool trades, skills and ideas. It is driven by a need that manages to mobilise whole communities. This goes some way to explaining the troubles faced by the giants and the success of smaller players. The difference is nothing to do with size, it’s about the communities they are rooted in. Where there is a community spirit, there has been great resilience,” Mainieri points out.
“The true sharing economy has shown just how efficient it is, emerging from the COVID-19 crisis stronger than before. Where there is a community spirit, there has been great resilience.”
— Marta Mainieri
Come Home is an example of the sharing economy supported by a loyal client base. “It’s a platform that organized events at home. Of course, with the health crisis this was no longer possible. In the blink of an eye, they launched Stay Home, turned all events into digital ones online and it worked really well.”
“The real challenges of the sharing economy are the lack of investment and the need for digital skills.”
— Marta Mainieri
“The real trouble with the sharing economy is not the impact of coronavirus,” Mainieri adds. “The truth is that there are no bold investments showing belief in this model. Lots of plans lose impetus and get lost by the wayside because there is no money to scale up and grow. There are no financial teams that believe in the opportunities – even profitable ones – offered by social networks.”
And last but not least, “comes the major topic of digital technology,” Mainieri concludes. “Nowadays, no business can do without it. The crisis has shown that digital technology – the skills and know-how – is fundamental to success.”