How Blockchain Is Transforming The Travel And Hospitality Industry

By Dr Krishna Naga

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Blockchain is proving its potential in and changing the travel industry’s status quo by playing a major role in keeping the network secure, protected, and trusted. Hundreds of blockchain developers are working in India.

The offerings of artificial intelligence (AI) keep breaking news due to their capabilities and AI being the forerunner of most big commercial opportunities. Blockchain is another technology that claims many surprising benefits and hence is spoken of non-stop by engineers and customers. These two advanced technologies support and draw benefits from each other. Together, these two innovative technologies, AI and blockchain, endorse the data provided to them and find the outcome which, when used for mass-market, change the way trust, security, and responsibility are perceived, hence add economic value to the businesses.

Blockchain became popular when entrepreneurs realised that it facilitated business transactions at a significantly lower cost, giving them more control and independence. It is noteworthy that a business can grow exponentially with the combination of AI and blockchain as they work wonders for the organisation and the customers. The application of blockchain in sectors like banking and healthcare claim a more promising future, and the tourism industry is no exception.

In 2018, the revenue through the aerospace industry was $838 billion. This industry is already using promising technologies like artificial intelligence and 3D printing to improve operations. But due to the B2B intermediaries, customers need to pay a high price. So, the industry should also consider use of blockchain.

The tourism sector has started using blockchain to change the way their data is stored, used, and secured. The sector expects blockchain to reshape the industry through transparent and secured transactions without the involvement of any third party between the hosts and guests, digital travel ledgers, faster identity management of customers, and much more. A report published by SITA (Société Internationale de Télécommunications Aéronautiques) declares that by 2021 year’s end, 59 percent of airlines would have initiated implementation of blockchain in their working.

Blockchain and cryptocurrency

Blockchain is a distributed, decentralised data structure that serves as a proof of work for the occurrence of events in a specific order. This digital ledger is immutable and stores the encrypted data. For example, when a transaction is made online, that event is represented as a block and is broadcast to peer-to-peer (P2P) network (computers/nodes).

The mechanism employs an encryption method known as cryptography, which uses known algorithms to validate the transaction and user’s status. The verified transaction can involve cryptocurrency, contracts, records, or other information. The transaction is combined with other transactions for verification. Then a new block of data is created for the ledger. The new block is added to the existing, permanent, and unalterable blockchain, and there is no way of erasing a data. The transaction is now finished without the involvement of any bank. Each transaction in the form of a block is time stamped, to pin the event to the real time, and many such blocks are linked together forming a chain, hence the name blockchain. These chains cryptographically link the past events to the current events, thus preserving their order under the latest time stamp.

Cryptocurrency does not require an intermediary like a bank to transact money. Instead, it makes use of blockchain technology. It has been in news, unfortunately, for enabling illegal purchases, money laundering, and tax evasion, which has created a wrong perception in the society. The legitimacy of dealing with this digital currency was difficult as there were no hard and fast rules to unveil the credentials of the involved criminals. However, after following the rules and guidelines set by various governments and the international Financial Action Task Force (FATF), cryptocurrency exchanges seem to be now able to keep the phenomenon under control.

Tourism industry

Planning travel often makes us flummoxed due to the complexity and the time involved in buying air tickets, managing transfers, booking rentals, hotels, and many more involved activities. Use of blockchain can bring safety and transparency to a plethora of organisations that are involved in a travel plan. A traveller is required to show passport or a valid ID at multiple stages of his journey such as booking, boarding, and check-in at the hotel. Blockchain could generate a single travel token for each traveller and this information would be universally accessible to multiple airports, thus making the ID verification process simple, secure, and efficient.

Making finance settlements between travel agents, hotels, and other travel-related firms is an extremely complicated process, especially when it comes to overseas transactions that involve currency exchange. Blockchain can streamline this process by reducing the intermediaries that can intervene or delay the settlement timing and increasing the overall transparency and the trust to a whole new level.

Baggage tracking is another challenge that requires keeping track of the travellers’ luggage as it changes hands from airlines to the ground handling services at the airports. The luggage data can be stored and processed by blockchain that allows passengers to track their luggage over the cloud and thus reduce baggage mishandling. Blockchain will allow all parties to exchange information even if they are not related to the same airline or same subdivision, thus improving the accuracy of baggage tracking across the industry.

Blockchain in use

Winding Tree is a decentralised open source business-to-business (B2B) travel marketplace. It is a platform where buyers and sellers of travel inventory may find trusted partners they could not find before, connect directly, and start doing business immediately. Winding Tree is not owned by anyone; it is controlled by the community of its participants. It uses different licenses for each category. For example, for smart contracts it uses AGPL (Affero General Public License), for libraries and code examples it is licensed by Apache 2.0, and for all the texts found in the platform it is licensed by the Creative Commons Attribution 4.0 International. In short, any establishment can install this technology and broach the infrastructure.

Winding Tree uses Ethereum technology, a public blockchain that is best suitable for smart contracts, which provides greater cost-effectiveness for travel industry partners. Eventually, customers and other stakeholders involved receive a better deal.

Disintermediation, that is, cutting off the middlemen, reduces the total cost of servicing as Winding Tree acts as a bridge between the business and their customers. The high-profile airline groups that have signed deals with Winding Tree aim to eliminate intermediaries and the accompanying costs to create a decentralised marketplace. These include Air Canada, Air France, KLM, Air New Zealand, Austrian Airlines, Brussels Airlines, Etihad Airways, Eurowings, Germany based Hahn Air, Lufthansa, Swiss Air, and Swissport.

AI increases global GDP (Image credit: pwc.com)
Fig. 1: AI increases global GDP (Image credit: pwc.com)

Winding Tree’s CEO Maksim Izmaylov says that Hobo Hotel Stockholm, a member of the Nordic Choice Hotels group, was the first hotel to undertake hotel booking and reservation services using their latest blockchain technology to provide real-life use case and best-in-class services to their customers in the travel and hospitality space without charging commission fees. As the platform is open source and distributed, it generates boundless possibilities for customers who are looking for lower costs, security, connectivity, and unlimited innovation opportunities. The hotel can choose to accept payments in the form of fiat, credit card, or cryptocurrency (only Lif token or Ether).

Winding Tree decentralised ecosystem
Fig. 2: Winding Tree decentralised ecosystem

Airport Hotel Basel (Switzerland) chain and citizenM Hotel (Malaysia) chain have understood the outstanding benefits of blockchain and hence signed a partnership with Winding Tree not only to foster innovation in the hospitality industry but also to exchange data and transact in a more straightforward, efficient, and transparent way that gets rid of middlemen and associated fees. Winding Tree is not only for giant hotels but even for small hotels, and start-ups who wish to avail the benefits.

Cool Cousin mobile app
Fig. 3: Cool Cousin mobile app

Cool Cousin is a decentralised travel agency that has integrated the emerging blockchain technology to expand their business worldwide with the help of local experts in each city. These locals are known as ‘Cousins’ who love to share enough information about their city. Cool Cousin was set in motion with its curated travel experience during 2016 as a 16-person start-up, and today 500,00 travellers make use of it. Travellers can download this app in their mobile and book services, find places of interest, get a ride from Uber, or use any other app-driven service. It uses the cryptocurrency called CUZ.

Members of Cool Cousin are issued utility tokens that grant them permission to participate in their platform and get access to various services provided. As many people are not aware of the cryptocurrency, Cool Cousin accepts fiat currencies but converts them to CUZ tokens behind the scene. The tokenised smart contracts make the service more trustworthy and efficient for a small transaction fee.

Efficiency of Rezchain (Image credit: Webbeds)
Fig. 4: Efficiency of Rezchain (Image credit: Webbeds)

Webjet uses Ethereum on Microsoft Azure for strengthening the data reconciliation service called Rezchain, which is a new technology that enables error-free hotel bookings in real time. Sometimes when bookings are done, discrepancies occur in price, duration of stay, booking status, currency, or room type, leading to invoice disputes between relevant parties. Rezchain warns the parties involved to verify if their reservation data matches with the booking systems, so that it can be fixed early in the booking process. For example, if one side assumes the booking has been cancelled and the other side assumes that the booking is done in their system, Rezchain alarms both the parties, thus making invoicing almost seamless with minimum friction and more efficient. Webjet has travel partners in Europe, Indonesia, China, Southeast Asia, Middle East Africa, North and South America.
ITC Hotels, the third-largest Indian hotel chain, have proved their commitment to a safe world by using VeChainThor blockchain together with DNV GL’s (Det Norske Veritas, Norway and Germanischer Lloyd, Germany) My Care methodology to assist Covid-19 infection risk management for their visitors. VeChain blockchain becomes the first 5-star rated blockchain service provider in the world! Visitors can scan the My Care QR code online or at the hotel premises and complete the DNV GL’s Covid-19 guidance document.

My Care (Image credit: dnvgl.com)
Fig. 5: My Care (Image credit: dnvgl.com)

The document guides the visitors in a consumer-friendly way. Each visitor’s details and the DNV GL’s rating statement are stored by the VeChain blockchain. Thus, ITC Hotels maintain their principle of ‘Responsible Luxury’ by a suite of independent assessment services that reassures visitors that the management has put prevention and safety at the core of their risk management strategy.

VeChain
Fig. 6: VeChain (Image credit: www.vechain.org/news)

SITA World Tours recently bagged the 2020 Asia-Pacific Automation Growth Innovation & Leadership Excellence Frost Radar Award, bestowed by Frost & Sullivan. SITA has allied with the key airline industry partners that work for a common goal to digitally track, trace, and record the movements and maintenance of aircraft parts. This is completed by using a maintenance, repair, and overhaul (MRO) blockchain. Members of the MRO Blockchain Alliance include Bollore Logistics, Cathay Pacific, FLYdocs, HAECO Group, Ramco Systems, SITA, and Willis Lease Finance Corporation, supported by Clyde & Co.

The recording and tracking have two separate strands of information for each aircraft part. The first is a digital thread that provides real-time status, chain of custody, and back-to-birth track and trace of the part. The second is a digital passport (like a human passport) that provides an obvious identity of an aircraft part and checks certification of airworthiness to attest the tenure. The use of an MRO blockchain can simplify, secure, and speed up tracking the aircraft parts.

Digital life cycle of aircraft parts
Fig. 7: Digital life cycle of aircraft parts

Uber Travel, tussling a large role in the travel and hospitality sector, is using a decentralised blockchain architecture based on the advanced Chandra-Toueg algorithm. Uber faced difficulties like high fees (to be paid to mediators), lack of transparency and security with the centralised approach, hence switched to the decentralised way of connecting drivers and riders with each other via an instant P2P protocol without the need for intermediators.

P2P Uber service
Fig. 8: P2P Uber service (Image credit: Leeway Hertz)

Conclusion

Blockchain is proving its potential and changing the travel industry’s status quo by playing a major role in keeping the network secure, protected, and trusted. In India, more and more travel and tourism companies as well as start-ups are expected to be on-board as blockchain expands the scope of further digitisation and provides solutions for many tenacious complications that hold back the growth of an organisation.

Financial services are facing challenges in verifying and identifying customers against financial crime and money laundering; the traceability and immutability of blockchain’s distributed ledger technology make a perfect solution. The built-in efficiency and security of blockchain can trigger huge innovation in travel, paving the way for new business models and collaboration. This appears as a cinch that will reshape the travel and tourism industry by eliminating siloed and inefficient centralised systems. Hundreds of blockchain developers are working in India. So many more companies are likely to make use of these blockchain developers and increase transparency, security, and efficiency of the tourism and hospitality industry.


Dr Krishna Naga works as a Physics teacher. She has over twenty years of experience in this field. Her hobbies include reading and writing

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