The goals of blockchain technology in the hospitality/hotel industry is eliminating third-party costs, and encouraging direct provider to consumer interaction.
By Jon Creasy
In 2016, the global hotel industry generated a staggering $550 billion dollars in revenue. Of this, $199.3 billion came from the US alone, with 88% of American customers preferring to make their reservation online, and 72% preferring to use an online travel agency instead of directly booking with their hotel of choice.
Old-timers will remember that travel was one of the first industries disrupted by the Internet. Travelocity and Priceline.com were followed by Kayak and other sites that disintermediated airlines, hotels and especially traditional travel agencies. This article focuses on the hospitality but blockchain upstarts are again trying to shake things up.
The hotel industry continues to perform well, despite of threats from online travel agencies and new and innovative alternatives such as AirBnB. Hotel executives are scrambling to keep pace with these two relative newcomers to the space, saying they’re creating a supply problem, and driving up booking prices to make up for third-party booking fees. While AirBnB and online travel agencies are posing significant challenges for the industry, there may be a newcomer in the rat race that few businesses are prepared to deal with: blockchain technology.
The goals of blockchain technology in the hospitality/hotel industry is eliminating third-party costs, and encouraging direct provider to consumer interaction. Blockchain companies like Abab, Lockchain, Trippki, Fujinto, Emphy, and Pally are creating platforms that aim to cheaply and transparently connect customers to room and rental providers that can best meet their needs, whether that be through providing an affordable hotel booking, or a unique room in a house, or a new way of using loyalty points.
When you book a room today, you will most likely use an online travel agency like Expedia or Kayak. Suppose you decide to stay one night in a hotel room, and the cost is $100. Most likely, $3 of that cost will go to cover the credit card processing fee. Another $17 will go to the agency you booked through – the booking fee. The remaining $80 is what the hotel actually gets from the transaction. This is the middleman market at work.
But what if you didn’t need to pay any of these extra fees? Saving 20% on a hotel booking could potentially buy you a better room, another meal, or entertainment during your trip. Up and coming blockchain companies realize this, and are preparing to radically change the market. For instance, Trippki believes that both hotels and their customers should have a mutually beneficial relationship through universal reward points. Whenever a customer leaves a good review, or refers a friend, they are rewarded with TRIP, a utility token that can be spent at the hotel, or redeemed for cash.
Lockchain, by comparison, believes consumers shouldn’t have to pay such a high premium to online travel agencies to get a good room, and hotels shouldn’t have to raise their prices to account for the cut the agencies take. They are providing a blockchain-based platform where customers can book rooms directly with hotels using any currency they like for a minimal fee (1-3%, depending on the currency). If the customer chooses to book using Lockchain’s native utility token LOC, they will be charged a 0% booking fee. The token is currently traded on HitBTC.
Legacy websites like TripAdvisor understand the importance of vacationing like a local. Because so many people like experiencing new places in this way, having a good reputation on TripAdvisor is a must for local businesses. But what if you could connect directly with locals to get recommendations on the best places to visit, eat, and see? Pally lets you do just that by utilizing blockchain technology to connect users all over the world with each other. Forget touristy guide companies – Pally allows you to not only to get the best local travel tips from locals, but provides a peer-to-peer payment platform too, making your entire experience quick, easy, and seamless.
Localized versions of these type of companies are popping up around the world. For example, Emphy is an Estonian AirBnB-like platform that makes the relationship between landlords and renters simple.
The hotel industry is ripe for the change blockchain technology could bring, but there is still a lot of work to be done for the blockchain companies that wish to take their place. It will take much more than a nice looking website, a whitepaper, and a Token Generation Event (TGE) to upset this $500 billion industry. The blockchain and utility token companies that are attempting to enter the space will need expert backing from both the cryptocurrency world and from the hotel and hospitality world.
Perhaps the first step towards blockchain disruption could be something like TravelChain: a decentralized data sharing platform where users are incentivized with rewards to share their travel preferences with hospitality companies. From a legacy perspective, this type of technology feels the least disruptive, but could be a stepping stone towards more innovative and new projects like the ones listed above.
The project has come out of Mapala, a Steemit-based site that has already created a community of possible users. It’s token sale is expected to close in February 2018.
At the end of the day, online travel agencies should be nervous. Hotel executives are already realizing that knowing their customers on a personal level is one of the best ways to combat alternative booking solutions, and blockchain technology takes them one step further in that direction. Here at Strategic Coin, we are committed to finding and recommending only the best utility token-based companies, and we believe the hotel industry will be seeing massive improvements very soon.
Featured Image via Pixabay