Blockchain-Based Innovation for Hospitality.

Blockchain or DLT these days is pretty much a basis for a vast variety of applications. Enterprises across every industry are exploring ways to leverage blockchain technologies for business benefits. The applications of distributed ledger technology in the hospitality industry are countless. All participant entities in this industry such as tourism companies, institutions, and governments are confronted with the opportunities and challenges of blockchain: including the processing of transactions, the maintenance of customer databases, and other fields of application. Blockchain is frequently used in business scenarios that involve multiple parties participating in a transaction.

Some of the benefits of blockchain for the hospitality and travel industry or any industry per se are below.

Benefits

Create Trust.

Blockchain technology’s main characteristic remains its network. Today, every transaction of value between two parties implies a third entity having total control, such as banks. Instead of having a centralized system and then copy the information to different parties, blockchain technology focuses on decentralization. The network verifies by consensus the proof of work of each block. Thus, helping to improve security and prevent fraud. Each participant is responsible for the reliability of the distributed data, which betters the accountability of the network and provides greater transparency.

Improve Traceability.

Blockchain's second main feature is the chronological sequence of its blocks. Thus, each time a block is added, the network of computers verifies its origin and authenticity. The blockchain gives access to every single transaction record making it easier to trace any previous transactions. In many industries, it could be used to better control supply chain activities.

Cost-Saving.

Any business's profitability relies on its ability to reduce its operating costs. Blockchain technology relies on peer-to-peer interaction, free of any intermediaries, which gets rid of unessential transaction expenses.

Boost Efficiency.

Having fewer intermediaries involved in transactions allows saving time by automating these processes. Thanks to its decentralization, blockchain removes the need to double-check different ledgers as data are recorded on a single shared record. Blockchain offers faster transactions compared to a traditional system.

The above characteristic of DLT technology, indeed address some of the current technological weaknesses that exist in the hospitality industry and lead to advantages in the application of the technology such as reliability, trust, security, and efficiency. Built on three inherent features — Transparency, Security, and Immutability — blockchain technology has the potential to drive new business models and improve workflow.

Now, let’s discuss some of the DLT-based use cases that can influence different phases of the customer journey starting from the planning stage, proceeding to the journey itself, and finally including the post-stage of travel in the hospitality industry. There are some backstage processes or processes that are not close to customers involved at different stages of this customer journey. These backstage processes such as transaction storage, fraud prevention can also be improved using DLT technology.

Applications of blockchain during the Journey stages.

Customer Journey

1. Inspiration and information:- Blockchain creates an opportunity to develop an efficient and cheap way of automated assistance to inform, plan and book a trip. Especially relevant to the fragmented services in tourism, large datasets with information about ratings, experiences, evaluation or trip data are seldom accessible for travellers, constituting the current weaknesses at this stage. The introduction of blockchain could influence and change open access to that information and provide optimal planning of the trip concerning previous data. Further blockchain applications that may increase the customer value at this stage are real-time availability of rooms or flights and automated booking. For example, It’s increasingly common that we look at forums and read user reviews when we travel; however, we cannot always guarantee who wrote them or their accuracy. With blockchain, all the information that shows up in the network is public, dependable, and secure, achieving better transparency and increasing consumer trust.
2. Booking:- The booking process is expected to be changed significantly by blockchain, as it improves current weaknesses, such as currency risk, market power, or the usage of outdated technology in GDS. Through the use of smart contracts, automatization of background processes could allow fast and secure booking. The application of a distributed database could have an influence as it reduces the market power of the current GDS companies as intermediaries by empowering direct relations between travellers and service providers. The booking of flights, hotel rooms, or packaged tours is also closely linked to currencies and payment, which could be simplified by the introduction of a few cryptocurrencies. Blockchain technology can enhance how digital identity would be managed and used in a world where transactions do not rely anymore upon physical documents.
3. Transportation:- The current weaknesses of transportation data systems are the non-connectivity of several providers and the obstacles in allowing multi-modal transportation. Blockchain creates an opportunity to collect data on each node and to validate it. This system could influence a flexible organization of flight times and delays. For car travel, it improves the connectivity of car rentals and sharing systems. Blockchain thus allows additional customer value in streamlining time management, identity management, automated payment for cars through IoT, or cross-border charging infrastructure for electric cars. The implementation of connected services is also a question of cooperation and consistent regulations in data management.
4. Accommodation:- The opportunity to digitize the booking processes and capacity management on a blockchain-based platform is a huge step in outpacing the current weaknesses of this section, such as market domination by a few GDS and OTAs, outdated software for capacity management, and inefficient transactions. The introduction of the blockchain in the accommodation sector will probably influence and force current software solutions to innovate technically. The introduction of applications that connect traveller’s data, like digital check-in and room keys, identity management, payment, or loyalty programs are some of the opportunities in focus. Also, the application for distribution and capacity management, which could remove the need for an intermediary and thus provide real-time and secure information about prices and capacities will be very useful for service providers, tour operators, and travellers.
5. Automated identification:- By the nature of travel, numerous identification and registration processes are necessary when booking and operating flights, hotel stays, and cross-border trips. The current weaknesses of identification and registrations are that they are time-consuming and that they are needed at every stage of the customer journey. This creates the opportunity to implement a blockchain-based registration process that stores data such as biometrics and tracks travellers bookings, including cross-border trips. The introduction of automated identification probably influences back-stage processes at service providers and checkpoints due to their simplification. Practically, blockchain can be the future of Hotel Digital Key technology. When a customer arrives at the hotel, they can check-in with the hotel’s kiosk. The digital kiosk can check the advance reservation, sync with the user’s smartphone through an OTP connecting the customer’s device with the hotel’s system.
6. Guest Tracking:- The guest tracking feature will allow hotels to track the location of the guests on a real-time basis. The hotel will receive alerts when the guest heads out to the airport from his house, when the guest has checked in to the flight, and finally when the guest arrives at the hotel. This tracking feature can improve the customer experience by reducing the wait time for guests to check-in at the hotels. It might seem too invasive, but guest tracking is only implemented after approval from the customers. The customers will approve the level of information to be shared with the hotels or other members who are part of the network. Blockchain technology provides a technological platform that can potentially change the hospitality industry without intruding on the privacy of travellers.
7. Loyalty/Reward programs:- Current weaknesses of loyalty programmes are a high fragmentation of countless loyalty points, cards, and earning systems. Blockchain probably provides an opportunity to offer universal platforms that could collect a mixture of loyalty points from hotels, flights, and activities. Once more, blockchain allows real-time transactions or earning of points. This technological improvement may influence the current providers by changing the matter of who sets the rules and who controls loyalty systems. This raises the customer value by reducing the complexity of several loyalty systems and allowing the possibility of redeeming points flexibly.
8. Transactions, contracts, and payment:- Blockchain creates an opportunity to reduce the potential for fraud, streamline processes, and pave the way for the implementation of the Internet of Things. Therefore, it will influence the organization of control, as no single unit holds control in a distributed system, and it will probably change our understanding of data management. By anonymously storing all transactions and information, it could provide customer value with quicker payments and cost-efficient and traceable transactions. Through the complexity of computing, questions arise concerning the number of possible transactions and the high energy supply needed for computing.
9. Networking and bundling:- Blockchain offers an opportunity to develop universal systems, e.g. for booking and protocols for the Internet of Things. The complexity of the technology calls for cooperation between traditional tourism service providers and experts in blockchain to develop and test their applications. This has been highlighted by the number of joint projects that have evolved in recent years. Besides cooperation in technological issues, blockchain may also influence the relations between tourism service providers themselves. Through smart contracts, automating, capacity management, and tracking, blockchain supports the bundling of journeys and reduces fraud. Besides, it possibly changes the manifestation of trust, which could become a digital asset by applying blockchain as the so-called “single source of truth”.

Conclusion.

Blockchain is a disruptive technology with applications reaching beyond banking and finance. There are many uses cases for blockchain in the hospitality industry. This sector is extremely sensitive to customer sentiments as it has a direct impact on the brand value. Blockchain technology will help improve customer experiences, make backend processes more efficient and improve overall brand value.