Why Decentralize Travel? — an Overview
Is blockchain the future of travel ecosystem or is it just a fad? Here is our overview of why travel should be decentralized.
Traveling has become much more convenient than ever before with faster booking, more options available, and plenty of discounts and promotions updated online everyday. As more and more Online Travel Agents (OTA) are diving into the travel sector, our means of travel options have expanded up to US$ 8.3 trillion in 2017, taking up 10% of the world’s industry.
So who is the ultimate winner in this travel industry? Unfortunately, it is not the hotels or the airlines OR you as we expected. The picture is distorting rapidly as the third parties take more control of the system, centralizing the power to them. Across every aspect of a traveler’s journey, from pre-trip to in-stay and post-trip, travelers face unnecessary complexity, hefty transaction fees and impractical loyalty programs.
Pre-Trip: Highly Fragmented and Complex Travel Ecosystem
The current travel ecosystem is highly fragmented with multiple intermediaries such as OTAs controlling the transaction flow. Blinded by the convenience of OTA services, travelers rarely understand what proportion of their payment goes towards third parties instead of directly to the vendor. In fact, considerable percentage of the payment is being leaked as commissions fee to OTAs. The commission fee started from 3%. Today, it is ranging from 15% to 30%, rewarding the OTAs but very little for the vendors or the travelers.
Currently, the two largest OTAs, Expedia and Priceline, take up 90% of all online bookings and this duopoly is expected to strengthen and take over larger share. The OTAs are constantly fed with more bargaining power, disrupting hotels’ profit margins. Eventually, hotels will be forced to increase their price per room or cut down their spending on services, which would decrease the value of customers’ travel experience.
In-stay: Unnecessary complexity and hefty transaction fees
Unfortunately, it is not just the OTAs at stake for higher prices. Travelers are also faced with increased costs when they are made to contribute to the income of financial institutions and accounting firms through fees. International payments are inefficient as existing charges issued by vendors such as banks may include up to 3% of additional transaction fees. On top of this, players in the travel space have to deal with dozens of currencies and constantly changing customer base. Now, it is easy to see how having just two intermediaries in the process can nibble your money away.
Post-trip: Ineffective loyalty programs
Large hospitality players are consolidating loyalty programs to make it more meaningful for the customers. Yet, not all players have been able to do so. Within travel, only large, multinational players hold the capability of building loyalty programs that work. Otherwise, smaller players run their own loyalty program, creating difficulty in keeping track of all reward programs with different brands and platforms, in different places at different times. As a result, it leaves the loyalty space heavily centralized to the large travel players that now owns multiple programs and the smaller chain hotels are left alienated from merger benefits.
A Decentralized and Frictionless System
Passport can bring blockchain-based solutions to problems laying across today’s complex and expensive travel landscape. Passport DAPP (Decentralized Application) uses blockchain technology to provide a new, decentralized system that gets rid of unnecessary intermediaries from the system, removing associated fees, transaction delays and potential counterparty risk. With the distributed ledger, the system is streamlined within a safe and transparent environment and automated processes using smart contract bring down costs while adding greater efficiency. Last but not least, Passport’s payment system will revolutionize the loyalty space. Under a single platform, travelers an access their loyalty points without the usual limitation and redemption silos. The new loyalty program will transform into one that is more liquid, flexible and efficient. Now, travelers can pay as close to face value as possible, bringing back the value to overcharged travelers.
Travel with blockchain technology will transform the travel ecosystem into one that is transparent, accountable and affordable for everyone.
Are you ready to grab your Passport?
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About Passport
Passport is a blockchain-based solution that aims to allow transparency and remove friction in the travel ecosystem. Through reducing fees occurred in payment processing, network, issuing bank, FOREX, and OTAs and distributed system booking, Passport will effectively lower transaction costs for all participants and incentivize loyalty rewards by aggregating merchants in the travel ecosystem. With instant penetration into worldwide markets, thanks to partnership with handy, Passport will immediately be utilized in handy Travel Wallet and handy Hotel Payment Network, increasing access for the users and establish Passports presence.
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