Will Blockchain Redefine Travel As We Know It?
This post was written by Daniel Buchuk
The tourism industry is estimated to be worth US$ 8.7 trillion annually, with sales expected to hit $817 billion in 2018. This industry by itself accounts for almost 10 percent of global GDP and moves millions each year. Since the ecosystem relies upon multiple companies passing information between one another, the potential applications of blockchain technologies to improve are endless, making travel and tourism the next prime targets to benefit from blockchain-enabled solutions.
In a not-so-distant future, people might be able to bypass the process of booking through third-party websites or just go to an airport without the need to stand in endless queues. The introduction of blockchain in tourism has the potential to help both travelers and companies within the ecosystem. Hotels, airlines, car rental, tours, pricing, and many other operations have an opportunity to evolve. Through a more intelligent and secure orchestration of data across companies, as well as the ability for customers to set their own preferences and manage their choices in a transparent ecosystem, the industry can improve tremendously.
While the opportunities are endless, they can be grouped into three main areas: simpler transaction management, better security processes, and improved loyalty schemes.
1. Payments & Transactions
Financial transactions are a key component of the travel industry, and blockchain technology can help managing payments, making them simpler. The amount of transactions needed with multiple suppliers can be reduced and streamlined using blockchain that simultaneously help synchronize and secure payments.
This is especially important with overseas travel. Whether this is achieved by accepting cryptocurrency as a payment method or by providing a transparent ecosystem through a safe global ledger, where bank payments might be streamlined to reduce associated costs for hotels, flights or tours. What’s more, blockchain has the potential to improve the level of trust among all parties involved through secure payments.
Imagine if the industry had access to a distributive blockchain database built in collaboration with airlines, hotels and other industries relating to tourism. This would empower individuals to directly book airline tickets, hotels, and rentals via smart contracts. Intermediaries such as Trivago or Expedia would become redundant and users would ultimately reap the benefits.
Inventory tracking also would come in handy. Since flight and hotel pricing fluctuate constantly, blockchain can be applied to this complex supply chain to avoid overbooking and to make customers fully aware of price variations.
For example, last month, Canada’s flag carrier Air Canada announced an agreement with Swiss startup Winding Tree to participate in an open-source, blockchain-based travel platform. The initiative is expected to remove bottlenecks associated with the distribution and sale of air travel products. This will give customers better access to inventory listings, directly from the airline.
2. Identification & Security Processes
One of the more exciting potentials for blockchain for hospitality is connected to identification and security services. Passengers are required to provide ID at various stages of their journey, but industry-wide adoption of a distributed blockchain would contain quickly verifiable data on travelers, such as a fingerprint to for verification, reducing waiting times.
In terms of the importance to the travel industry, stability and security rank very highly. 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.
Blockchain can make accessing and storing important information easier and more reliable, because responsibility for storing it is shared across the whole network. For example, to avoid unnecessary delays at various stages of traveling, smart contracts codes can help scan passengers in real-time. Moreover, this would ensure security to the passengers and help preventing unnecessary queues in airports.
3. Loyalty Programs
Tourism and loyalty programs go hand in hand. The loyalty rewards programs is a US$360+ billion industry, made up of thousands of different programs each with its own systems for earning, redeeming, and exchanging their unique points. In fact, recent data from the IMI Corporation shows that 68 percent of customers are bound to be loyal to brands offering rewards.
Blockchain technology can revolutionize loyalty programs by simplifying the process, making it easier for customers to access their points and redeem them. Rewards can be distributed through digital tokens which can be used anywhere and any time, with an added layer of security to reduce loyalty scheme fraud. This can work beyond the travel industry, including in retail.
Key players in the industry have started taking big steps to embrace the opportunities that blockchain can bring to create better loyalty programs. This summer, Singapore Airlines launched its blockchain-based loyalty program for frequent customers. KrisPay, a digital wallet developed in partnership with KPMG and Microsoft, allows Singapore Airlines customers to turn travel miles into units of payment, which can be used with partner merchants in Singapore. Most notably, the newly dubbed KrisFlyer program utilizes a blockchain to underpin its clients’ loyalty wallets.
Another great example in this area came from The Cathay Pacific Group and its rewards programme, Asia Miles, which launched their first application of smart blockchain technology earlier this year in collaboration with Accenture. Through their new dining promotion in Hong Kong, Unlock More Miles, members will earn miles credited to their accounts within a single day, improving business efficiency by minimizing back-office administration.
Short Term and Long Term
Travel platform Travelport predicts that most of the industry’s blockchain developments in the short term will happen in closed supplier groups on private and permissioned chains. In the mid-to-long-term though, we will probably see it applied to payments, inventory and order management. Once more and more players within the industry join forces and embrace this new technology, blockchain enabled solutions will be able to assist in the long-term with whole trip management on blockchain.
The future is bright for the travel industry, as travelers will be able to trek across the world with the added benefits of an infrastructure designed to make the entire experience better, safer, cheaper, and faster.
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