Enterprises across every industry are exploring ways to leverage blockchain technologies for business benefits. As proof, $2.1 billion has been spent globally on blockchain solutions in 2018, and accelerating. This is a clear indicator that this emerging technology is here to stay and bring increased opportunities with it.
“Blockchain is a decentralised database, with inherent governance that, in the main, allows one to scale trust.” – Joerg Esser (former director Thomas Cook)
Think of the blockchain as a ‘new internet for the travel industry’. Where we once thought the internet would be a fad, we all now are incredibly reliant on it for every aspect of our lives.
Blockchain might well be a revolutionary technology that could shape the future of travel – especially payment settlement and fraud prevention. Blockchain technology is, in its simplest form, a way to move information from one point to another in a highly secure manner. When used with the cryptocurrency bitcoin, it essentially cuts out financial middlemen. Blockchain permanently records transactions in an open, encrypted ledger that provides direct payment to sellers.
The goals of blockchain technology in the hospitality/hotel industry is eliminating third-party costs, and encouraging direct provider to consumer interaction.
Don’t expect online travel agencies to necessarily rush into any decentralizing technology such as Blockchain. The reality is the online travel agencies sit at the top of the 50-year-old distribution-food chain.
It has the potential to vastly reduce the market share of OTAs and intermediaries. Under blockchain, OTAs will continue doing business but in a fairer playing field. However, they might start to face greater competition, as anyone can source rooms from blockchain. This will release the OTA’s stronghold on having exclusive inventory which can deter them from charging exorbitant commissions. On the other hand, metasearch engines like TripAdvisor and Trivago, might have a tough time dealing with the blockchain platform. These search engines capitalise on the flaws in the distribution system to generate their revenues. The flaws might be minimised with the wider presence of blockchain.
Swiss startup Winding Tree is a decentralized open source platform for travel distribution that aims to make travel booking more affordable for the travelers while at the same time making it more profitable for the suppliers.
Amadeus says the blockchain – one of six areas the company has identified as potential disruptors of travel – has tremendous promise to change the way we can ‘exchange value’ digitally. Amadeus is also launching its new Innovation Partnership Programme, which will support growth stage companies piloting new ideas using a range of different emerging technologies.
Four potential use cases for the blockchain in travel including simplified and more secure passenger identification, improved baggage tracking, more user-friendly loyalty schemes, and simplified payments between travel agencies.
Trippki believes that both hotels and their customers should have a mutually beneficial relationship through universal reward points. Whenever a customer leaves a good review, or refers a friend, they are rewarded with TRIP, a utility token that can be spent at the hotel, or redeemed for cash.
TUI Group, one of the largest leisure, travel, and tourism companies in the world, has shifted all its contracts to its private blockchain.
Webjet is piloting hotel room inventory on blockchain, to collect exponentially more data with each booking and ensure prompt and complete payment to all parties.
Also, recently, German airline Lufthansa announced that it will be working with Swiss startup Winding Tree to build travel applications based on blockchain. Lufthansa is currently Europe’s largest airline, and if this partnership becomes a success then we can expect more airlines to join and adapt the blockchain technology in the future.
Blockchain’s potential for the hotel industry
What has always frustrated growth and innovation within the hospitality industry is the problem of centralised and inaccessible inventory. The vast majority of relevant data is held by a couple of large companies, which arguably makes the barrier to entry for new companies (who may have great ideas) unfeasibly high.
A major pain point among hoteliers and third-party providers alike, is data held by global distribution systems (GDSs) that can be expensive and inaccessible. In comparison blockchain technology is inherently easy to access and low-cost – making it an undeniably attractive alternative. If the ease and cost of transactions got cheaper, the cost saving could be passed onto the guests, but also adding to higher profit for the hotels.