Blockchain has generated significant excitement within many fields. It’s in his infancy, but it’s clear that it will change many industries in radical ways. The travel sector belong on the growing list of beneficiaries as well. This is largely because it has the potential to dramatically change the way in which information or data is stored and used, enhancing transparency and security, while also improving transactions.
Reaching nearly $1.6 trillion US$ globally, the travel industy accounts for one-tenth of the world’s GDP.
- Global travel revenue with flying passengers — $ 530 billion
- Total people crossing borders while traveling — 1,23 billion people
- Global hotel & private rentals revenue $ 170 billion
No other industry needs decentralization like the travel sector. Thankfully, Blockchain technology is coming to the rescue and travelers and service providers can build more mutually fulfilling relationships that contribute to better overall value.
The travel industry relies upon different companies passing information between one another, as customers move across the travel value chain, and leave a trail of complex commercial transactions. For example, travel agents need to pass customer details on to flight companies and hotels, while the personal belongings of travelers are often passed between companies and tracked too.
The decentralized nature of the blockchain means that information can never go ‘offline’ or be lost through accidental deletion or a malicious cyber attack, ensuring transactions are always traceable.
It can bring in the seamless integration, agility and speed required between disparate systems as: It enables shared, simultaneous access to the same version of updated data across multiple players, while also enabling diverse points of data entry. It embeds cryptographic protection and a transaction validation mechanism giving all stakeholders a level of trust and data protection not available with other technologies.
Let’s dive into a detailed look at the various ways in which blockchain is likely to be used, within the travel industry.
Areas of Impact for the Travel Industry
Blockchain technology is poised to impact processes and roles across the travel ecosystem like:
- Transparency: Blockchain entries are immutable. Blockchain can provide a permanent record of the flow of money through the travel life cycle, bringing more transparency to the process.
- Settlement: Blockchain can impact the complex settlement process by automatically executing Smart Contracts and settling with both the buyer and seller within hours versus days.
- Loyalty: In a blockchain-based world of loyalty, a customer flying from San Francisco to New York might redeem their airline loyalty points for an Uber from the airport. The same digital wallet could then be accessed to redeem their hotel loyalty points when they arrived at their accommodation.
- Fraud: The blockchain distributed ledger helps to dramatically reduce fraud, because a change to a single node will be identified quickly if it differs with rest of the ledgers on the blockchain.
- IoT (Internet of Things): Blockchain could be used to keep track of any asset, for example, a passenger’s luggage or airline equipment at an airport.
- Overbooking: Blockchain’s ability to prevent double spending could in theory remove the problem of double bookings in the industry.
- Policy: Blockchain could help the corporate travel industry improve its ability to track negotiated fares/rates, as they can be auto-executed by Smart Contracts.
- Tracking: Blockchain could be extremely valuable for tracking the movements of luggage, especially when dealing with international travel. Using a decentralised database makes sharing tracking data between companies a lot easier.
- Secure, Traceable Payments: Perhaps the most important use of blockchain technology is related to payments.
- Advertising: Blockchain could fix the broken ecosystem by clear away some of the opacity clouding media-trading practices. The advertising ecosystem has become overrun by “middleman”. As a result, advertisers face poor reporting and targeting. Publishers lose revenue while fraud has increased.
- Reducing the Need for OTA-dependency: At present, countless hotels rely on OTAs such as Expedia and Booking.com for distribution. They have become the go-to places for finding hotels and rooms but they all charge fees for the vendors while payment processing charges a fee on the customer.
It’s a relationship of necessity — major OTAs provide mass exposure for hotels to reach larger audiences and capture more bookings.
The cost of this relationship, however, can be substantial. OTA commission fees average between 15%-25%, heavily eroding hotel profit margins. Blockchain offers a solution to this issue too, allowing transactions to take place without intermediaries. - Access to Inventory: Blockchain solves the problems faced by travel startups is, access to inventory. As a new player you will either struggle because you don’t have the volumes required for anyone to be willing to open their API — and you can’t get the volumes unless you have the inventory — or, they see you as a potential threat down the road and deny you access altogether.
- Enhanced Security and Data Verification: Biometric information, once stored, authenticated and encoded in a distributed blockchain ledger, can be used to validate customers’ identities without requiring them to repeatedly share their personal or financial information. It will also enable travel players to provide personalized offerings to their customers. Along with enhancing security, the wider benefit is that the door-to-door travel journey will be sped up considerably.
Examples of Blockchain Technology In Action
In addition to these more general examples of the way blockchain can help to transform the travel industry, there are also some more specific examples of the technology being put to good use already, such as:
- Travelchain: integration: payment for ads and business data use, location based offers for example nearby restaurants or hotels. Travelchain allows users to make the public information available for every part of the system, while safely encrypting the private information.
- Winding Tree: Inventory Management for Greater Visibility — Making travel cheaper for consumers and more profitable for suppliers. Think of Winding Tree as a self-sustained, commission-free global distribution system. Picture the world’s travel content such as flights and hotel room listings floating around in the ether (the Winding Tree blockchain), accessible free of charge by enterprises, individuals, and travel managers via custom-built interfaces. Poor visibility on the inventory often leads to overbooking, cancellations and refunds. In a blockchain, each confirmed booking, be it a direct sale or a booking made by an agent, will be added as a transaction block. All participants will thus have a unified view of the remaining inventory. It can also help airlines and hotels monitor the fill rate. Switzerland- based travel platform Winding Tree2 is developing a fully public, blockchain-powered marketplace for travel inventory (hotel rooms, flights and even experiences). This will enable suppliers to list their inventories and agents to book through it. The TUI Group3 is already using smart contracts on its private blockchain to manage bed inventories across its partners’ property management systems.
- Cool Cousin: seeks to turn users into de facto travel agents in their cities. Visitors can ask for recommendations and “Cousins” are incentivized to participate thanks to the platform’s CUZ tokens, letting customers earn rewards for helping others and offering good advice.
- Webjet integration: Australian travel booking firm Webjet has signed up three travel agencies and a hotel chain to a blockchain solution it has built with Microsoft to address data exchange issues in the travel industry.
- Fizzy: AXA is the first major insurance group to offer insurance using blockchain technology. Discover fizzy, a 100% automated, 100% secure platform for parametric insurance against delayed flights.
- CryptoCribs: there are a lot of similarities to AirBnB, which makes it quite familiar. The first significant difference is the button at the bottom left corner. Pay with ETH or BTC
- Sandblock: Many frequent travelers belong to airline and hotel loyalty programs. However, spending points and miles often means jumping through multiple hoops to redeem rewards. Furthermore, despite high rates of participation in loyalty programs, many customers report a willingness to accept better deals from competing carriers and service providers if the price is right. New entrant Sandblock is looking to radically change the loyalty landscape with its blockchain-based platform.
- Loyyal: — Frequent Flyer Program Management — Blockchain can transform the loyalty membership experience for both businesses as well as customers. On a distributed blockchain ledger, loyalty rewards offered by travel companies can be tokenized and redeemed immediately. In a vast blockchain that includes almost all travel players, customers’ redemption options will multiply exponentially, including the option to transfer tokens to friends or convert them to cryptocurrencies.
- Arise:— Today, hotels send their room and rate information over networks that have been pieced together from third-party services each with their own APIs, data formats and local caches. These services take a cut of hotel booking revenue or charge for connectivity. Arise is a digital marketplace designed to eliminate the inefficiencies and costs in the current online travel distribution market and extend the value of hotels’ inventory.
- TUI Bed-Swap: — Finally, TUI has launched its own in-house blockchain project, which it refers to as ‘Bed-Swap’. Using this technology, the company is able to move inventories between different points of sale and flex selling margins, in real-time, based on the level of demand that is present at that time.
- LockChain: In simple terms, LockChain operates as a direct marketplace for hotels and hospitality companies looking to rent out property. The platform covers payment, property management and various other aspects of the booking process. Best of all, because it uses a decentralised system, there are no middlemen and no commission fees.
- Emphy: Emphy is decentralized blockchain lodging ecosystem. Blockchain technology along with smart contracts provides safer, faster and more affordable way to rent properties for vacations. Emphy will make it possible to solve and simplify the problems that most of the guests and landlords face. Emphy is the way to better travel experiences, discovering new destinations, meeting new people.
- MeetnGreetMe: MeetnGreetMe is a global platform connecting international travelers and local people for getting personal concierge services and lifestyle management. Contact and hire local people as your personal assistants to take care of your needs when you travel.
The core engine and fuel for a new era?
Blockchain and the capabilities that it brings are endless and the travel industry is only at the beginning of realizing new ways to leverage its capabilities. Changes will take time, but the first movers to implement the new tools and processes will be ahead of the pack and reap the benefits of leading the industry and ultimately make the journey better for everyone.
