Reaping the digital fruits of competition

Due to the digital revolution, more and more products and services have been offered on platforms such as Airbnb, Booking.com, Ebay or Uber in recent years. "Digital business models are creating more choice for consumers and competition is often more intense," says Tobias Thomas, Director of the economic research institute EcoAustria. "Established providers have often become accustomed to higher prices and less pressure to innovate for better products, especially when market access was previously more difficult," says Thomas.

Airbnb has become an increasingly important pillar of tourism in Austria. In 2018, 1.1 million guests stayed overnight in accommodation booked on Airbnb. That is 2.5 percent of all overnight guests. Apparently, the accommodation on offer is better suited to the needs of overnight guests in terms of price and quality than alternative offers. The traditional hospitality industry also offers accommodation on Airbnb and uses the platform as an additional sales channel. In addition to more choice and a better price-performance ratio for overnight guests, at least some of the overnight stays are additional. A study by EcoAustria on behalf of Airbnb, based on surveys and analyses of the countries of origin, shows that the number of overnight stays by Airbnb increased by 504,000 across Austria in 2018. Overall, consumer spending by guests was associated with added value of 390 million euros and 4,600 employees. Of this, 55 million euros in added value and around 650 employees can be attributed to the consumer spending of the additional guests. Overall, the effects are admittedly higher, as the income of accommodation providers also leads to more consumption opportunities and further added value, according to the results of the EcoAustria study.

"In order for the fruits of competition to unfold for consumers and the economy as a whole, regulations should not represent insurmountable barriers to market entry. However, it is equally important that all providers comply with tax regulations, for example, and that misconduct is consistently prosecuted instead of calling digital business models into question in general," says Thomas.