Blockchain and the travel industry - What you need to know

Veselin Peev - 26/02/2020

Mayank Singhal envisions a world in which your luggage never gets lost, you never have to wait for your hotel loyalty rewards to materialize, and passports and visas are digitized, making movement through the airport faster and more efficient. What's going to fuel this brave new world?

Blockchain technology, says Singhal, a faculty member at the Toronto-based Blockchain Research Institute.
There's good chance you hear the term "blockchain" and your brain goes on stun mode; you may have a basic understanding thet it has something to do with crypto-currency, but how it actually works eludes you.
Here's the thing: you're not alone. "It's a complicated subject", admits Michael Strauss, a travel technology expert and CEO and head of Business Unit Travel worldwide. But although the technology is still in its infancy, it could have a massive impact on the travel industry in upcoming years.


Firstly, although blockchain is the technology on which cryptocurrency runs - in fact, it was invented to run Bitcoin - it has many other applications and potential uses, from fund transfers to digital identification and loyalty programs.
Ultimately, a "blockchain" is simply a list of time-stamped transactions (for goods, services money or data) between parties. Each "block" is essentially a storage place for data. But instead of being stored in a centralized database, blockchain transactions are decentralized, Strauss says. Each block of data is connected to the next, creating a "chain", like the links of a bracelet.
The key advantage of blockchain technology is that - implemented correctly - the information it contains remains secure and yet traceable. Although a hacher might be able to compromise a centralized database, it's more difficult to tamper with a block.
Says Strauss: "If you change one block, you have to change them all. And since blockchain information is shared across a network of peers, everyone would have to agree to change the data".


"It's a great way for parties to transact directly with each other without the need for an intermediary", Singhal says, "especially in situations where they may not trust each other." What's more, you can log transactions in real time, preventing duplication and confusion.


The travel industry is a natural fit for adopting blockchain technology for a couple of different reasons, Singhal says. First, travel almost inevitably involves data sharing amongst multiple players, including travel advisors, online travel providers, airlines, credit card companies, car rental agencies and hotels.
For example, travel advisors pass customer details over to airlines and hotels, and airlines transfer and track luggage between one airport and the next. Given the number of players involved, it's probably not surprising thet the process doesn't always go smoothly.
Blockchain has the potential to make accessing and storing important information easier and more reliable, because responsibility is shared across the whole network, Strauss says. With information decentralised, you don't lose it through data corruption, accidental deletion or an intentional cyberattack.
And financial transactions are a key element of the travel industry, as well. Blockchain could simplify payments and make them more secure and traceable - particularly overseas payments. "Blockchain offers transparency because those involved can see every entry into the ledger of transactions, "Strauss adds. "But at the same time, it provides privacy since transaction details are shared only among participating parties".
Finally, Singhal says, "I feel the travel industry is ripe for disruption". If you look at the innovation consumers have seen over the past five to 10 years, he says, Uber, Airbnb and their respective competitor lead the pack. "What they were able to do was create an alternative form of supply within the travel industry," Singhal explains, enabling home-owners and drivers to contract derectly with travellers.
But when you want to book a car, a flight or a hotel in the conventional travel industry, you can do all kinds of price comparison on Expedia, Hotwire and Priceline, "but at the end of the day, 90 per cent of them are owned by (formerly Priceline) or Expedia." Thet fact, combined with the difficulty of forming direct partnerships and connections with individual travel suppliers, makes it "difficult for innovators to come in and change the way you book a vacation", he says. "I personally think blockchain has the power to enable innovation".


Blockchian technology has potential for many different areas of the hospitality and travel industry from tracking luggage to identifying passengers, ensuring secure traceable payments and enabling customer loyalty programs to run better. Here are just a few of the applications:


Blockchain has potential to revolutionize the process of identifying and processing travellers. Currently, for example, the Government of Canada and several global partners are testing a new system they call the Known Traveller Digital Identity prototype. It allows travellers to use an app to digitize their personal information - perhaps a permanent residence card - as well as biometric data (think fingerprint or retina scans) - and share it with airport and government authorities before travelling. The data would be stored using blockchain. The aim: to reduce check-in times and lineups in airports by allowing security to efficiently identify and process travellers.


Customer loyalty programs are a staple in the travel business and blockchain can simplify the process. How? "The moment you pay your bill at the hotel, your points should appear instantly," Strauss says. You don't have to wait two or three days for the information on your new points balance to make it to a centralized database.


Think about all the times a bag changes hands during a trip abroad. "And yet it's very centralized", Singhal says. "Each airline has its own system to track bags." That means a lot can go wrong, particulary on connecting flights when consumers are handing off bags from one airline to another. Using a decentralized blockchain database that tracks the movements of all bags through an airport would dramatically improve the customer experience and reduce the likelihood bags would get lost. "I envision a world where all airlines could implement a radio-frequency identification (RFID) solution in their own baggage terminals, and all of the data is then tracked centrally on blockchain", Singhal says. "So if at any point your bag gets lost, you could look up where it is within the system." In order for such a solution to be adopted, though, travel suppliers would have to come together and collaborate "to improve the customer experience for passengers."

In the end, contends Strauss, blockchain technology is still in its infancy; there are questions to be asked and answered regarding its scalability, the privacy of data and whether transaction fees will actually be reduced, among other things. Nonetheless, he says, "the promise of a new method of storing data that is secure, transparent and decentralized is intriguing."

By Camilla Cornell

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