The word "blockchain" has passed from a few years to industry conferences and press releases from technology suppliers, but few hotel operators include technology, the way it can be used, or why they should care about it. Blockchain has been heralded as the second coming in some domains – like the world of cryptocurrency – and while its uses might not seem obvious today technology is already affecting travel.
At its most basic level, blockchain creates a public or private ledger that is decentralized and encrypted. This allows users to track and record distributed transactions on a number of devices to prevent the records from being changed retroactively. For this reason, some IT professionals refer to the blockchain as Distributed Ledger Technology.
Jessica Stansbury, partner of the consulting firm Oliver Wyman, said that the path of technology to business can be compared to the development of the Internet over the years & 70s. "Everyone who used the internet knew it was a turning point, but nobody could imagine how it would invade so many places in our lives and make an impact on how we do business," he said.
Blockchain technology was developed in 1991 as a way to view documents without changing timestamps. However, it came into prominence in 2008 when it was used as a basis for bitcoin cryptocurrency. This development has espoused the concepts of blockchain and cryptocurrency in the public eye, but Stansbury said technology has much more to offer. Airlines use blockchain in their loyalty programs and hotel companies are working to implement similar systems for the future.
"Blockchain allows two parties to come to terms with how a loyalty currency can be understood in predefined terms, and then recognize them more quickly and automated," Stansbury said.
Thom Kozik, commercial director of Loyyal Corporation, said that a successful blockchain implementation will result in an increase in the efficiency and speed of marketing capacity for a hotel company. These efficiencies will come in the form of lower reconciliations on billing, for example, and said that technology is already used in supply chain management because it can be used to build processes and track information.
For hoteliers, Kozik That said, the most interesting and effective way to put the blockchain at work is once again in loyalty programs as a means of tracing analysis, deepening how a single point is spent throughout its life cycle. Hotel companies want to understand how guests use loyalty points, where loyalty points are more valuable and what the real value of a point is, and now they can do it.
"With the ability to track every point or mile up to the moment and location of its issue, this can create a new asset class to house groups that own multiple properties, allowing them to exchange the currency of the program between their properties of the portfolio without paying a fee to the management company, "said Kozik.
If blockchain allows loyalty points to be exchanged between portfolios, will we ever see a world where Marriott Rewards points will be exchanged for Hilton Honors awards? Kozik said it is not likely because the hotel companies want to keep their points at home. The risks to the security of the use of such a system, however, are low. Because blockchain technology is a closed ecosystem with elements that can not be modified once created, there are some security risks. In fact, Kozik claimed that the primary risks associated with blockchain were observed in the world of cryptocurrency at the exchange level. Hackers often drive deposits made after currency transfers, so the currency, not the platform, holds the risk.
The Great Unknown
If the concepts behind the blockchain still seem nebulous, it's because developers are still trying to figure out how they go. Filip Karaicic, CFO of the Review Network market analysis firm, said hoteliers should start worrying about the technology because it will save money and help them build connections with guests more easily.
"Blockchain can help with market research, improve transparency and efficiency and also improve processes," said Karaicic. "Today we are only beginning to penetrate this sector, some airlines use blockchain to track down their luggage if they are lost, and the same mentality could be used for the objects of hotel guests."
Karaicic stressed that the most important aspect of the blockchain is that the data can be made public or publicly visible, but it can not always be changed. Compared to centralized data systems, this is much less error prone and protects operators from the unexpected. It is also safer.
"Both hotels and guests benefit from it," he said. "By building processes in a blockchain, hotels can remove intermediaries and directly implement different phases of their loyalty programs without using expensive centralized platforms."
Stansbury has expanded this concept. "For a personalized and personalized loyalty package, like a private golf weekend with a moment of encounter, there are so many moving parts to keep under control," he said. "Blockchain allows partners to set things up more easily and offer more diversified and better options."
Where and When
If blockchain can do so well, why is not it everywhere? Both Stansbury and Karaicic have said that technology will not see a widespread implementation for five to ten years, and Kozik attributes this to just a few factors.
"If it's not broken, do not fix it," he said. "To a large extent, hotels that use legacy programs do not believe that something is fundamentally broken by what they do, and considering the backlog of IT projects that every organization has shown, it will show that blockchain is not at the top of their priorities. "
Even so, incremental adoption of this technology should continue at a gradual pace, and once enough companies use the blockchain, Kozik said it would be easy to link them.
"I think the consortia will increase as the blockchain is used more," Kozik said. "On a large scale, a single commercial agreement will be required for everyone to use the same blockchain."