Lockchain.co — the project and its potential to change the Online Travel Agencies business via blockchain

Hristo Tenchev
Sep 26, 2017 · 6 min read

Lately we’ve been quite busy working on our project Lockchain.co — a 0% commission decentralized hotel and private properties booking marketplace. An amazing idea which cleared in Nicola Alexandrov’s, my partner, head during last summer. A way to use blockchain technology to change a $500bn industry — the online travel agencies industry, dominated by giants like Priceline, Expedia, AirBnB. To remove them as middlemen thanks to latest technology. And yes, now it seems more possible than ever.

Our token sale starts in just 2 days on the 29th of Sept and the community is constantly over us. Just like all of our team members, I take my share of time each day answering people’s questions. One of the questions, I received a quite frequently, is about the value of our LOC token. More precisely — if LOC is an utility token, used by travelers to pay to hotels and private property owners for their stay and then converted back to fiat currency again, having 0% commission, there will be a zero net value, respectively no increase in demand and price. People will buy LOC, use it to make cheaper bookings, hotels then will sell LOC for fiat — how will then LOC increase in value? If it can’t, why should I buy tokens now hoping they will increase their value in the near future? First and most important you should only buy our utility LOC token for the purpose of using it on the platform to faciliate the provision of certain services on the platform. You should not buy expecting to increase its value. LOC token is an utility token and its sole purpose is to be used for the activation and provision of specific services on the platform which are only available through the use of LOC tokens. However, as regard to that question, let me share my thoughts and research on that.

One of the breakthroughs, we aim to introduce, is the so-called Decentralized Open Source Bookings Ledger. This is the part of our software, which we will build on top of Ethereum blockchain as Decentralized Application (DApp). We call it the Decentralized Engine. Here all listings of available properties will be stored, together with their payment conditions/rules. Not only stored, but ready to be booked by travelers and secured in the most trustless way possible to date — via smart-contracts.

If I want to rent my apartment as I do on AirBnB, I can list it on the Decentralized Engine and include information like how many nights minimum do I allow, when it’s available, what’s the price for stay, do I require additional security deposit etc. Then a traveler can send LOC directly in the smart contract, securing his dates for the stay. LOC tokens will remain in the smart contract to ensure traveler’s security — they will be disbursed to the owner after the traveler’s stay.

The amazing part is that the engine will allow security for both the traveler and the property owner. If there is a problem with the booking — a fake offering or the property is not as advertised, the traveler can get his money out of the smart contract. If property is damaged, the host can decide to keep part or the complete deposit guarantee. In case of problem both parties can escalate a dispute, handled again on the blockchain. I will leave the dispute’s mechanic for another post as it won’t be a short one for sure.

Booking a reservation requires the traveler to send LOC tokens in the smart contract of the listing. LOCs remain safely there, until disbursed to the property owner after the traveler’s stay. This is very important for the LOC value. That means that in any certain moment there could be LOC tokens in end-customers, property owners, exchanges or other roles with business connected to LOC, but also a great amount will be “stocked” in smart contracts for the period between booking a property and completing a stay there. Higher adoption of Lockchain.co (and possibly other agencies who decide to build service on top of the decentralized open source bookings ledger), means more bookings each day and more LOC tokens locked in smart contracts. Having in mind that all LOCs will be created on the token sale event and no further tokens will be created ever again, that can only mean that supply will get shorter by the locked tokens. My bet is that such difference in supply and demand can only drive price of LOC up.

But is that seriously an argument, can it be shown in a quantitative way? Or in other words presented with numbers. Let me share some research I did on that:

  1. https://www.ahla.com/sites/default/files/Lodging_Industry_Trends_2015.pdf

This wonderful report unveils very interesting numbers. But what we care about here is how much dollars an average traveler spends per room night. Amount varies for hotels and airbnb bookings, so we get an average of $139. Having in mind this report is from 2015, nowadays this amount is at least $150.

Conclusion 1: Average Travelers Room Stay per day is $150

2. https://techcrunch.com/2012/11/09/airbnb-research-data-dump/

Next I stumbled upon a post in Techcrunch which got me how long is the average stay in a hotel or a private property. A lot of business people go for just 1 nighters, but there are also a lot of leisure travelers who book 1–2 weeks holidays on AirBnB or Booking.com as well.

Conclusion 2: Average Duration of stay is 3.5 days for hotels, 5,5 days for AirBnB or an equalized average of 4,5 days per booking.

3. https://www.hospitalitynet.org/news/4070411.html

I wanted to understand how many days in advance does the average traveler books his stay. Despite the fact that the article is mainly about how early you should book your stay to get the best prices, which should be longer than average, I think I can safely take 2 weeks as weighted average.

Conclusion 3: On average users tend to make their bookings 2 weeks before the actual stay.

4. https://www.quora.com/How-many-bookings-does-Airbnb-have-per-day

The last one is a killer and it’s from 2017. Writer Rowan Clifford does an analyses of AirBnB’s daily number of bookings to reach their daily turnover. So if Rowan is correct or near correct we can draw our 4th conclusion:

Conclusion 4: AirBnB is supposed to do 78 277 bookings per day

Let’s get back to Lockchain now. When we manage to put the entire system online, start signing up hotels and hosts and attract travelers to book with at least 20% discount from all other places on the market currently, we will start accumulating bookings each day.

If we are successful, these bookings will grow each day.

If we are as successful as AirBnB, we will have 78 277 bookings per day.

If we are better, we can have more!

Based on the number of bookings per day, let’s see how much LOC tokens (valued in $ for ease of understanding in current moment), will stay securely in smart-contracts. If this value is high, this means demand will grow higher than supply as people will need new LOC to make bookings. My formula looks like that:

X = Y * Z * (A + B)

X — Total amount, locked in a certain moment in smart contracts of pending bookings

Y — Bookings per day

Z — Cost of stay — number of nights, multiplied by the price per night

A — Average number of days per stay

B — The time between a booking is made and the stay begins

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I had to draw the graph to understand the scope of the effect of this factor. I hope I am close to being right here. Of course, to check that in reality, we would need first to prove that we are worthy to gather people’s trust on the tokensale and then to build and grow Lockchain.co

This article is neither intended to recommend participation at our token sale, nor constitutes a prospectus of any sort and in any case is not a solicitation for investment. Taking part at our token sale and purchasing LOCs is at your sole discretion only. Let me know your thoughts on that, thanks for reading through.


Hristo Tenchev
Co-founder Lockchain.co

27th Sept 2017

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