The rise of the sharing economy in the Middle East

We're moving in a fast-paced world nowadays; blink, and you'll miss something.
And you could fall out of the flow real fast. Not a good idea to lag behind if you want to keep abreast with the latest.
We take a look at one trends that is engulfing some key sectors in the Middle East today: the sharing economy, which could arguably claim to be the best disruptor of established models.
Airbnb vs local hotels
Let's pit a Middle East bellwether versus a global biggie in one of the fastest-growing - and sometimes controversial - sectors today.
The sharing economy has gained traction for several good reasons, one of the most important - if not the most important - is that it provides (most of the time) better, cheaper alternatives to traditional models.
Two sharing companies in point - Airbnb and Uber - have made their way in several countries, catching more established players off-guard, sending them scrambling on how to deal with them.
In the Middle East, however, disruption can be a little hard to do compared to the United States, Asia and Europe, thanks to unique policies and traditions, according to a recent report from social media analytics firm Crimson Hexagon.
Airbnb, the San Francisco-based online marketplace and hospitality service, started in 2008 but did not make its way to the region until 2011. It prides itself in providing more affordable lodging options by sleeping in other people's turfs - home-sharing, in layman's terms.
"I'm not saying the whole world will work this way, but with Airbnb, people are sleeping in other's homes and other people's beds," Airbnb CEO Brian Chesky says.
"So there's a level of trust necessary to participate that's different from eBay or Facebook."
The keyword here is "trust"; would you let strangers have a pillow fight in your own room?
Let's see: since the beginning of 2015, social conversation about Airbnb has rocketed 120 per cent - but that's that: conversations. The study shows that while indeed the company has gained traction, it still accounts for a mere fraction of the hospitality industry in general.
And customer experience is also deeply-rooted in this. The survey found out that 17 per cent feel more positive than negative when it comes to local hotels, compared to Airbnb's nine per cent.
Meaning, consumers still prefer local hotels, and for obvious reasons: they're more established, are more secure, provide better service - not to mention on-demand - and provide a better overall experience.
Sure, Airbnb will get more interest as time goes on. But how sooner or later is the bigger issue.
"On the positive side, [Airbnb] will attract new visitors to Dubai who will have not previously considered the destination due to their travelling preferences, for example, a desire for self-catering," travel writer and Hotelier Middle East contributor Louise Oakley says.
"It might also, however, convert traditional hotel guests even at the luxury level to try the home-sharing alternative."
In other words, would you rather save up on a posh-looking flat conveniently located at a spot that gives you access to everything, or fork out some more cash for a five-star hotel in the same place?
Not everyone has enough or is willing to spend on a place to stay. In the Middle East, home-sharing has the potential to become bigger, but it is, so far, unlikely to challenge the local hotel industry in the foreseeable future.
Careem vs Uber
Which leads us to another sharing economy bigwig - probably the titan of them all - some ride-hailing firm called Uber.
Another San Francisco-headquartered firm, Uber has had more than its fair share of disrupting - figuratively and literally - the road it's on and even on the shoulder, thanks to extra-curricular issues besetting it recently (toxic workplace, culture/gender/diversity issues and CEO Travis Kalanick's antics, anyone?).
Taxis were supposed to be Uber's main rivals on the road - but it ran - eventually smack - into Dubai's very own answer: Careem.
Careem was founded in 2012, while Uber entered the Middle East in two years later. To sum up the curve, Uber pipped Careem, despite the latter's two-year headstart, in terms of social media volume.
Uber's post volume blasted off a ridiculous 827 per cent since 2014; Careem's social footprint is also impressive - but at "only" 108 per cent, it pales indeed.
Makes Uber the leader, right? Think again.
Narrow the data down to 2016 and you'll see something really different: Careem has turned the tables on Uber, with the former stepping on the gas with a 191 per cent increase and the latter hitting the brakes at a mere 29 per cent.
"Organisations should have values and aspirations as well," Mudassir Sheikha, the CEO of Careem, said during his visit to Khaleej Times for our "Meet the CEO" initiative. "The companies that have been around for hundreds of years have these values instilled in their DNA. Our mindset, from day one, was to make something to last," he said.
Sentiment - again - plays a critical role here. The study shows that Uber conversation is only four per cent more positive than negative, while for Careem it's 25 per cent better than worse.
For good reason. Users in the Middle East tend to view Careem as a much more local and familiar option than a more international-flavoured Uber.
One more thing that gives Careem the edge in this race: consumers discussing Careem are much more likely to be interested in Middle East-specific topics, compared to those in Uber that are much more centred on international stuff, the reports suggests.
"What does all this data tell us about the future of the Middle Eastern consumer? Mostly it suggests that they are a bit at a crossroads, caught between tradition and modernisation, and - most importantly - between local and global," Crimson Hexagon says.
The differences in consumer sentiment between home-sharing and ride-sharing is a useful way to look at these competing forces.
Airbnb's rising conversation volume and relatively high sentiment suggests that home-sharing may have a future in the region, the report adds. But where Airbnb is locals offering their homes to visitors from both within and outside the region, Uber is slightly different: it is competing against a similar service that has a much more local presence and history. Uber's arrival in the region was greeted with excitement and much discussion, but those have both declined as problems around the service's local knowledge have surfaced.
The sharing economy is, to the strictest sense, still at its early stages. A few tinkering here and there will be able to catapult into a more mainstream flow - as long as the right things are done.
- alvin@khaleejtimes.com