Web3 in Travel: Leveraging Blockchain Technology in the Travel and Hospitality Industry
Decentralization in tourism
Blockchain technology, known for its decentralized nature, is closely associated with the idea of a utopian internet, where the ideal version of the web can only be realized through decentralization. As a secure, transparent and decentralized method of recording data, blockchain technology has enormous potential for various industries, including ours. Blockchain technology can transform a number of industries by automating ordering and payment processes, increasing trust and security, and promoting efficiency through smart contracts and identity verification. For example, blockchain can serve multiple purposes in travel, such as tracking and distributing reward points, coupons, or other benefits in loyalty programs. It can also be used to verify customers’ identities, prevent fraud and improve supply chain efficiency. Other potential applications include secure and decentralized customer identity management systems for storing and sharing customer information such as passport and visa details, digital payments and transactions, baggage tracking, NFT rewards, tokenization, collaboration with crypto artists, NFTs and more. Since 2023 is a year of reconstruction amid uncertainty, hotels face a number of technological and organizational challenges that require prioritization. Blockchain is the future, and organizations must adapt by identifying the best vendors in this space and rapidly deploying solutions with clear revenue prospects, pending mainstream customer adoption of Web3 technologies.
Web3 generation and hotels
Blockchain technology’s marketing and branding aspects in the hospitality industry are particularly exciting. Blockchain users form a tight-knit, sizable and financially sound global community known for extensive travel. By accepting cryptocurrency payments, for example, hospitality brands can showcase their forward-thinking nature. In addition, offering benefits to collectors of specific NFTs, such as the Bored Ape Yacht Club or CryptoPunks, can encourage high net worth communities to develop brand loyalty. In the era of Airbnb, hotels can be perceived as outdated and impersonal. Targeting tech-savvy audiences and demonstrating an understanding of their needs can significantly boost your brand image, making blockchain enthusiasts the ideal community to target.
Web3 = Value creation
Blockchain technology enables hotels to bypass intermediate stages and move directly to advanced technological solutions. Despite the historically slow adoption of new technology, blockchain offers hotels the opportunity to create value by restructuring distribution, controlling prices and increasing loyalty. For example, tokenized issuance allows hotels to control access to their inventory, while tokenized shares facilitate granular price control enforced at the point of purchase. This enables hotels to regulate the types of guests they accept and influence additional income. In addition, tokenized stays can create a Proof-of-Stay, a verifiable online transaction that identifies each guest, their stay and their reviews, eliminating the need for reputation management solutions and resulting in significant savings.
RNTs and guest verification and personalization
Room Night Tokens (RNTs), a form of Non-Fungible Tokens or digital assets, can be minted for guests upon arrival and either burned or made inaccessible, but retained when the stay ends. Hotels can create personalized designs for these NFTs, highlighting their brand and providing guests with memorable souvenirs. Furthermore, these souvenirs can prove loyalty in loyalty programs, with hotels offering incentives based on the number of RNTs a guest has.
Account ownership, personalization and reputation
Web3 can solve the fundamental question of account ownership in the hospitality industry. Currently, travelers have separate accounts for each platform (eg Booking.com, Airbnb) owned by the respective platforms. Listings and reviews are built on top of these accounts. However, if an account is closed or a platform is closed, the listings and reviews disappear, reducing the value of years of hard work. Web3 offers an alternative approach where a digital wallet gives account ownership to the user. Listings and reviews are linked to the user’s account, not the platforms, so they can retain control. If a platform is closed, the user’s account, listings and reviews are not affected, as they are independent of the platform. Multiple platforms may simultaneously use the user’s account, listings and reviews with the user’s permission. This model is already being explored in decentralized social networks, making it a technically feasible reality. Blockchain-based review systems are another excellent use case, as these systems can verify that only authentic customers provide feedback, ensuring that all changes are reflected in a secure, immutable record. This process significantly increases the value of reviews.
Non-working trips?
Blockchain technology supports the creation and management of NFTs, providing additional opportunities for the travel and hospitality sectors. For example, NFTs, which represent ownership of digital assets, can be used to tokenize travel vouchers or support experiential tourism and “tokenization of emotion.” In addition, NFTs and blockchain can streamline processes in business travel, such as notarizing expenses or travel contracts, controlling compliance through smart contracts, and using fungible tokens for business payments. Unfortunately, hotels must be quicker to adapt to new technology. They were once pioneers, but hotel technologists became entrenched in local and unwieldy technical solutions. Today, they are cautiously exploring cloud-based options due to their heavy legacy. As a result, the hospitality industry has viewed technology as an enabler rather than a value creator, which needs to be corrected.
Blockchain distribution
Tokenized inventory distribution allows hotels to open their distribution channels worldwide while still controlling access. Hotels can decide what type of guests they attract, and detailed price controls can be enforced in each transaction, allowing hotels to manage floor and ceiling prices for primary, secondary and tertiary token sales. Blockchain can programmatically implement these controls, saving legal, accounting and settlement time and resources. In addition, tokenized stays can solve problems with reputation management and loyalty distribution. Proof-of-Stay, a verifiable online transaction that identifies each guest, their stay and their reviews, can eliminate the need for expensive reputation management software. The travel and hospitality industry stands out as a significant sector without a secondary market for the resale of unused reservations, despite the prevalence of resale markets for various consumer goods. This is mainly because travel bookings are considered service contracts rather than goods. Therefore, transforming these orders into non-fungible tokens could represent a significant innovation and a critical milestone for the industry. Currently, there is a win-lose situation between hotels and travelers when it comes to booking reservations. Travelers want flexibility, and hotels seek immediate and guaranteed cash flow. However, this is not achievable with the existing rate system (Refundable vs Non-Refundable). A win-win situation can be created by leveraging NFTs and blockchain technology so that pre-paid non-refundable orders can be resold. This shift will establish the first-ever secondary market for travel bookings, where individuals can buy and sell reservations in the same way that physical goods are traded on platforms such as eBay. Decentralized marketplaces may follow a similar trajectory to ticketing platforms, with most now opting for third-party services like Ticketmaster rather than primary marketplaces for booking concerts or sporting events. For example, if a hotel is selling a room for $200 and a significant event is taking place, the price for that night may increase. If a traveler who purchased the room resells it for $500, both the hotel and the retailer benefit, creating a virtuous circle of value.
Conclusion
Blockchain technology’s open and perpetual nature enables hotels to store and access information like never before. As previously discussed, some examples include:
- Secure payments: Blockchain can develop transparent and secure payment systems that bypass intermediaries such as banks or credit card companies, reduce transaction costs and improve consumer data security;
- Loyalty programs: Blockchain technology allows customers to accumulate and redeem rewards securely and transparently, reduce the cost of running loyalty programs and increase customer engagement;
- Identity verification: Blockchain enables brands to establish secure, decentralized identity verification systems, replace paper passports and traditional identification methods, streamline check-in procedures and reduce the risk of identity theft;
- Supply Chain Management: Hospitality operators can better track inventory and manage logistics by developing more open and efficient supply chain management systems;
- Smart contracts: Blockchain makes it easier to create smart contracts, automate processes such as booking and payment, eliminate intermediaries and increase efficiency.
In conclusion, integrating blockchain technology into the travel and hospitality industry can transform these sectors, promoting secure and transparent transactions, personalized customer interactions and creating a secondary market for travel bookings. Moreover, blockchain technology can lower barriers to entry for smaller operators, improve efficiency and offer unique experiences to travelers while maintaining a solid customer-centric focus. By embracing blockchain and Web3 technologies, the travel and hospitality industry can position itself for a more innovative and prosperous future.
Simone Puerto
Travel singularity
