The introduction of blockchain technology is expected to revolutionise global travel and tourism. What are its current and future uses in the hospitality industry? Donald Gasper takes a closer look.
The introduction of blockchain technology is expected to revolutionise the US$ 8.1 trillion global travel and tourism industry.
“Excitement about blockchain, the distributed digital ledger for sharing information securely across different organisations is understandable,” says Mark Hurd, CEO at Oracle. “But as with any emerging technology, the questions CEOs want answered have less to do with how it works and are more along the lines of how it will help boost revenue, increase productivity, streamline costs and create a better customer experience.”
Among other things, blockchain has a function which could allow hotels to track the location of guests on a real-time basis. This could improve the customer experience by reducing the waiting time for guests checking in at a hotel. Restaurants too could benefit from the use of blockchain in supply chain management for monitoring and tracking food.
“For hotels across the Asia-Pacific region, many of which run on decades-old technology, the idea of implementing blockchain may seem far away,” says Klaus Kohlmayr, Chief Evangelist for IdeaS Revenue Solutions. “But, even for those properties which could be labelled ‘late adopters’ of new systems and approaches, it may be closer than you think.”
Forward-thinking brands such as TUI Group, Lufthansa and Nordic Choice Hotels are already implementing elements of blockchain into their thinking and future strategy, pointing to a future where blockchain may be commonplace in the regional hotel sector.
“All hoteliers across the region need to begin to educate themselves about blockchain to understand how it may have an impact on the industry and their business,” says Kohlmayr. “The best way to stay on top of any emerging technology is to immerse yourself in it. Blockchain is still in its infancy, so keeping up with the latest advances will enable you to make more informed decisions in the future.”
Reports compiled on blockchain by credible analyst firms such as Gartner and Forrester offer valuable insights, and even organisations like Nasdaq are reporting on topics like: ‘How Blockchains Are Changing the Hotel Industry.’
There are also already a number of cases of the use of blockchain in hospitality. Blockchain platforms certainly have the potential to streamline and disrupt the distribution channel. Several cases include streamlining availability, rate and inventory (ARI) and descriptive content updates, payments for bookings, the enablement of direct bookings and loyalty programmes, to name a few.
Blockchain as a mode of payment
A case in point is the strategic partnership agreement signed in December 2018 between Singapore-headquartered Locus Chain Foundation, the company responsible for developing a next generation blockchain protocol, and Let’s Fly Free, an India-based online travel and tourism platform, to introduce Locus Chain digital currency as a mode of payment in the travel and tourism industry. Let’s Fly Free has more than one million paid users and has averaged a monthly revenue of US$40 million since its launch in February 2018.
With this strategic partnership, Let’s Fly Free users will be able to make payments for memberships and travel packages using Locus Chain digital currency, which aims to become a convenient digital payment mechanism backed by blockchain technology. Following the launch of its main net, Locus Chain will also build a customer management system for Let’s Fly Free. Both parties will later work together to introduce, develop and implement Locus Chain’s blockchain technology platform to develop the tourism industry in Asia and Africa.
Locus Chain uses Account-Wise Transaction Chain (AWTC) and Dynamic State Sharding technology to improve the transparency, reliability and scalability of its platform. The partnership is built on the practicality of Locus Chain’s blockchain platform, which has been designed to eliminate loopholes in existing blockchain by maintaining transaction speed and safety regardless of the number of users in the network.
Online travel agencies
An area of interest for all hoteliers related to blockchain should be what the online travel agencies (OTAs) are doing. Some industry observers believe blockchain has the potential to put many of these players out of business in the future. But OTAs have been traditionally resilient and adaptive in the face of change. Platforms such as Switzerland-based Winding Tree claim they are poised to disrupt the industry by offering an open-source blockchain that supports a decentralised travel industry, effectively cutting out Expedia, Airbnb, Booking and other third-party players. Watch this space closely and draw your own conclusions as the battle unfolds.
“Obviously, as with any new technology, it’s advisable to take a cautionary approach,” says Kohlmayr. “At the same time, you do not want to be left playing catch-up to rivals who implement new systems for the benefit of their business. With the rate at which blockchain technology is advancing, taking a broad and deep approach to understanding its potential, and implications in the hospitality industry, will prove invaluable.”