A couple years ago I conducted an extensive research study that examined Consumer behavior. Specifically, I studied the link between a consumer's overall level of happiness and their penchant for Frugality, stinginess, or overly economical behavior. I surmised that people make themselves less happy by certain choices they make as consumers. Based on the visceral reactions from friends and family members, I was about to embark on a highly contentious study.

Prior to this study, I would casually observe how it seemed like the people that were constantly chasing bargains never seemed to be satisfied. However anecdotal this may seem to most people, I suspected the people that would drive across town to get gas at Costco (where it might be 20 to 30 cents cheaper per gallon), were actually chasing their tails because they weren't really saving any money when you considered the extra gas to get to the Costco across town or the lost time they could have applied to more productive uses.

Anyways, I hypothesized that people make themselves less happy (and, dare I say, miserable) by being overly frugal. To test this hypothesis I surveyed a panel of more than 15,000 consumers and assembled a small research subject group of 45 people to measure their epinephrine level response to a variety of images and phrases. Hooking people up to a biometric machine helped me determine how they would respond and see if people generally get excited by finding bargains. In sake of brevity, I found a direct correlation between frugality and negative associations with a person's well being and satisfaction. Frugal people were generally less happy than self-described non-frugal people. My hypothesis was supported.

Fast forward to today and I think something has really changed in the psyche of the American consumer (perhaps permanently). Citigroup released the results of a survey on Friday that showed that 63 percent of Americans polled said the way they spend and save has "forever changed" due to the economic downturn. Eighty percent of consumers making less than $50k said they would most likely cut back on everyday expenses while 68 percent of those earning between $75k and $150k said they would make such cuts. Thirty-four percent said they were saving or investing more money, while 60 percent said they would invest or save more going forward.

This is an earth moving change from where our consumer driven economy was just two years ago when I conducted my research into consumer behavior.

Despite the dramatic shift in spending habits, Smith Travel Research has reported that they expect leisure travel to begin growing again next year. My take away from the convergence of both research reports is that people will begin to travel more, but many people will be seeking new alternatives that are more cost effective. In short, this new era of frugality will drive consumer behavior in the direction of bargains, discounts and deals.

These seemingly disparate trends are actually highly correlated and this is exactly why we are building the a fully functioning market niche for Home Exchanges. Given the rise of social networking and the propensity for all age groups to network with friends, family and strangers online, we believe that the next big revolution in travel will be driven by this new era of frugality and social networking. This is exactly where house trading (aka home exchanges) comes into the picture.

Greater desire to travel combined with higher levels of social networking & increased frugality = Latent need for home trading as opposed to booking expensive hotels. Sherpa will make the latent need manifest.

We are creating a secure social networking driven marketplace for people to find other like minded people around the world who want to travel to each other's cities and avoid expensive hotels. Sherpa's home based lodging platform will feature proprietary matching technology that will connect you with other homeowners that want to swap homes for a few days, a few weeks or even a month or more.

Would you swap homes with someone for your travel lodging if you knew it was safe and secure?

I'm interested in hearing your thoughts.

Russ


Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102
415-601-6244 mobile
[email protected]
Stay Smart. Stay Sherpa.

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