Blockchain in TravelTech: How Startups and Mature Players Strive for Industry Disruption
Booking Holdings (formerly Priceline Group) and Expedia are the leaders in the travel booking industry. According to the American Hotel & Lodging Association (AHLA), 95 percent of the US online travel market belongs to these companies. In 2016, the number of accommodation bookings through OTAs exceeded direct hotel bookings.
In an attempt to stop OTAs’ dominance and cut expenses, hotels have been encouraging customers to book directly from their websites. Blockchain-based decentralized companies have joined this fight against powerful middlemen.
At the same time, some centralized companies have realized blockchain’s potential and applied the technology to enhance internal processes. Platforms providing travel assistance services have chosen blockchain to be enhance their competitiveness in market.
Before we talk about these companies, let’s briefly define terms.
Blockchain technology is one of the implementations of a distributed ledger — a digital system with a decentralized design. Such a system allows for storing, recording, and maintaining transaction records and their details in numerous places simultaneously, guaranteeing their integrity and safety. These records are encrypted with hashing algorithms. In blockchain, records are united in a series of blocks. So, blockchain works as a decentralized database, and participating computers belong to a peer-to-peer network. Transactions between participants are regulated with smart contracts.
So, let’s have a look at how startups and mature travel industry players leverage blockchain.
Winding Tree: B2B Decentralized Inventory Distribution
“Making travel cheaper for consumers and more profitable for suppliers.”
Winding Tree is a decentralized distribution platform for travel. An open B2B platform, it allows even small suppliers to list their inventories and compete with big businesses for customers. Travelers can save money or afford longer trips because they can book accommodations, air tickets, or tours directly through the blockchain network, and skip intermediaries.
Cost savings and direct cooperation between vendors and customers are possible thanks to the use of the platform’s own cryptocurrency, an ERC20 compatible Líf token. ERC20 is a smart-contract standard used in the Ethereum platform. Ethereum, a cryptocurrency itself, is also a blockchain platform that is considered to be the most mature and stable one for establishing peer-to-peer transactions.
Winding Tree representatives note that the Líf token allows for reducing transaction costs as it makes international payments cheaper.
As a result, both travelers and providers benefit from being part of the platform.
TravelChain: Personalized Travel Achieved by Sharing Individual Data
“Let’s give the information back to people!”
Business players who have access to customers’ personal data significantly increase their chances for development and prosperity. The reality is that 80 percent of personal data is stored and managed within transnational corporate systems. Small and medium travel providers are left with 20 percent of the available data only.
TravelChain aims to make information available for small and medium businesses with a concept of smart travel.
“Smart travel entails traveling according to one’s interests. And, more importantly, this approach allows travelers to meet like-minded people, gain knowledge, discover new things about the world and themselves. Smart travel also allows providers to access their target audience and build a closer relationship with it,” says TravelChain CEO Ilya Orlov.
This concept can be realized with the use of blockchain. TravelChain founders came up with the idea of building an open, decentralized platform where users are motivated to collect their travel data, for example, transaction history or visited destinations, and share it with service providers.
“Nowadays the travel industry consists of transport, accommodation services, and activities. Transport and accommodation are completely digitized, activities are on their way to become so. A traveler is the only industry participant that is barely digitized. There is the need to digitize travelers to get information about them. How is that possible? Travelers should be motivated to share their information. In our case, the token is the main motivator.”
Every time travelers give permission to use their data, they receive TravelTokens that can be used as payment for services within the ecosystem or exchanged for money.
Using information about travelers’ preferences, businesses can offer them personalized tours that totally meet their expectations and capabilities.
Thanks to the platform’s unified rating and search system, entrepreneurs can start their business without using services of banks and attorneys, Ilya Orlov notes.
So, the data exchange marketplace allows for removing middlemen from the supply chain. This leads to cutting marketing costs for businesses and making travel more affordable for customers. Developers can also build their applications and connect them with the platform’s blockchain system.
TravelChain is based on the Graphene blockchain open source framework. The platform is currently under development.
Cool Cousin: Trip Planning with the Help from Locals
You can’t choose your family, but you can find a like-minded cousin who will show you around.
Thorough research and planning stand behind any perfect trip. Travelers can spend days surfing numerous websites trying to find out what’s unique about a chosen destination. Popular review platforms do help but can’t be 100 percent reliable. The story about a Londoner who turned his shed into the top-rated restaurant on TripAdvisor adds concerns about all reviews’ undeniable objectiveness. And eventually, how does a reviewer you’ve never spoken to be sure you’ll enjoy “the best places to see in X city?”
Cool Cousin, a Tel Aviv-based travel company that gained the trust of more than 500,000 international travelers since its launch in 2016, has a solution for trip planning.
Focused on millennials and Gen Zers who are looking for authentic experiences, it introduces cousins — your new kind of travel agents.
The blockchain-based platform with its own cryptocurrency, the CUZ token, motivates local guides — known as cousins — to make money for providing on-demand city guidance. Cousins can plan the whole trip, from flight booking to a table reservation at a local restaurant.
“Cousins can recommend you a neighborhood to sleep in and book your Airbnb/hotel there. They can offer special experiences (for example, an art curator can organize a gallery tour) or custom itineraries, such as a food tour in a local market. They can score you tickets to a show, party, or a sport event,” says the agency’s co-founder & CTO Gil Azrielant.
Travelers and cousins interact with each other through the iOS app or the agency’s web version. Guides introduce themselves on a profile page that looks like an interview in a magazine. So, tourists can find a travel assistant with common interests, tastes, and outlooks on life.
A profile of one of travel assistants at Cool Cousin
This seems like a win-win. Travelers get personalized services at affordable cost due to lower transaction fees within the ecosystem compared to centralized OTAs. Cousins become their hometown ambassadors and make money for services they provide. By the way, they can set their own rates.
The Cool Cousin team considers security as one of the key features of blockchain systems. Smart contracts are used for the direct and safe exchange of data between community members. Private keys for each user are generated and managed by Amazon Web Service Key Management Service.
Developers of Cool Cousin plan to build the CUZ token on the Ethereum blockchain platform and make it compatible with the ERC20 standard.
Emphy: Increasing Trust between Local Providers and Travelers in Developing Countries
“You don’t have to be rich to travel well.”
The team of this decentralized ecosystem for short-term lodging has also chosen the blockchain technology to solve problems of both customers and real estate owners. Travelers may not want to book a specific property due to high commissions set by OTAs and sharing economy platforms, the lack of full information about it. A small number of reviews is another reason for security and trust concerns, especially if an accommodation is located in a destination that isn’t popular or common yet.
The agency aims to ensure additional security and increase the level of trust between community members by using Ethereum-based smart contracts, scanning QR codes on guests’ phone screens during check-in. The implementation of an automatic ID confirmation system through face recognition technology and support of virtual tours with the Emphy app are also among its key features.
How Emphy works
Emphy is a crypto company, so tourists are going to pay landlords with EmphyCoins.
Thanks to 4 percent commission and the blockchain-based ecosystem itself, travelers will spend less on accommodations. “Usually when we ask people about the main reason they don’t go on vacation, in 90 percent of answers, we hear that’s because of big expenses. We at Emphy believe trips can be cheaper, easier, and more comfortable if intermediaries and additional services are eliminated,” states CEO and project co-founder Dmitri Nogin.
According to their roadmap, the platform will become publicly available in August.
MeetnGreetMe: Finding Personal Concierges among Locals
Personal assistants will enrich your travel experience at a decent price.
MeetnGreetMe founders and creators of Cool Cousin were inspired by a common idea — to help travelers organize their perfect trip. MeetnGreetMe is the marketplace where international travelers can find personal assistants among locals. Well, who does know unique places that help to feel the city’s vibe better than a resident? That’s right, no one.
Since its launch in 2016, more than 1000 travelers have explored foreign cities with the help of personal concierges. What makes MeetnGreetMe different from Cool Cousin is probably its emphasis on problem solving. For example, a local can be your translator, meet you at an airport, assist with banking, set up a doctor’s appointment or even provide “24-hour information support,” as stated on the website. And every traveler can afford these services, representatives claim.
Another distinction is that the platform wasn’t based on a blockchain at the beginning.
“MeetnGreetMe had been a fully operational platform since 2016, and in September 2017 we decided to apply the blockchain technology to our platform,” community manager Lizaveta Deikun notes. “Adapting blockchain allows MeetnGreetMe to have its own means — MeetnGreetMe ERC20 compatible crypto-token — to incentivize contributors and reward the activities connected with the platform growth and development. MeetnGreetMe crypto-tokens are aimed at fueling the MeetnGreetMe ecosystem. Besides, the blockchain enabled payment system will allow for excluding a costly middleman from the money transfer process in the future, make it transparent and convenient for the parties regardless of their geographical location.”
The company has already successfully completed its pre-ICO and is preparing for the ICO campaign launch which will start on March 27.
TUI Travel and Tourism Agency: Making Unified Inventory Database for Hotel Management System
The application of blockchain beyond crypto companies
The blockchain is not only about ICOs and crypto-coins. One of the world’s largest travel companies, Germany-based TUI Group, adopted the technology to address operational problems.
First, the company based its hotel management system on the private blockchain. The goal was to store the information about several source markets in a single database.
Second, the new blockchain-based yield management system allows specialists to “shift capacity from one source market to another” or in simpler words, swap beds to destinations with a higher demand.
In the future, the company plans to use smart contracts to seal deals with small third-party suppliers that offer tours and excursions to travelers.
“And we want to do this with small suppliers — may be a single person — because we think smart contracts offer a great possibility to make contracts with those individual persons with a very high grade of automation. So those individual suppliers don’t have to go with an army of lawyers to make those contracts,” says TUI Group’s head of blockchain engineering Dr. Lukas Schack in his interview to PhocusWire.
Webjet: Eliminating Data Mismatches in Online Hotel Bookings
Imagine you’re excited about your upcoming vacation in Bali that you made six months ago . . . Suddenly a hotel receptionist tells you he can’t find your reservation, and there is nothing he can do about it. The hotel is fully occupied, and money is lost, just like your cheery mood.
Webjet online travel agency together with Microsoft developed a proof-of-concept solution aimed at eliminating inaccuracies in hotel bookings. The system, based on private Ethereum network, tracks all records made by middlemen to ensure they got paid for facilitating a reservation.
“Blockchain eliminates transaction errors by having an indisputable record of truth,” underlined Webjet managing director John Guscic.
In addition to dealing with data mismatches, the system allows for reducing layers between vendors and customers, speeding up transactions and cutting costs for both travelers and hotels. Keeping in mind that blockchain and security always come together, we see another system’s advantage.
IATA Coin: Single Currency to Streamline Cross-airline Transactions
Cryptocurrency for air travel
Back in September 2016, IATA, the trade association that connects most airlines, suggested the proof-of-concept of their own coin on the World Financial Symposium. The main problem that IATA tried to address is the high cost the and longevity of payment transactions. International travel that involves multiple carriers from multiple countries appears to be inefficient due to various fees and payment delays.
The IATA idea suggested a single cryptocoin for airline transactions that would even out additional transaction fees and increase the speed of payment operations. Additionally, the coin was supposed to unify various loyalty programs by airlines allowing travelers to choose whichever loyalty bonuses they actually need.
The underlying platform was supposed to be Bitcoin. Apparently, the idea hasn’t hit its full implementation yet as there has been no news since the IATA presentation.
The Main Blockchain Opportunities in Travel
Let’s generalize the main opportunities of blockchain in the travel industry that are both implemented or are waiting for their pioneers.
MRO in Airlines. We’ve already discussed maintenance, repair, and overhaul opportunities when modernizing operations in airlines. Blockchain can potentially be used for decentralized equipment tracking and providing timely maintenance checks and requests for repairs.
Transaction Management. Currently, a standard travel-related transaction involves multiple service providers to be connected. These include GDSs, bedbanks, end-service companies, and eventually point-of-sale players. The path that a single request has to make is long, involves multiple travel-related APIs, and much computing power. Using smart contracts and supply visibility that blockchain provides this process can be streamlined.
Peer-to-peer transactions. Most examples that we’ve mentioned leverage one of the main blockchain benefits — peer-to-peer interactions that reduce the middlemen while providing higher value for the lower cost.
Identity and biometric data exchange. Personal data is a sensitive topic in the travel industry. The changes that GDPR brings will increase personal data security, but won’t fully solve the problem of personalization that requires more individual data. Blockchain encryption capacities and general security can address this problem and nudge travelers to share their personal information more willingly. This is exactly the model that TravelChain follows.
Inventory management. The model of Winding Tree strives to solve the problem of poor inventory visibility that leads to overbooking, confused confirmations, and difficulties with canceling. Distributing data in transaction blocks provides equal inventory visibility for all transaction participants.
Loyalty programs. The existing problem with loyalty programs is the lack of flexibility. Bonuses that many travelers receive don’t represent value for them. Introducing a flexible loyalty coin exchanged for various bonuses across multiple service providers can address this issue.
Being a backbone of decentralized companies, blockchain technology can also become a game-changer for traditional businesses. Startup representatives are mostly optimistic about the future use of blockchain in the industry but admit the technology is still immature. The blockchain and a decentralized business model still need the test of time.
“We believe that ‘thin’ middlemen that don’t add any value to the transaction are going to extinct thanks to the blockchain technology, but that will take a couple of years,” summarizes Gil Azrielant.