Companies now dare to ask a bold question: “What if we actually made money?”
Bubble: Burst
Unfortunately for everyone who got used to booking suspiciously-cheap rides across town or taking affordable vacations while living in a stranger’s home, companies like Airbnb and Uber are emerging from the pandemic much more expensive than they were before.
On average, Lyft and Uber rides cost 40 percent more now than they did last year, the average Airbnb is 35 percent more expensive, and food delivery apps have been gradually raising prices and adding new fees as well, The New York Times reports. Part of the reason, according to the publication, is that companies are trying to actually turn a profit after all but incinerating cash for years, ending the era of cheap services subsidized by extremely patient — and perhaps gullible — Silicon Valley investors.
Difficult Comparison
There are likely other factors at work too. A year ago, the US was in the early months of the coronavirus pandemic — both the rideshare and travel industries were essentially on hiatus, leaving drivers and hosts stuck without income.
Now, as demand surges back, the companies have the opposite problem, according to the NYT: too few drivers willing to take on the risky workplace conditions for low pay — an imbalance that allows Uber or Lyft to drive up costs for the rides they can offer.
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But aside from the impacts that the pandemic had on contractors, the fact remains that these various Silicon Valley companies are pivoting away from their earlier business models — deeply unprofitable but good at gobbling up market shares — and toward actually taking in money from customers rather than investors.
Unfortunately for everyone else, that means that the cost of hailing a car or booking a vacation house will actually represent reality rather than the deeply subsidized costs that were meant to bring us in as regular customers.
READ MORE: Farewell, Millennial Lifestyle Subsidy [The New York Times]
More on ridesharing: Thousands of New York Drivers Create Worker-Owned Version of Uber
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