03/06/2014 - 09:44

Taxi anyone? Sharing economy takes shape

03/06/2014 - 09:44

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Businesses drawing on the emergence of a ‘sharing economy’ are infiltrating Western Australia’s traditional transport and hospitality sectors.

Taxi anyone? Sharing economy takes shape
SMOOTH RIDE: West Coast Eagles footballers Nic Naitanui and Chris Masten at Uber's Perth launch last month. Photo: Uber

Businesses drawing on the emergence of a ‘sharing economy’ are infiltrating Western Australia’s traditional transport and hospitality sectors.

A sharing economy allows individuals and businesses to become providers of accommodation, transport and other rental services directly from each other.

This activity most often takes place through new digital tools such as Airbnb, which allows visitors to book a room or rent a house directly from the owners, and already has more than 350 accommodation options listed in the state.

Newer technologies such as car hire service Uber and taxi booking apps goCatch and ingogo, which bypass traditional systems, are also gaining prominence locally.

These business models have led some traditional industry players to complain they evade regulations and taxes, may compromise users’ safety, and negatively impact on the economy by taking business away from established providers.

Taxi operators are upset about the Perth launch last month of global operator Uber.

Through the UberBLACK app, customers can book a car such as a Holden Caprice, BMW 740 or Mercedes Benz S-class. A ride from Perth airport to the CBD costs $85.

Swan Taxis chief executive Kevin Foley, whose business is estimated to hold a 90 per cent market share of cabs in WA, said Uber was operating illegally and had arrived at a difficult time for existing operators.

“They’re not operating within the law like Swan Taxis and Black and White does,” he said.

Transport Minister Dean Nalder said he was surprised and disappointed to learn Uber had launched without fully collaborating with the state government, but had since been advised it was not necessarily breaking the law.

“I am advised that it is possible for drivers utilising the UberBLACK service to comply with the law, but they need to be cautious in doing so,” he said.

Mr Nalder said the Department of Transport welcomed innovation and competition and believed its most important contribution was to ensure technicalities did not stop innovation.

“It will continue to work with the industry to ensure new ideas are taken on board and assessed, while making sure the safety of passengers and drivers are still paramount,” he said.

To grow its market in Perth, Uber is currently advertising for a local general manager, community manager, and operations and logistics manager.

Uber Melbourne general manager Simon Rossi told Business News the response from customers to Uber’s arrival in Perth had been overwhelmingly positive.

Mr Foley said Uber’s timing coincided with a downturn in demand for cabs in Perth.

“We’ve become more competitive because over the last two years the demand for taxis in Perth has gone down 10.1 per cent,” he said.

Mr Foley said Uber could afford to ride out a slump in one region because it was a global company focused on expansion.

“They’ve poured a lot of money into this business from what I’ve heard,” he said.

New online accommodation services seem to be causing few ripples among traditional providers, however, with hoteliers spoken to by Business News unconcerned by the emerging local presence of Airbnb, noting reports of a backlash against the group in some offshore markets where it is more established.

Airbnb raised $US450 million this year and has a valuation of $US10 billion. Its rapid growth to operate in 192 countries has earned the ire of a number of councils and businesses.

It has counteracted claims it has a deleterious effect on local economies, saying its regional offices create jobs, and the ‘Airbnb community’ contributes to economic activity, with hosts generally putting payments towards their mortgages or rent and visitors spending money locally.

Tourism WA declined to say whether Airbnb was having a negative effect on WA’s established providers, but said it encouraged visitors to use accredited accommodation providers whenever possible.

Australian Hotels Association WA chief executive Bradley Woods said he did not expect WA’s accommodation and tourism market to be affected negatively by Airbnb.

Airbnb is an entirely different model to that of traditional hotel accommodation and should therefore not be compared,” he said.

Mr Woods said consumers were smart enough to tell the difference between what’s on offer on Airbnb versus WA’s three to five-star properties, which were subject to strict regulations.

“I would certainly not be booking accommodation for my family or friends in an unregulated building.”

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