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In 2017, blockchain projects flourished, where Ico managed to raise billions. 2018 was a year of crisis for the crypts, even if the sums collected this year were twice as high as the previous one. Blockchain projects have promised a lot, however 71% of them do not yet have working products. The argument was that blockchain is still in its infancy and many should deliver their products in 2019. And one of the best places to watch the Blockchain rise again is in the travel industry.
Problems we face
The travel industry is particularly suitable for benefiting from the blockchain. There are many different actors involved and everyone needs to work together without problems. When someone wants to travel, he has to take care of the airlines, book hotels, find businesses, browse the airports and maybe hire a car. They will also have to change their currency so that they can buy at their destination.
Photocredit: GettyGetty
Hoteliers and airlines also need to collaborate (and compete). In addition to managing their website and reservation systems, most of them have found it necessary to work with Global Distribution Systems (GDS) and online travel agencies (OTAs) to land on multiple supermarket shelves global. The execution of these systems increases costs for end customers, but there are also many other hidden costs.
For one, we have to consider transaction costs and inefficiencies in the financial and banking sectors, especially when different parts of different countries are involved. Another problem is the installation and integration costs involved when service providers need to synchronize their separate and separate databases. A standard travel-related transaction involves multiple service providers, from GDS and bedbanks to final service companies, and finally point-of-sale players. Third, we have the GDPR and the importance of security and privacy. Fourth, we have the problem of fraud, which costs airlines $ 1 billion a year.
Finally, we have the "invisible costs". Services like GDS are expensive, especially for smaller players. This makes the entry barrier significantly higher for them, which means that many innovative startups are left in the dark. Furthermore, data held by GDSs can be expensive and inaccessible for hoteliers, who might otherwise have more distribution options. Expedia and Priceline have a 93% duopoly, which according to the American Hotel & amp; Housing association "It hurts consumer choice and small businesses in our industry, which account for about 60 percent of all hotels in the United States, which are struggling to compete because of the commission gouging rates charged by the [online travel agencies]".
Blockchain upsets the duopoly
Blockchain removes intermediaries and offers a decentralized system in which different parties can interact without having to trust one another, removing a lot of overheads. This produced real results.
"Our project outperformed the market with + 200% during the bear market," says Nikola Alexandrov, founder of LockTrip.com, which offers global coverage of around 100,000 hotels. "The prices on our market are on average about 19% less than the cheaper alternative–booking.com. "Continue:" our prices are so cheap, we are not allowed to advertise them in Trivago ".
But lower costs are just one of the benefits of blockchain–there are many others
Fraud
Rita Hunter he was sentenced to prison over 14 allegations of fraud. His fake travel company has instructed people to fly and lodge without actually booking them, leaving them out of their pocket and without the holidays "they did not see the hour and pledged to pay". This is not a limited incident.
According to Barry Gooch, president of the Prevention of Fraud in Travel campaign, "a significant problem for the travel industry was the way criminals were able to commit fraud as a director of a company that is part of a consortium, so move to another and commit fraud again because there is no established legal method to share this information. "
Blockchain offers the ideal solution for these cases with smart contracts. As Alexandrov explains, "every booking is blocked in an intelligent contract until check-out, which offers unparalleled security for the traveler compared to traditional reservations (where once they have been paid they have no guarantee that they will receive the service for which they paid). "
Obstacles and solutions
However, the GDS companies claim to offer more services and prices in real time for the distribution of what blockchain could do.
"We will always need someone to aggregate offers and enable multi-sourcing shopping, I do not think Blockchain solves this," Philip Likens, director of Saber Labs, he told Reuters. The representatives of Amadeus, Travelport and SITA echoed his comments.
Tony Hird, VP of Enterprise Business Architecture at Travelport also highlighted another problem: "You can not have a real-time environment if you have to wait 10 minutes to commit the transaction."
The third problem is the nature of cryptocurrencies: currently it has a learning curve and requires some levels of technical understanding, which keeps it from the mass adoption.
Recently, Michael Culhane, CEO of TripX LLC has announced that it has solved the security, transaction speed and compliance issues that have led large companies in the travel industry not to rely on the implementation of blockchain solutions. The platform, available on a "test" network, allows a 10-minute registration procedure and payment of commissions received on the same day.
Without blockchain, the cost and complexity of deposits, billing, batch processes and reconciliation processes could lengthen payments and commission agreements between 30 and 90 days. According to Culhane, for most large companies, these savings could translate into an entire percentage point of their EBITDA.
Regarding the problem of the "learning curve", LockTrip offers a model in which users can pay with their credit card–the system will automatically acquire the necessary tokens on cryptographic exchanges. Users do not feel like they are using cryptocurrencies, since everything is taken care of behind the scenes.
Forecast for 2019
The industry benefits greatly from the adoption of the blockchain–but it also seems to be the path that customers are taking. According to Phocuswire forecastsWhile Expedia and Booking.com are trying to be a one-stop shop for consumer travel purchases, consumers love to look around. They like offers, they like reading reviews and they like to get advice from their friends. For these reasons, the path they take can involve hundreds of searches on a wide range of sites and apps. The trend will move away from centralized portals to find the best deals, and here's where blockchain can make the difference.
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In 2017, blockchain projects flourished, where Ico managed to raise billions. 2018 was a year of crisis for the crypts, even if the sums collected this year were twice as high as the previous one. Blockchain projects have promised a lot, however 71% of them do not yet have working products. The argument was that blockchain is still in its infancy and many should deliver their products in 2019. And one of the best places to watch the Blockchain rise again is in the travel industry.
Problems we face
The travel industry is particularly suitable for benefiting from the blockchain. There are many different actors involved and everyone needs to work together without problems. When someone wants to travel, he has to take care of the airlines, book hotels, find businesses, browse the airports and maybe hire a car. They will also have to change their currency so that they can buy at their destination.
Hoteliers and airlines also need to collaborate (and compete). In addition to managing their website and reservation systems, most of them have found it necessary to work with Global Distribution Systems (GDS) and online travel agencies (OTAs) to land on multiple supermarket shelves global. The execution of these systems increases costs for end customers, but there are also many other hidden costs.
For one, we have to consider transaction costs and inefficiencies in the financial and banking sectors, especially when different parts of different countries are involved. Another problem is the installation and integration costs involved when service providers need to synchronize their separate and separate databases. A standard travel-related transaction involves multiple service providers, from GDS and bedbanks to final service companies, and finally point-of-sale players. Third, we have the GDPR and the importance of security and privacy. Fourth, we have the problem of fraud, which costs airlines $ 1 billion a year.
Finally, we have the "invisible costs". Services like GDS are expensive, especially for smaller players. This makes the entry barrier significantly higher for them, which means that many innovative startups are left in the dark. Furthermore, data held by GDSs can be expensive and inaccessible for hoteliers, who might otherwise have more distribution options. Expedia and Priceline have a 93% duopoly, which according to the American Hotel & Lodging Association "It hurts consumer choice and small businesses in our industry, which account for about 60 percent of all hotels in the United States, which are struggling to compete because of the commission gouging rates charged by the [online travel agencies]".
Blockchain upsets the duopoly
Blockchain removes intermediaries and offers a decentralized system in which different parties can interact without having to trust one another, removing a lot of overheads. This produced real results.
"Our project outperformed the market with + 200% during the bear market," says Nikola Alexandrov, founder of LockTrip.com, which offers global coverage of around 100,000 hotels. "The prices on our market are on average about 19% less than the cheaper alternative–booking.com. "Continue:" our prices are so cheap, we are not allowed to advertise them in Trivago ".
But lower costs are just one of the benefits of blockchain–there are many others
Fraud
Rita Hunter he was sentenced to prison over 14 allegations of fraud. His fake travel company has instructed people to fly and lodge without actually booking them, leaving them out of their pocket and without the holidays "they did not see the hour and pledged to pay". This is not a limited incident.
According to Barry Gooch, president of the Prevention of Fraud in Travel campaign, "a significant problem for the travel industry was the way criminals were able to commit fraud as a director of a company that is part of a consortium, so move to another and commit fraud again because there is no established legal method to share this information. "
Blockchain offers the ideal solution for these cases with smart contracts. As Alexandrov explains, "every booking is blocked in an intelligent contract until check-out, which offers unrivaled security for the traveler compared to traditional reservations (where once paid they have no guarantee that they will receive the service for which they have paid). "
Obstacles and solutions
However, the GDS companies claim to offer more services and prices in real time for the distribution of what blockchain could do.
"We will always need someone to aggregate offers and enable multi-sourcing shopping, I do not think Blockchain solves this," Philip Likens, director of Saber Labs, he told Reuters. The representatives of Amadeus, Travelport and SITA echoed his comments.
Tony Hird, VP of Enterprise Business Architecture at Travelport also highlighted another problem: "You can not have a real-time environment if you have to wait 10 minutes to commit the transaction."
The third problem is the nature of cryptocurrencies: currently it has a learning curve and requires some levels of technical understanding, which keeps it from the mass adoption.
Recently, Michael Culhane, CEO of TripX LLC has announced that it has solved the security, transaction speed and compliance issues that have led large companies in the travel industry not to rely on the implementation of blockchain solutions. The platform, available on a "test" network, allows a 10-minute registration procedure and payment of commissions received on the same day.
Without blockchain, the cost and complexity of deposits, billing, batch processes and reconciliation processes could lengthen payments and commission agreements between 30 and 90 days. According to Culhane, for most large companies, these savings could translate into an entire percentage point of their EBITDA.
Regarding the problem of the "learning curve", LockTrip offers a model in which users can pay with their credit card–the system will automatically acquire the necessary tokens on cryptographic exchanges. Users do not feel like they are using cryptocurrencies, since everything is taken care of behind the scenes.
Forecast for 2019
The industry benefits greatly from the adoption of the blockchain–but it also seems to be the path that customers are taking. According to Phocuswire forecastsWhile Expedia and Booking.com are trying to be a one-stop shop for consumer travel purchases, consumers love to look around. They like offers, they like reading reviews and they like to get advice from their friends. For these reasons, the path they take can involve hundreds of searches on a wide range of sites and apps. The trend will move away from centralized portals to find the best deals, and here's where blockchain can make the difference.
