How UAE residents are saving money in the sharing economy

People are increasingly shunning ownership of big-ticket items and turning to rentals for flexibility and lower costs

Nick Donaldson / The National

As petrol prices rise on the back of the Russia-Ukraine crisis and apartments with a parking space become more expensive to rent compared with a year ago, car ownership is affecting most wallets somewhere along the road.

And whatever the budgeting motivation, increasing numbers of people are turning to the sharing economy for their motoring needs — as well as a range of other services.

Udrive — the Middle East’s first on-demand car-sharing platform — is aiming to double its UAE car fleet to 1,000 as more drivers shun expensive car ownership in favour of on-demand models.

The app-based service can offer “great value for money” with savings of about 25 per cent to 40 per cent, depending on the car model, says Nicholas Watson, co-founder and chief executive of Udrive.

Factor in purchase price, loan repayments, insurance, registration fees, servicing, tyres and petrol, and it is easy to see the draw of Udrive’s “car sharing by the minute” option.

“Because we charge on time, the less time you spend in the car the cheaper [it is],” Mr Watson says.

“Once you have finished driving, you have no other costs, such as paying for parking for the day or petrol.”

Launched in 2017, Udrive’s alternative may not work so well for frequent users who require many hours of daily car use.

“However, the average trip is approximately 35 minutes for our per-minute fleet, so it works out favourably,” Mr Watson says.

A taxi from Dubai Marina to Dubai International Airport can charge Dh80 to Dh100, while that trip in a Udrive vehicle — normal traffic withstanding — costs about Dh25, he says.

The customer profile is “usually tech savvy but across varied age groups”, with those between 23 and 32 years being the largest pool and those between 42 and 46 years the second-highest group of users.

Udrive has clocked two million trips to date, “making us one of the largest rental booking platforms by transactions per car in the region”, Mr Watson says.

“Convenience is a major factor because Udrive provides all UAE riders with free fuel, RTA parking and comprehensive insurance, so customers don’t need to do anything other than driving,” he says.

“Cars can be driven per minute or per day, depending on [the] requirement, can be picked up from any location available and returned at any location in the same city.”

The mobile app also reduces the booking process time compared with traditional car rental companies.

“We also see many people becoming more transient by nature — cars are one of the items you don’t need to own when travelling … therefore, making it less appealing,” Mr Watson says.

Society's changing consumer traits prompted Faisal Mushtaq to create Eze Lease, the region’s first lifestyle rental platform for furniture and electrical appliances.

Launched in November and currently operating in pilot mode with multi-unit landlords, the company will soon service individual homeowners and tenants.

It brings home the sharing and circular economy by leasing items such as sofas through to fridges.

“We are not trying to reinvent the wheel,” says Mr Mushtaq, 43, who first rented furniture while training as a pilot in the US.

The business model has been operating for 10 years in his home country of India and longer elsewhere.

“This product is perfect for a market such as the UAE, where 90 per cent of the population is expatriate, transient and, out of that, 85 per cent live in rentals.

“It makes a lot of sense because you can change your product when you want; today you have a black sofa, you can change to a white sofa at the click of a button, but if you buy, you can’t do that.”

For families, that can include upgrading a bed outgrown by a child without the hassle of selling unwanted furniture.

“I came here single, then got married and had kids … if you have the flexibility of subscription, you can change up and down as per requirement and budget,” Mr Mushtaq says.

On a broader scale, Eze Lease offers savings, convenience and flexibility to property owners seeking greater yields for furnished apartments, compared with unfurnished units, and looking to lease sooner by offering ready-to-move-in homes.

From a user perspective in a region where people regularly move apartments or territories, on-demand furniture and appliances present huge appeal, including removal and servicing savings.

Mr Mushtaq highlights a Dh72 per month rental for a 300L LG fridge and annual full-home combo packages from Dh6,000, available for various unit sizes, as well as kitchen, bedroom or lounge-only packages.

A studio apartment in Dubai’s Discovery Gardens can fetch up to Dh12,000 more rent annually if furnished, with Eze Lease shouldering purchase costs instead of the landlord, he says.

“Once we take this to the end-user, this will really change the game because flexibility and convenience is a key thing,” Mr Mushtaq says.

“The new generation, because they are moving around, are more into subscription, more into experience rather than owning product.”

Shifting ownership responsibility also underpins the model operated by another UAE start-up, Rent-a-Towel.

It currently rents towels and bed linen to 20 Dubai hotels and invited sustainability-conscious small investors to part-fund inventory through a Germany-based crowdfunding platform.

Rent-a-Towel services properties with 100 to 200 rooms and provides about 20,000 towels and linen items daily, shifting the workload from hotel housekeeping and reducing operating costs, which can ultimately influence rates paid by guests.

Chief executive Narayanan Raghavan and chief operating officer Ram Mohan describe the venture and its sister company Dr Linen as laundry aggregators that remove the need for in-house laundry infrastructure.

“We take the load from hotels and give it to a laundry, which is close to the property and get it processed,” Mr Mohan says.

“Running laundry [in-house] is as good as running a new department within the hotel, it is cost intensive … they need to spend a lot of money having the team, keeping machines on.”

While some properties already outsource laundering directly to Dubai’s large commercial laundries, Rent-a-Towel and Dr Linen took this further by also owning the linen, thereby removing a capital cost from properties. Its model can save housekeeping 10 per cent to 12 per cent, Mr Mohan says.

Hotels may engage them for their entire linen ecosystem while larger resorts can plug into the service in the short term to rent linen during times of full occupancy, such as peak tourist season.

Process expert Mr Raghavan and Mr Mohan, whose technology background includes software provision to hotels, set up their operation in 2015.

While common among US and European hotels, they say the concept is new to the GCC region.

The entrepreneurs initially invested in linen stock before they found a way to fund additional or replacement supplies that shifted some cost — and rewarded small investors globally.

They partnered with German sustainable impact crowdfunding platform Bettervest, where users pledge cash to buy new linen.

“We call the concept OYT — own your towel,” Mr Raghavan says.

“You put in €50 [$54] and get €50 of towel working for you at the back end, generating revenue for you — we collect the money and pay interest back to these guys.”

Reducing capital expenditure also means less risk for Rent-a-Towel, which has 22 employees, including drivers.

Mr Raghavan also highlights the reduced environmental impact in their circular economy model.

As well as centrally purchasing and processing hotel laundry, the company buys from suppliers that use Tencel fibre, which requires less water during production and allows faster evaporation while drying, thereby reducing energy consumption and bills across the value chain.

The company is also partnering with a Europe-based non-profit organisation promoted by a global retailer to convert retired linen into resources for new products, eliminating textile waste.

That too influences long-term costs, which is part of the equation for Rent-a-Towel and Dr Linen’s success, alongside convenience — key factors as hotels recover from Covid-19-related losses while maintaining high linen standards for strong guest appeal.

“Today, hotels, because of the pandemic, don’t get the right budget at the right time for replacing linen,” Mr Mohan says. “And if they lose guests because of the linen, the guests will not come back.”

Burgeoning subscription and sharing models also enable better expense and savings planning, Mr Mushtaq says.

“It is all about circular economy, where resources are being shared,” the Eze Lease boss say.

“It is not the linear business that used to work — you use, consume and discard — now we are reusing, recycling and repurposing the whole thing and extending the life of the product.”

“The product used to be sold and that was the end of the life cycle or a relationship with the customer. Now, if I ‘sell’ you something, it’s the start of the relationship,” he says.

Back on the road, Udrive says its relationships are flourishing.

With expansion planned in the Mena region and Turkey, and 300,000 registered users — of which 210,000 have taken trips — Mr Watson makes a bold prediction.

“Regarding car sharing as a whole … it will grow into the dominant form of car rental, especially as the younger generation continues to adopt usership rather than ownership,” he says.

“Drivers are becoming more aware of the costs of ownership and the work required to have a car.”