Blockchain’s Promise in the Hospitality and Travel Industryby Fintechnews Switzerland November 28, 2019
Blockchain, the technology underpinning popular cryptocurrency bitcoin, is considered as one of the most exciting digital technology innovations of recent times. Though the financial services sector has been undeniably the most active sector to experiment with and deploy blockchain, the technology promises to transform numerous other industries ranging from human resources and digital identity, to voting, education and hospitality.
Blockchain’s greatest promise lies in its ability to provide a way to move information from one point to another in a highly secure manner and cut out financial middlemen, revolutionizing the way information and data are exchanged. Blockchain also allows transactions to be recorded permanently in an open, encrypted ledger, enabling the creation of a transparent, verifiable and immutable register of transaction data.
Blockchain in the hospitality industry
In the hospitality and hotel industry, blockchain can eliminate third-parties and encourage direct provider-to-consumer interaction.
Hotel booking, in particular, is a fragmented market in which hotels and guests must go through many middlemen and infrastructure to connect. Blockchain promises to cut out these middlemen, bringing efficiency and significant cost savings for both hotels and consumers.
But according to Norm Rose, senior technology and corporate market analyst at Phocuswright, blockchain’s most likely application in travel is payment settlement. The technology can help reduce settlement costs and time by eliminating banks and other financial intermediaries.
Outside of payment settlement, blockchain can also help combat fraud in the travel industry, Rose said, in addition to many other potential use cases including improved baggage tracking, and passenger identification and identity management in general.
Another possible use case is loyalty schemes. Loyalty systems are usually independent systems, and there is no easy way for a traveler to, for example, use loyalty points earned from air miles on a hotel stay or to shop at an airport. This results in lost business opportunities and reduced scope for better customer experiences.
In this scenario, blockchain can be used to help multiple partners come together to provide a unified platform and deliver enhanced user experiences. Blockchain can bring hospitality chains, airlines, car rental agencies and coffee chains onto a same platform that delivers a whole range of options for members to redeem loyalty points from any of the partner across the network.
Blockchain solutions for the travel and hospitality industry
Though still limited compared to financial services, blockchain solutions for the travel and hospitality industry have nevertheless begun to emerge over the past couple of years.
Winding Tree is arguably amongst the most notable ones. Developed by a Swiss non-profit organization, Winding Tree is a blockchain-based, open source platform for travel distribution that aims to make travel booking more affordable for travelers and more profitable for suppliers.
Another solution is Nocturus, a blockchain-based hotel booking system middleware developed on the Hyperledger platform. Nocturus provides an open and secure marketplace for hotels to list their room inventories and for travel agents and websites to search those inventories and book rooms. The startup was acquired in January 2019 by China International Travel Service (CITS), a state-owned company and the largest Chinese travel agency.
Travel blockchain project Trippki is an Ethereum-based solution that intends to make online travel agencies and global distribution systems obsolete. Trippki is a hotel booking and reward system charging 0% commission. Trippki incentivizes participation on its platform by rewarding users with TRIP, a utility token that can be spent at a partner hotel, or redeemed for cash.
Blockchain adoption in hospitality
Several players in the travel industry have started adopting blockchain.
German company TUI Group, the world’s largest tourism company, is arguably a pioneer in blockchain integration in the sector. TUI Group has shifted all its contracts to its private blockchain, and its BedSwap project uses a blockchain-enabled system to maintain records of hotel bed inventories in real-time. TUI Group is also working with Winding Tree on a public decentralized travel ecosystem to distribute travel inventory.
Webjet, a digital travel business from Australia, launched its blockchain-based platform Rezchain in November 2019. Rezchain, developed in collaboration with Microsoft, leverages blockchain to enable error free hotel bookings, eliminating costly discrepancies that occur in up to 5% of transactions.
Featured image credit: Edited from Freepik