The benefits of blockchain in the travel and hospitality industry
|Over the past decade, the booking and reservations industry for travel and hospitality has migrated online. The internet has revolutionized the way in which people travel, with instant price comparison websites, cheap web-based airlines and shared accommodation apps like Airbnb. Blockchain technology is the next logical step in a movement away from costly, centralized management and into an entirely self-managed, autonomous tourism ecosystem.
The advantages of decentralization
Online booking sites like Booking.com might appear to provide the best deal to the customer but they charge a high commission to accommodation providers, causing prices to rise or service to decline. Beppo Buchanan-Smith of the Isle of Eriska Hotel and Spa in Scotland calls them 'parasites' and claims hotels have to raise room prices to cover losses.
While the move online has helped to reduce staff and rental costs associated with traditional brick-and-mortar travel agents, the system is still affected by a centralized management system that can dictate and manipulate prices. Senior VP of research group Phocuswright, Douglas Quinby, says 2016 was the first year that online travel agency (OTA) bookings exceeded that of hotel website bookings. Already a number of companies worldwide are investigating blockchain projects in the travel and tourism industry. The Crown Prince of Dubai recently announced intentions to create an entirely blockchain-based, government-backed marketplace for the tourism industry.
In Australia, travel agency Webjet is developing a similar project and the TUI Group are using blockchain technology to manage contracts with freelance tour guides.
How blockchain can benefit tourists and retailers
A blockchain is entirely decentralized, autonomous and open-source. The system is supported and controlled by all involved and cannot be manipulated to benefit one party more than another. With a blockchain system, consumers can interact directly with retailers - cutting out the middleman, saving costs and providing the most efficient, streamlined user experience. The immutable, secure nature of blockchain provides a trustworthy payments platform and an encrypted method for data transfer. All interactions on the chain are identified by a unique private key and every transaction is recorded in a way that cannot be altered. All of this is achieved without the need for third-party management and is secure from outside interference or tampering.
The cost of implementing a blockchain reservations system is negligible when compared to the cost of setting up and maintaining an online website. Customers can easily connect to a blockchain system with only a mobile phone and instantly begin interacting with a tokenized system that provides ongoing rewards from day one. The low cost of entry and simplicity of deployment means a blockchain-based platform is available to any organization or business, no matter the size or exposure to technology.
Rewards on a blockchain system
Traditional rewards offer little redeemability and tend to stagnate over time. With a blockchain-based rewards system, retailers can reward their customers with tokens that not only equate to real money but consistently increase in value over time, with no extra cost to the retailer. Research by the IMI Corporation shows that 68 percent of customers are loyal to the brand that offers the highest number of rewards. Through an all-in-one app such as that offered by DigitalBits, a wide range of hotels, restaurants and travel-related industries globally can collectively and easily provide services redeemable for blockchain-based tokens.
Any retailer can instantly join the platform and begin trading services without the timely and costly need for a third-party intermediary. In addition, the availability of encrypted shared data will give retailers the ability to provide more refined and targeted results while effortlessly maintaining the privacy of customers.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.