While blockchain has been around since early 2009 as the technology behind crypto-currencies like Bitcoin, the hospitality industry is starting to take serious notice of the innovation and impact it can have on critical industry pain points.
At its most basic, blockchain is a digital “ledger” maintained by a network of connected computers, not a centralized, third-party source. That means that once entries are added, they can’t be changed, making it a virtually impenetrable way to store and track data.
Some pretty significant applications are being floated and piloted for the hospitality industry to improve efficiencies and profitability – key factors to the survival of a hotel chain. Here are just a few potential applications.
Room #1: Blockchains and third-party factor and hotel bookings
Airbnb, Expedia and Booking.com have made the process of finding and booking a stay easier and more accessible. But the downside is that such third-party platforms also add to the fees hotels pay for the bookings. As much as 25 percent of the online booking fees go towards the booking platform and financial transaction fees, or middleman processors .
Blockchain technology eliminates the need for middlemen to process payments and present and verify transactions. It was designed to decentralize security through the network and easily verify data through the chain, and ultimately allow a direct connection between the lodging providers and customers. This eliminates double spending, information disputes like denial of payment and overbooking.
Room #2: Blockchains for internal hotel management functions
It’s also feasible for different hotel operations to be managed through blockchains and integrated, improving both transparency and security. For example, rates, inventory and availability rules could be stored on a blockchain ledger, along with “smart” (or crypto) contracts for transient, corporate, group and other agreements for procurement and other services.
A 300-hotel group headquartered in Germany is aggressively testing the technology. In one area, it is using an in-house blockchain in tandem with its yield management system as a means of controlling and managing its room inventory -- how many are available where and when.
Room #3: Blockchains can ensure the customer comes first
Blockchain also represents a secure way to capture and manage customer information – from travel and purchasing patterns and preferences to personal data like credit cards. That makes it an ideal way to drive one-on-one marketing initiatives like loyalty programs.
One hotel group is looking at the “mass individualization of 20 million” customers through blockchain. While it’s still in the testing phase, the possibilities are vast. It could allow the hotel immediate access to accurate information on a guest’s simultaneous eligibility for discounts, affinity groups, reward programs and targeted promotional rates, as well as free room upgrades and other benefits like early or late check-ins and check-outs.
In other words, blockchain could enable the integration of all customer information into a single profile for each, individual customer – the kind of personalization that really drives true loyalty.
Blockchain is a technological advance that poses exciting possibilities for the hospitality industry. Let’s all stay tuned to see how it plays out in the near and longer terms.
HUB International’s consultants are available to work with you in understanding how trends and developments like blockchain impact your risk posture today and in the future.