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Blockchain is by far the most disruptive technology the world has seen in recent years. After being first mentioned way back in 1982, it shook the world in 2008 with the publication of “Bitcoin: a peer-to-peer electronic cash system” by someone disguised as ‘Satoshi Nakamoto’. No one still knows for sure whether it is a person or a group of people. But once Bitcoin was launched, cryptocurrencies – the very first practical implementation of blockchain technology – took the entire financial world by storm and still remain in the spotlight today.
As for travel and tourism, there have been lots of talks and plenty of analysis regarding practical use of blockchain in this sphere. But are there really any feasible prospects or practical achievements?
We’ve done a little research that we are happy to share with our readers. But before we proceed…
In a nutshell, blockchain represents a growing list of public records (also called a publicly distributed ledger) that contains a constantly updated list of transactions taking place between the parties. The content of every single record, or a ‘block’, within this ledger is protected by encryption. Individual blocks within the ledger are arranged as an uninterrupted chain that is bound together using unique blockchain keys, or ‘hashes’, for every block. Every new block contains a hash from the previous block to refer to it. The same happens with all the subsequent ones in the chain.
Blockchain utilizes decentralized data storage. In practice, it means that the transaction ledger it contains is shared across all the members of a public peer-to-peer network, with anyone allowed to join. Each individual block within the ledger contains specific transaction information that is marked with a timestamp. In addition, all ledger blocks remain permanent. They can only be altered or tampered with based on approval from the entire network. As a result, blockchain produces decentralized, stable, time-stamped, and unalterable data. All activities and info are secure and traceable, while the network preserves full transparency. In other words, blockchain-based environments are secure and trustworthy by design.
Here is a nicely done explanatory video unveiling the essence of blockchain bit by bit:
When it comes to the travel industry, secure and trustworthy transactions are also a vital topic here. It is especially relevant for the numerous overseas transactions taking place between various bodies within the industry every day. Blockchain adoption could make the transaction more secure and trustworthy. Besides, blockchain-powered payments could become much faster thanks to the lack of intermediaries in the process.
Furthermore, global travel can benefit from the decentralized nature of blockchain. It can establish an infrastructure with no unified data storage. Such a system is unlikely to go down because of hardware malfunctions or malicious attacks. The nature of blockchain makes the process of accessing and saving critical data easier and more reliable thanks to the lack of any single point of storage. Any company can benefit from it – a tour operator, a travel agent, business travel providers, OTAs, etc.
Below we’ve summed up some of the most promising uses for blockchain in the travel industry:
Bearing in mind its key architectural benefits, no wonder that blockchain gained widespread popularity in finances and payments. This technology is a great way to ensure trust and security for all parties within a transaction. The quickest and most obvious application for travel is existing cryptocurrencies like Bitcoin or Ethereum that can be used to make regular transactions. In theory, it might also be possible to build a global transaction ledger and thus secure a transparent and trustworthy environment for payments.
Blockchain can potentially be implemented to make inventory management more transparent and efficient. Nowadays its poor visibility in many cases can lead to unpleasant outcomes, such as cancellations, refunds, or overbookings. In a blockchain-based world, inventory distribution could turn into a much more streamlined process. Every new booking could be added as a transaction block into the general blockchain ledger shared between all the involved parties – customer, travel agency, supplier, etc. As a result, everyone will be on the same page regarding the current inventory status which can help to manage the fill rate with much more accuracy.
Blockchain could potentially help hotels and hotel chains to improve their work with suppliers through better visibility of the entire supply cycle. A privately set blockchain network might connect exporters, importers, packers, or any other involved entities into a common chain that would be fully traceable and transparent for all.
Blockchain can be of great value in ensuring a more secure and reliable tracking of luggage. Traveller’s luggage frequently changes hands throughout its journey. A decentralized transparent database would make tracking data storage a lot more transparent and independent of any particular failures happening at any specific point of luggage storage.
Blockchain can potentially work as a secure way to validate customers’ identities without any redundant repetitive sharing of personal information or financial data. Once stored in a secure and encoded block within a distributed ledger, it will get protected against tampering which might be quickly reproduced upon request. This way it will be possible to drastically shorten the check-in / check-out times.
Air transport communications company SITA is investigating the possibility to use ‘single travel tokens’ operating on the basis of the Single Sign-on (SSON) principle. It might be stored on a mobile device and authenticated with blockchain. The benefit of this would be reduced numbers of document verifications while traveling.
Many travel businesses nowadays run various loyalty point programs to encourage returning customers. Blockchain technology can improve loyalty point management by allowing easier access for clients to the data on their loyalty account status. It also can help make the tokens distributed and more controllable to exclude acts of fraud.
Alongside ongoing discussions and analysis of potential uses, there have been a number of blockchain companies that launched their products into the real world. Here is an overview of what companies are using blockchain in travel to date:
LockTrip took off with an idea to build a direct marketplace between hotels and hospitality entities that seek to rent out the property. The core benefit was the idea of making a contract excluding the middlemen which add and earn a large surplus on the prices.
As of 2021 the platform offers flight and private accommodation bookings in addition to hotels, covers payments, property management, and various other aspects of the booking process. Locktrip clients can cut down up to 60% on the booking costs by excluding intermediaries. The company reported record growth of 259% in Q2 of 2021.
The concept behind this non-profit project is similar to the previous one and also lies in the development of an open decentralized marketplace that can secure fair prices by excluding middlemen from transactions. The marketplace has a powerful API that can be integrated into any POS of a travel company for streamlined onboarding. It also features its own LiF token cryptocurrency that can be used to execute fair and transparent transactions.
As of October 2021, the project is still active. The current price and market volume of LiF tokens can be found here.
One of the most innovative current blockchains is the BeeToken or Beenest – a travel startup representing a home-sharing platform. Here, the technology is used to put customers in touch with hosts, so that they can arrange and pay for stays. Again, there is no commission, while payment, reputation, and arbitration protocols are all in place, keeping users safe.
TUI has launched its own in-house blockchain project, which it refers to as ‘Bed-Swap’. Using this technology, the company is able to move inventories between different points of sale and flex selling margins, in real-time, based on the level of demand that is present at that time.
In truth, blockchain technology is less complicated to come to terms with than it may initially seem. Nevertheless, the process of learning about it can still seem daunting or overwhelming, especially to people with limited knowledge of digital technology, encryption, cryptocurrencies, and peer-to-peer networking.
However, its huge potential and capacity to transform the travel industry makes learning about it important. As testified by the cases above, the work to apply blockchain for the needs of travel is progressing at a great pace. Although it is not possible to say there are projects that truly disrupted the world of travel, some blockchain startups like LockTrip and Winding Tree show good progress. And we are most likely to see more projects in the near future. Just as with many breakthrough innovations, Blockchain needs its time to mature.
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