Can Blockchain Disrupt the Online Travel Agency?

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I can still recall the first time I traveled out of the country in my early 20’s.  I took a drive to the local travel agency on Western Avenue and sat down with the agent to begin the booking process. About an hour later—after looking over brochures, dates, asking many questions about the hotel and the location, and then comparing prices—I wrote a check. I walked out with my airline tickets, booked hotel, and itinerary in hand. That was over 25 years ago. Since then the Internet has disrupted the travel booking services where one no longer needs a travel agent to book a vacation. Indeed, we can do it all online.

One of the first online services, or OTAs, started in 1994, where according to The Guardian, “Travelweb.com emerged as the first comprehensive catalogue of hotel properties around the world.” Today we have Travelocity, Expedia, Priceline, Orbitz, Cheaptickets, and more. All competing for your business.

Blockchain is now poised to disrupt the online booking industry making it easier and more efficient for hoteliers to book guests directly and save money.

Booking

Christopher Curry writing for Today’s Hotelier says that there are just a handful of large online travel agents (OTAs) that dominate the online booking landscape.  While hoteliers get enhanced visibility with the OTAs, they pay a sizeable commission from 10% up to 30% for bookings made on their site. Those costs drive up the costs for guests. Moreover, with the current OTA arrangement, commissions are not paid in a timely manner.

Lily McIlwain  reports on two areas where blockchain can help the hotel industry and why it should be on the radar for hoteliers.

1) Reduce the market share of OTAs and intermediaries, and

2) Make it a lot easier, and more affordable for hoteliers to introduce new technology to their operations.

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Reduce the Market Share of OTAs and Intermediaries

Hotel inventory can be placed on blockchain on a distributed platform. OTAs can work with hotel suppliers to put their inventory into a blockchain network with an agreed upon price for bookings and distributors can pick and choose the inventory that is the best fit for their audience.

Alternatively, says Curry, companies like LockTrip or Winding Tree, among other startups—are looking at blockchain powered booking platforms to allow guests to book rooms directly at hotels. In this way, hotels will become less dependent on OTAs for bookings, which can result in lower prices for the consumer.

Make it Easier and More Affordable For Hoteliers

Lily McIlwain  says in Triptease that with blockchain, new technology can be introduced for their own operations and to incentivize consumers. An area of frustration, says McIlwain, are the problems with “centralized and inaccessible inventory”.

Currently, the majority of critical data is held by a few large companies. With blockchain distributed ledger technology and a decentralized data base, the data can be made accessible for hotel distribution making it easier to manage inventories. With companies like Winding Tree and LockTrip—hotels will have alternatives to the OTA, say Curry.

Yet another technical application for blockchain is the ability to include cryptocurrency as part of the payment system. Many retailers are implementing cryptocurrency payment options.  With cryptocurrency customers can pay for their hotel and generate reward points.

Moreover, hotels can market their rooms directly to the consumer. “Companies like KeyoCoin plan to use a cryptocurrency reward as an incentive to get customers to book through their mobile app instead of an OTA,” says McIlwain. And—hotels using blockchain platforms like KeyoCoin will be able to offer travel rewards as one way to disintermediate the OTAs.

Conclusion

Innovation always finds a way. There are times when I would prefer to book directly with a hotel than to use my OTA account. Hotels have an incentive to protect their brand. With blockchain’s distributed ledger technology—hotels now have technical tools they can adopt to give the consumer better customer service and reduce the cost of a room.

 

Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

Contact Samuel

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