Peer-to-peer (P2P) rental
Peer-to-peer (P2P) rental is a segment of the sharing economy where individuals rent out or loan their underutilized resources to others, creating a mutually beneficial arrangement. This model is particularly useful for expensive items, such as cars or accommodations, that may be needed infrequently. The growth of technology has facilitated these transactions, allowing users to easily connect with one another through various platforms for renting items like tools, clothing, or even parking spaces.
P2P rental services have gained popularity as they often provide more personalized experiences compared to traditional services. For instance, travelers may prefer renting a room in a private residence through platforms like Airbnb, which offers not just a place to stay but also local insights from hosts. However, this model is not without risks; safety, regulatory challenges, and issues like property damage or theft have raised concerns among users and local governments.
While many individuals benefit from the economic advantages of P2P rentals, such as lower costs and additional income through renting out personal assets, some cities have imposed restrictions or outright bans on specific services. Overall, P2P rental represents a significant shift in how people view ownership and resource utilization, driven by changing attitudes and the influence of digital technology.
Subject Terms
Peer-to-peer (P2P) rental
The sharing economy, also known as peer-to-peer (P2P) rental, is an economic model in which individuals rent out or loan resources to others. When an item that is underutilized by its owner but in demand by others is rented out, it benefits the owner by generating revenue and the renter by providing a convenience. P2P rental is most often used when the resource, such as a car, is expensive but needed infrequently. Other examples of sharing economy transactions may involve bedrooms, designer clothing and accessories, parking spaces, and tools used for household projects or chores. These services are becoming an increasingly large part of the rental industry.
Risks associated with this model are largely centered on safety and regulatory issues. Though the sharing economy model has been around for centuries, new technology has made it easier and often safer. As it has developed, people have given the model other names, including the access economy and collaborative consumption.
While the transactions benefit individuals and the companies that foster these connections, not everyone is in favor of such sharing operations. Some cities and industries have fought sharing economy services. Several American cities have banned P2P taxi services, and officials in Amsterdam have located unlicensed hotels by monitoring rental service websites. Some cities want to develop a system to collect hotel taxes from private transactions, while tax bodies have questioned whether rental fees are being declared as income.
Overview
Sharing has historically been a transaction between friends, family members, and neighbors. Some people attribute the modern increase in sharing to a change in attitude about acquiring possessions, while others point to the economic hardships and high unemployment rates of the twenty-first century, in particular the economic downturn that began in 2008. Still others believe people wish to use resources wisely and see no reason for unnecessary production of goods that are infrequently used.
As the Internet has become more entrenched in people's daily lives and technology has enabled individuals to find what they need or want, the sharing economy has expanded tremendously. If individuals need goods or services that cannot be found within their circle of acquaintances, they are likely to find an app that has been developed to accommodate almost any sharing need. For example, global positioning technology (GPS) allows a person to locate and hail the nearest available vehicle.
Consumers and providers reap many economic benefits in a sharing economy. Individuals who do not own a car, for example, may rent one for a few hours; a person who needs a formal outfit for one night may prefer to rent designer clothing for a fraction of the cost of buying it. Travelers may rent a bed, a room, an apartment, or an entire castle for a night or weeks, depending on their needs, finances, and preferences. A person who has a spare room or will be away from home may earn money by renting out the unused space.
Accommodations
Many travelers say they prefer a private residence over an impersonal hotel room, which may look exactly like hundreds of rooms around the world. They also say they can gain information about the locale from the owners. They feel this personal interaction is a benefit that often enhances the travel experience. Airbnb, a room rental website that launched in 2008, allows individuals to list their accommodations and post photos, tips on local dining and attractions, and personal information. Users can search for accommodations in thousands of locations around the world and are encouraged to rate their experiences. Asset renters also can rate users, which helps others listing properties decide with whom to do business. Airbnb handles the financial transaction and safeguards users by holding the payment for a full day after check-in to allow any problems to be resolved. The company takes about 9 percent to 15 percent of the transaction as its fee.
Several other companies similar to Airbnb exist. In addition to fostering human habitation, companies such as DogVacay and Rover provide kennel services for dogs.
Transportation
Because such services as shared rides are private and not regulated, the cost is usually less than taking a taxi. At the same time, this lack of oversight means the passenger may be taking on risks, such as being dependent on a criminal or riding in an unsafe vehicle.
While some businesses foster vehicle rental, others help connect drivers and passengers. Some companies in the shared transportation business include Buzzcar, Lyft, RelayRides, and Uber. Still others help users rent boats or other means of moving from point to point. The companies earn money by taking a portion of each fee as a commission; for example, RelayRides takes 40 percent.
As an indicator of how entrenched the sharing economy model has become in the transportation sector, GM Ventures was among RelayRides's investors in 2011, a move that boosted the profile of GM's OnStar navigation system. OnStar smoothed the process of signing up for RelayRides and also made it possible for owners to remotely unlock cars for renters. Car rental firm Avis acquired pay-by-the-hour business ZipCar in 2013. This purchase also provided Avis with a stake in the peer-rental firm Wheelz.
Problems
Some P2P users have experienced problems, including reported crimes. Airbnb property listers have had their homes trashed and items stolen. Airbnb responded to this early misstep by guaranteeing $50,000 for hosts against damage, and by 2024 had increased its coverage to $3 million.
Many American cities do not permit rentals shorter than thirty days in unlicensed and uninspected properties. Some property owners have served eviction notices on tenants who have rented a property to others through Airbnb.
Transportation services offer similar insurance for drivers. Several states have passed laws placing liability on the car-sharing services and their insurance rather than on the owners and their personal insurance. Transportation-oriented companies provide varying degrees of service. For example, RelayRides checks driving records, but users must rely on reviews to evaluate the driver and service. The heads of such businesses say the inherent rating structure helps to weed out problems: Drivers who get bad reviews will not be hired, and unpleasant passengers will be rejected by other drivers.
Bibliography
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Morgan, Jacob. "Are Uber, Airbnb, and Other Sharing Economy Businesses Good for America?" Forbes, 17 Dec. 2015, www.forbes.com/sites/jacobmorgan/2015/12/17/are-uber-airbnb-and-other-sharing-economy-businesses-good-for-america. Accessed 27 Oct. 2024.
"The Rise of the Sharing Economy." Economist. Economist Newspaper Limited. 7 Mar. 2013, www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy. Accessed 27 Oct. 2024.
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Slee, Tom. What's Yours Is Mine: Against the Sharing Economy. OR Books, 2016.
Sundarajan, Arun. The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT P, 2016.