While blockchain remains somewhat of a concept for the hospitality business, the potential of blockchain to address the industry issues related to transparency and intermediary costs could revolutionise the market. Streamlining intermediary costs and countering the strength of the OTAs appear currently to be the main drivers of blockchain development in the tourism sector, but the opportunities are broader still. Below are listed applications and advantages for blockchain in hospitality and tourism:
- Direct P2P booking, bypassing booking intermediaries
- Pricing flexibility, without intermediary agreements such as price parity
- Ease of bundling, packaging hotel and travel/experiential services
- Provision of smart contracts, creating online security and trust
- Secure payment systems, trust through escrow-like transactions
- Reduced transaction fees, bypassing card services & banks
- Reliable P2P review systems, immutable and based on real purchases
- Distributed databases, give transparency and aids
flow of information - Decentralised arbitration systems
- Flexible loyalty programs, broad exchange and redemption options
As the hotel distribution landscape changes to sources such as Google and Amazon the ease of access to inventory facilitated by blockchain and ability of dynamic businesses to package additional products and services will form the backbone of experiential travel. With distributed ledger technology, smart contracts automate the transfer of funds between parties according to the rules (e.g. rate, cancellation fee, deposit, payment term) established in the agreement and with transparent and secure payment via cryptocurrency, trust is determined for both parties without the risk, interference, delays and costs of travel or financial intermediaries.
Review sites have surpassed classification systems and brands as a significant factor in the choice of accommodations. However, manipulation through fake or impartial reviews and review sites loss of neutrality is an issue for the industry. The immutable distributed ledger in blockchains provides authenticity by giving trace on verifiable transactions, reducing the potential for falsification and eliminating editing. Similarly, over time, many hotel and travel loyalty programs have become more convoluted, less transparent, and challenging to use. Loyalty programs linked to smart contracts facilitate immediacy, full partner integration (e.g. hotels, airline, taxi), personalisation and flexible redemption options.
While the development of layered private blockchains by travel industry intermediaries is inevitable, the primary purpose of decentralised distributed databases are they are not subject to control by a single authority and success is dependent on gaining widespread industry support. Winding Tree is an example of a non-profit open consensus / open source development project for a permissionless pubic decentralised computing platform.
Blockchain has applications across many industries related to hotels. Within CRE including hotel transactions blockchain cases include the improvement of the search and listing processes, expedition of property due diligence and security in property title management, as well as application of smart contracts in leasing arrangements. Within the hotel operations, for example, a digital food supply chain powered by blockchain enables full transparency to management and guests by tracking each step of the food supply chain, down an individual producer or farmer, by shared data on an immutable ledger, creating differentiation, brand loyalty and trust.
The global hype over bitcoin and cryptocurrencies investments, rapid growth/decline and overall volatility, as well as issues of use in illegal transaction and coin exchange theft, have detracted from their practical application. While in most countries cryptocurrencies are legal they are not fully integrated into the legal framework and for tax purposes may be treated as property or money and typically liable to VAT when received in exchange for goods or services.
The following are leading examples of blockchain projects in hotels and tourism:
Winding Tree – Decentralised Travel Distribution
Token – Lif. Winding Tree latest Updates on Medium.com. Link to Winding Tree Whitepaper
Winding Tree incorporated as a non-profit company limited by guarantee with the aim to address current issues in the travel industry and enable permission-less innovation. Built on top of the Ethereum platform, by connecting buyers and sellers via smart contracts and open-source tools, without transaction fees, it offers a decentralised alternative to GDS and OTA distribution with reduced cost and increased packaging flexibility. The platform is built for software engineers, and it is not the intent to user-facing interfaces for the marketplace but rather encourage third-party developers to create interfaces to increase transparency, competition and quality. It is understood that deals have been agreed with high profile airlines including Air France-KLM, Lufthansa and Air Canada. In February 2018 Winding Tree raised just approximately €14 million in an ICO. May 2019 it was reported that the first public blockchain hotel booking was made on the Winding Tree platform at Nordic Choice Hotels – Hobo Hotel Stockholm.
LockTrip – Booking Portal
Token – LOC. LockTrip latest Updates on Medium.com. Link to LockTrip Whitepaper v1.2
LockTrip is a multifaceted project consisting of three elements: (1) A travel marketplace, hosted at LockTrip.com. It allows customers to book hotels, vacation rentals and flights without intermediaries and their charges. (2) A distributed database as a marketplace-supporting infrastructure to give back the control of prices to hotels and to improve transparency as well as efficiency. With zero commission, it will make it possible for travel agencies to synchronise and source inventory, eliminating costs along the supply chain. (3) Optimisation for other businesses that have identified a requirement for blockchain technology. LockTrip monetises its business model by offering additional premium services at a fee and relying on the anticipated appreciation of the LOC token based on increased transaction volumes. LockTrip is currently finetuning marketplace user interfaces, attracting hosts and hotels to publish their listings and availability and started the research work on the decentralised database. They state financial security until early 2022, without depending on its cryptocurrency reserves or revenue generated from premium features.
Beenest – Decentralised Homesharing Network
Token – BEE. Bee toke
Peer to peer homesharing is dominated by the homestay intermediaries of Airbnb, HomeAway and Booking.com, with high fees and San Francisco based Beenest is looking to disrupt this space using blockchain to facilitate direct booking between hosts and guests. The commission-free platform utilises payment through Bee tokens (deployed to the Ethereum blockchain), smart contracts, KYC checks and blockchain published peer reviews. Small charges (1-4%) apply to the use of other cryptocurrencies and fiat payments.
Travala – Crypto-currency Friendly Travel Booking
Token – AVA. Link to Travala Business Plan. Link to Travala Monthly Update Reports
Founded in 2017, Travala describes itself as a Next-Gen Online Travel Agency (NOTA), providing a revolutionary, easy to use booking platform combining decentralised technologies and tokenised incentive structures, an advance towards more mainstream adoption and growth of blockchain. The platform launched in November 2018 and to May 2019 achieved a slow but steady growth to just under 600-room nights/month. Originally Travala intended only to use AVA tokens. However, they changed strategy to apply a broad range of payments, due to cryptocurrency volatility and suppliers demand to have fiat payments available. A feature of Travala is incentivisation with reservation discounts based on the balance of AVA tokens, the volume of platform usage and referrals. Marketing appears focused on support and awareness within the blockchain community with close ties to blockchain meet-ups & events.