Web3 in travel
With 2022’s cryptocurrency markets in turmoil, it’s easy for skeptics to question the long-term value of many blockchain and web3 projects. However, judging the category by the price of speculative tokens misses the point that many companies in this space have little to do with digital currency, but are instead using the underlying technology to deliver unique solutions.
At JetBlue Technology Ventures (JTV), we invest in and partner with early-stage startups improving travel and hospitality. To do this, we focus on use cases first. And this means we keep an open-mind to factors like underlying platforms, programming languages, degrees of centralization, etc., as long as a concept can safely deliver unique value to the travel industry and our parent company, JetBlue. While we haven’t yet invested in web3, that doesn’t mean we haven’t noticed several companies and concepts that should be on the travel industry’s radar. In this post, we’ll look at a few that have caught our eye.
Decentralization and tokenization in accommodations
The high fees imposed by popular home-sharing platforms like Airbnb or VRBO have been a hot topic amongst customers. A decentralized, smart-contract-based marketplace could be a solution that ensures higher earnings and more control for hosts. In this scenario, a decentralized, programmable marketplace removes the “middleman,” by allowing property owners to rent directly to guests. One company already doing this is Dtravel, a decentralized autonomous organization (DAO) owned and governed by its community of hosts, guests, and token holders. As with other concepts, management by DAO is intended to give the community the power to decide where resources and profits are directed: whether that be for enhancements, new features, or paid to the community as dividends.
So now that the high fees are solved for, what about the lack of flexibility in most reservations? Houston-based Pinktada aims to make reservations transferable, sellable, and swappable by tokenizing stays into what they call a “room-night token” (RNT). Put simply: Pinktada offers a secondary market for your hotel reservation. And if no one wants to buy your stay from you, Pinktada will also act as a market-maker, offering to buy back the reservation at an increasing discount the closer you get to the intended date of the stay.
Part of the benefit of this model is that the hotel’s revenue for the room is guaranteed, regardless of how many times the RNT for a particular room and night changes hands. Travelers also get significantly more flexibility and peace of mind and might even be able to make a profit if the price of hotel rooms rise above their purchase price. However, we can imagine both pros and cons for that scenario…
The rise of crypto for online travel agencies
Another intriguing area is the acceptance of cryptocurrency as a differentiating factor for online travel agencies (OTAs). Australia-based Travala has built a successful and growing OTA around the premise of accepting cryptocurrencies while also offering token-based rewards and incentives. Travala now boasts more than 2.2M properties in 90K destinations spanning 230 countries, and claims to be up to 40% cheaper than mainstream travel booking platforms.
Interestingly, Travala also offers transparent company metrics on a monthly basis on their public website. Their May 2022 Monthly Report lists $5.3M revenue, over 10K room nights booked, over 2K flights booked, and 189K monthly active users. Travala also awards users for bookings using its own token called AVA as well as provides the capability to allow users to book travel directly from certain cryptocurrency exchanges.
Tokenizing carbon offset credits for good
The voluntary carbon market — which is intended to allow carbon-intensive businesses to offset their emissions by purchasing carbon credits from projects that remove greenhouse gasses from the atmosphere — is another focal point for several blockchain-based companies. These companies argue that existing purchasing options are complex, opaque, and laden with middle men whose fees take away from project funding. The market is currently estimated at around $300M with McKinsey forecasting growth to $50B by 2030. Other estimates double and even triple that number.
Whatever the future market size, tokenizing credits might help bring more transparency, liquidity, efficient pricing, and hopefully funding for projects. Some of the most notable companies in the space include Flow Carbon, Pachama, Nori, Toucan, KlimaDAO, Moss, C3, and AirCarbon Exchange. Unfortunately, this category is not without controversy, including accusations that early efforts mainly sold carbon credits for low-quality, dormant projects. The industry’s primary credit issuer and standard-bearer, Verra, recently suspended support for the creation of blockchain tokens based on retired credits while it reevaluates the process and its impacts.
Decentralized mobility
All over the transportation space we’re seeing the effects of supply-chain disruptions, scarcity, and rising fuel prices. While JetBlue Technology Ventures doesn’t focus specifically on the automotive space, there are some web3 applications that could make sense for air travel, tourism, and hospitality moving forward.
Mobility as a Service (MaaS) is a concept that allows travelers to choose from all available transportation modes on a single platform. Existing initiatives have been slow to catch on and generate revenue. Could a web3 community enable the goals of a MaaS platform in a peer-to-peer way? A growing focus on sustainability could drive the shift toward decentralized mobility markets and lead to environmental benefits through more efficient travel.
One MaaS platform gaining traction is MobiFi, through which users can discover, plan, book, and pay for any available transportation service while still controlling their data permissions and privacy. MobiF also allows travelers to earn rewards by choosing sustainable transport options.
While there’s more of a smattering of web3 developments in travel and tourism mobility so far, we suspect the brands that will win the web3 future are the ones that start experimenting now to improve traveler mobility and lead the way in sustainable travel.
Token-based loyalty programs
You’ve probably received an email that your travel-brand points are going to expire, but knowing how to best use them can be surprisingly hard. Many say loyalty programs have become too complex.
Could token-based loyalty programs be better than the status quo? Crypto tokens and non-fungible tokens (or NFTs, which are a type of tokens which are each individually unique and cannot be copied, substituted, or subdivided like other forms of currency) can be transferred from one traveler to another, exchanged for other tokens or other loyalty programs, and potentially grow in value with no expiration date. All potential wins for travelers. However, it’s hard to believe major brands will willingly give up their existing incredibly valuable loyalty programs unless maybe some new entrant demonstrates that reward tokens can generate even more loyalty and business value.
A few startups working on token-based loyalty programs include Flycoin which is a crypto-based frequent-flier program launching with Ravn Airlines that pays guests in Flycoin currency every time they fly or transact with Flycoin partners; San Francisco based Trypto which rewards travelers with existing cryptocurrencies and expects to launch with Fiji Airways; Loyyal which aim to provide ‘blockchain as a service’ to help airlines build out their own token-based loyalty programs; and Fida which wants to make it possible for any brand to have its own token-based currency.
Web3-powered accommodations and mobility could go hand in hand with better rewards for travelers, and loyalty programs might be some of the lowest hanging fruit for travel brands considering web3 innovation.
Everyone’s taking note of increased travel, inflation, interest rates, fuel costs, and employment trends. Combine all that with the growing interest and investments in web3, and the travel industry has a lot to think about.
Of course, aviation, trade, and travel are highly regulated industries, and experimenting is often easier said than done. Crypto tokens, which are critical to many web3 applications, still exist in a regulatory gray zone in U.S. Some regulators, including Chair Gary Gensler of the Securities and Exchange Commission, have argued that tokens may well meet the definition of securities and that platforms offering tokens should be subject to the same rules as companies that issue stocks and bonds. Travel brands, especially airlines, will still have to ensure compliance while leveraging new tech to improve the traveler experience.
Not to mention that aviation is a low-margin business, and cryptocurrency’s volatility is a risky proposition for many brands in the space. Even though we’re just arriving at this intersection of travel and web3, leading brands should be thinking of how they might leverage these developments. Web3 startups (and their investors) can be positioning themselves to work with travel brands that are responsibly leading the way, and travelers can start paying attention to ways they might benefit from what web3 has to offer the travel experience.
