Is the hotel industry ready for blockchain?

The potential applications for blockchain in hospitality and travel were discussed at a recent event in London. Sarah McCay Tams reports.

Greater transparency, lower distribution costs and data you can trust – those were just some of the benefits of blockchain highlighted during the recent panel discussion on ‘Hype or Hope: Is Blockchain going to change the industry, or much ado about nothing?’ at the recent Revenue Strategy Forum London.

Khalid Ladha, director of strategic alliances (UK/EU) at BlockX Labs kicked off proceedings with a quick introduction to what blockchain actually is. He explained how blockchain operates on a protocol, very similar to the SMTP protocol that is at the heart of all email systems. As with SMTP, no one owns blockchain at a base level. Rather, companies will be able to plug into a blockchain protocol and build their apps on top.

The fact that blockchain operates on this ownerless protocol model is just one way in which the system should be more trusted than current networks, as Ladha said: “Blockchain is something that disintermediates trust. Take your STR report as an example. STR relies on hotels to give accurate data. With blockchain you are moving away from trusting third parties to trusting a system as a whole. Blockchain will serve as your hub of truth, which will make a huge change to organisations as you can trust the data you are looking at. Comp set reporting on an excel sheet that comes out once a month is ludicrous!”

For Ladha, the real value is in creating a trustless network: “That’s the real innovation, because there’s no single party you are trusting. Once that happens the sky’s the limit.”

• Trialling blockchain
Nordic Choice Hotels in Finland is already experimenting with blockchain. Christian Lunden, director of future business at Nordic Choice Hotels, told the RSF audience the hotel group could be using blockchain in a year or two. “What we are trying to do now is understand what it is and what the possibilities are,” he said.

Nordic Choice is trialling blockchain with Hobo Hotel in Stockholm, working through a third party channel manager. According to Lunden, Nordic Choice’s use of blockchain will be purely B2B; the guest themselves should not need to understand what platform they are making their reservations on. “They don’t need to pay with cryptocurrencies,” he explained.

Lunden is hopeful this new distribution channel will help reduce costs. “If it’s an open platform we can decide what we are paying in distribution costs. If you have one place where all the inventory is you can have one API – cost will be less for everyone. This also opens up more possibilities with packaging. If everyone can sell our rooms – a blogger, travel agency or even a company selling beds – the possibilities are endless.”

• Blockchain and hotel distribution
David Brillembourg, founder, chairman and CEO of Brillembourg Holdings, offered his take on how blockchain could solve distribution challenges: “We are experimenting with building a hotel brand around full distribution through the blockchain, giving full transparency in price. You can book in the blockchain and then trade your reservation if you want because you own the reservation. Ultimately, its direct distribution to a client. We are applying what timeshare has been doing for decades – forward-selling rooms.”

Brillembourg hopes to launch this next year through his STEP (Simple Travel Ecosystem Protocol). “This will affect the ownership of hotel distribution,” he said.

• Blockchain and hotel loyalty
Charles Ehredt, co-founder and CEO of Currency Alliance, explained how blockchain could be used in loyalty programmes.
Typically, a loyalty programme has to action:
• An accrual transaction
• A redemption, where people redeem against a flight or hotel
• Exchanges that allow customers to exchange points from hotels to airlines
• A retail component that allows customers to buy points

Using a centralised blockchain database, hotel companies could push the application out of their dated legacy systems and put that into smart contracts that allocate value among trading partners.

“A loyalty programme has a 10% breakage point, where points expire. You can share that value amongst your trading partners. Using blockchain reduces risk and fraud and enables you to better serve the customer,” Ehredt explained.

However, he also pointed out that you need to have partners to network and collaborate with. Blockchain usage is currently in a bit of a stalemate situation, waiting for key players to make a move. “Companies are asking ‘What is the defining moment when I should consider launching blockchain?’ The answer is when there’s a minimum critical mass of business partners to do business with,” Ehredt said.

• When will blockchain gain critical mass?
Nordic Choice is testing right now. TUI is also experimenting with blockchain. And in aviation, Singapore Airlines has introduced a miles-based blockchain based digital wallet.

According to Brillembourg, blockchain technology will be applied by all distribution platforms over time. “Everyone will ultimately have blockchain; every brand and online travel agent will apply blockchain somehow in the next decade.”

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