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How can blockchain technology improve the travel and tourism industry?

According to robust data, the travel and tourism industry is the second-fastest-growing sector in the world, after manufacturing. The World Travel and Tourism Council (WTTC) concluded that in 2018, travel and tourism increased by 3.9%, more than the global GDP growth of 3.2%. As we speak, the Coronavirus outbreak generates a degree of uncertainty related to how and when the travel and tourism sector will get back to normal. However, we consider that destinations around the world begin to accept this delicate situation with a number of precautionary measures in place. Besides recommended measures coming from local authorities, such as social distancing and proper hygiene, we believe that travel and tourism organizations have the proper resources to integrate innovative technologies, such as blockchain and cryptocurrencies.

If used accordingly, blockchain and cryptocurrencies can contribute to the comfort and safety of a traveler’s journey. It can provide a new experience in terms of booking travel tickets and hotel rooms, removing intermediaries out of the way. For the purpose of this article, we’re going to explore different applications of blockchain technology in the travel and tourism industry.

First, what is blockchain technology exactly?

Even if it might sound confusing at first, it is actually pretty straight-forward to understand the basics of it. It can be looked at as a list of public records, also known as public ledger, with transactions between parties listed or stored in a transparent manner. Individual entries are encrypted and grouped into blocks that form a chain, therefore leading to the blockchain terminology.

The main characteristic and differentiator of the blockchain technology is that data is decentralized, meaning that it becomes available throughout the different nodes or computers part of the network. Copies of the compiled information are available on individual devices that are part of the network. In other words, the information stored is shared across a peer-to-peer (P2P) network. It is completely transparent, and it cannot be altered without the permission of the entire network and without modifying all subsequent blocks.

Applications of blockchain in Travel and Tourism

Recently, blockchain has gained a lot of interest in the travel and tourism industry. An increasing number of major companies have incorporated this technology in their list of offerings. Below, there are different ways in which blockchain technology might be used in the travel and tourism sector.

  • Lower transaction costs

The implication of intermediaries has inevitably been one key issue in the travel and tourism sector. These third parties involved in the booking process of hotels, airlines and other travel service suppliers result in additional fees for the end-user (tourist or traveler). TripAdvisor is an example of a third party that charges additional fees for their available services.

With the employment of blockchain technology, the long chain of intermediaries that results in delays and financial losses can be simplified. It is an ideal way to close the “gaps” made by different payment providers. At the moment, travel agents wait on average 60 days to earn their commission after a client checks out, because of the many parties involved in the payment cycle. Commission reconciliation can be a real hustle among travel agents. Travelport, a B2C travel service provider decided to adopt IBM’s Hyperledger Fabric to assure commissions paid to travel agencies. The main purpose of this partnership is to decrease the number of third parties involved in the payment cycle, by relying on blockchain in the process of a booking.

  • Trucking luggage

I bet that some of you that are reading this post have experienced issues with claiming a luggage, especially when dealing with international destinations. It’s definitely not a good start for a holiday or business trip. A traveler’s baggage is subject to several automated and manual processes, before being picked up at the final destination. This luggage itinerary is stored in a non-standardized form by the parties involved and these parties include airlines personnel, transportation companies, airports, and local authorities.

Blockchain, with its online-record keeping system stored on a peer-to-peer network can be a game changer and step up the way in which airlines tackle the problems of lost luggage. This way, both customers and airlines can track a luggage in all stages of its transfer process, offering full transparency to the process. Therefore, if a bag is mistakenly left behind, airlines can easily access its entire journey and identify the exact point where it went missing and the reason for that.

Back in 2017, Air New Zealand partnered up with Winding Tree, a decentralized Swiss travel start-up. The main purpose of this collaboration was to explore applications of blockchain technology in the airline’s business. Their mission was to improve  security and efficiency of services, such as baggage tracking and ticket booking.

  • Traveller’s identification

As blockchain does not store information on a central database, the customer identification process can save up a considerable amount of time by using this technology. It can even replace passports and become an industry standard for storing such personal information.

The World Economic Forum along the governments of Canada and the Netherlands launched a pilot program for paperless journeys between the two countries. This new project, entitled Known Traveller Digital Identity (KTDI), is the only solution to use digital identity for international trips, giving the traveler’s full control over how their own data is used. Personal data that is usually stored on a passport’s chip is replaced by encrypted data stored in a traveler’s digital wallet and it becomes available on mobile devices. Compared to old-fashioned ID systems that are operated by centralized authorities, KTDI is based on blockchain technology.

  • Secure and traceable transactions with Cryptocurrencies

An increasing number of companies in the travel and tourism sector begin to realize that accepting cryptocurrencies as a payment alternative creates a seamless purchase behavior. The major benefit that cryptocurrencies brings with it is that it eliminates traditional payment methods that rely on third-party payment apps. This way, transactions can occur between two entities directly involved. Payments based on blockchain technology will also decrease the time needed for completion of payments, resulting in faster transaction speed and more sales.

Another benefit is that cryptocurrencies replace the need of exchanging money into the local currency. It eliminates currency exchange commissions and users can take advantage of the same value no matter where they are. Forget about spending part of your allocated budget on bank commissions.

Given the various benefits of accepting crypto payments in travel and tourism, there are still some gaps that need to be addressed. It is not enough for a single entity to accept cryptocurrencies. For example, a travel agency that accepts crypto payments will still have to exchange those to Fiat money to contract services from providers that do not accept digital currencies. It is a matter of time until other parties involved will realize the benefits it brings with it.

Final thoughts

There is no doubt that blockchain technology has enough features and resources to revolutionize the travel and tourism industry. However, this innovative technology is still in the early stages of its life. To take advantage of its unique features, such as personal identification, governments and other authorities should have a good understanding of the benefits that it brings to the table. Anyway, many organizations from the travel and tourism industry begin to find out its applicability and that’s obviously a good sign for those involved in it.

Empowering local economies through Tourism

The beginning of 2020 brought us the Madeira Startup Retreat, a wonderful program that supports startups that brings together startups that aim to use their technology for the Travel and Hospitality industry. It helped us better understand how our solution can help communities develop their own local economies.

But as I write these lines, the world is totally different from what it used to be just a few months ago. The coronavirus pandemic made governments impose total lockdowns on communities, a measure designed to keep us safe until these hard moments pass. All industries took a big hit, but Hospitality and Travel are probably the ones that suffer the most in these hard times. Travel bans and lockdowns transformed our once vibrant communities into “ghost cities”, making us understand that we shouldn’t take anything for granted.

Image by Magdalena Smolnicka from Pixabay

The last few weeks gave me time to think of the importance of local communities and their role in the reconstruction of the global economy. And how Tourism can empower local economies. Because although we all suffer together, the power must come from within: individuals, small businesses, local communities. We are strong together, but firsts we must be strong as individuals.

The future of communities

The idea of local economies that are globally interconnected is not new, but today’s hard times force us to better understand the importance of each chain link in our interconnected world. And that the fall of one piece can create a chain reaction that will affect us all. While some communities are created around powerful manufacturing industries or financial centers, many of them are 100% dependent on the industry that took the biggest hit these days: Tourism. 

Overall, 1 in 10 employees work in tourism, making it one of the biggest industries in the world. But for some communities, it means more than that, making it the only way that allows them to attract external funds. However, taking a deeper look at the Tourism Industry allows us to see the day-to-day challenges. Challenges that affect both the Tourism Industry and the community. Tackling these challenges could mean a stronger, financially independent community that has the power to attract more tourists and offer better experiences. The key members that create these experiences, which have the interest but also are required to work together. 

Current main problems

We will take a look at how Hotel Chains, small businesses, and local authorities could better work together. But first I want to list some of the problems that affect the small communities and Tourism operators.

  • Especially in developing countries, tourism inflates prices. Tourists afford to pay more for existing products and services, making it harder for locals to access them. In the long term, this makes the area lose its initial inhibitors and its cultural heritage, affecting tourism in the region.
  • Most of the money leaves the community/country. Although tourists spend large amounts of money, a big percentage leaves the local economy within just a few transactions because of the lack of strong local businesses.
  • Lack of data. Each stakeholder has access to part of the data (tourist information, purchasing habits, preferred experiences, etc) making it almost impossible for them to offer the experiences tourists crave for
  • Fragmented experience for the tourists. Different currencies, different payment methods or divided registration processes can become daunting. Often enough, tourists choose to skip different activities because of the mentioned reasons, affecting both the local economy but also their own experience – a lose/lose situation.

Sustainable Tourism

At first, it may look that these problems affect just the local communities, not the powerful Hotel Chains that operate there. But a weak community will discourage people to visit a specific area, forcing the Tourism Operators to take a big hit as well. Distributing part of the money to locals is an investment that will help the area flourish, having an impact on all the mentioned stakeholders. And with millennial travelers valuing local experiences and pushing the trend to experiential traveling, any support offered to the local community becomes an investment into the industry itself.   

At Oveit, we have developed an Economy as a Software solution, aiming to help communities to create their local economy. Having such an ecosystem means that the money tourists spend on their vacations stays within the community that works to create these wonderful experiences. It’s a way of making sure that the wealth is distributed amongst those that put the hard work in creating beautiful memories. It’s a way of making Tourism (more and more) sustainable.

Local Economies. From concept to implementation

If you think the theory sounds good you will be happy to find out that the implementation is easier than you would imagine. Our solution allows the main stakeholder of the ecosystem (let’s put the Hotel in charge) to easily onboard external vendors and experience creators into this local payment system. 

The integration with the PMS means no complicated onboarding is required. Guests from the hotel can use their room key ( or even their mobile phones or customized NFC wearables) to pay or claim different benefits. It can be used to open the room, access the spa, pay at the hotel’s restaurant or gift shop. But by onboarding local vendors it also means that they can use it to pay at a local shop or to access the local museum. By partnering up with the local entrepreneurs and authorities, the Hotel can encourage its guests to spend their money within businesses that add value to the region. It can create better experiences for the tourist, allowing them to pay using the same NFC wristband that they use to open their rooms.

Tourists will no longer need to carry cash around. So often, small local businesses do not afford to onboard the existing banking system, making it harder for them to sell their services and products to foreigners. Tourists can use the same wearable for all the activities they want to join – a simple thing as an NFC wristband can become their room key, wallet, access to the museum or even transportation pass.


Photo by Satoshi Hirayama from Pexels

Data becomes available live – purchasing habits and experiences are all processed through the system, allowing involved parties to better understand the customer journey.  And, of course, to use this information to better understand who their customers are and how they could improve their stay. 

Local authorities can support the industry by making sure that part of the money generated by the Tourism industry is spent within it. For example, for spendings within local businesses users can receive extra Perks – free entrance to local attractions, discounts, and many more.

Conclusions

We live in an era where technology shows us the power of decentralization, empowering individuals and communities. Looking at today’s biggest companies like Airbnb and Uber we see the effect of giving power to individuals and small communities. Not only a better wealth distribution but also improved services for the consumer. And better experiences mean better client retention.

Leading Tourism companies have the opportunity to use their resources in creating powerful economies around their businesses. To empower the communities that empower the tourism industry.


Cashless payments and loyalty programs in hospitality & tourism

In today’s world, cash is not a preferred method of paying for goods and services. More and more businesses around the world have decided to eliminate the need of dealing with cash. There are other innovative payment alternatives, replacing the old-fashioned way of paying with cash. The hospitality and tourism industry is no different from the vast majority of businesses that adopt cashless payment alternatives. Travelers don’t feel comfortable when carrying cash during their holidays. Businesses that are part of this industry and not only, will transform usual customers into loyal ones, will increase sales, and improve the overall user experience considerably, if they switch to a cashless payment alternative.

Cashless payments and loyalty programs in resorts and hotels

Businesses that are part of the hospitality and tourism environment need to differentiate themselves from their competitors. It is an extremely competitive market, where customers have a variety of options to choose from. For a hotel, it is not enough to only provide bed & breakfast. Guests expect tailored and unique experiences. What if I told you that a simple key card can take on many roles, transforming your regular guests into loyal ones? Let’s take the example of a hotel chain, with several locations around the world. The majority of hotels and resorts, provide their guests with key cards for room access only. However, those cards can be used as: payment, entrance to specific areas, bonus, and loyalty cards in any participating location, therefore creating an ecosystem. Besides these great features, you will have access to qualified data that can be used strategically.

Among companies using incentives, 79% of them report a success rate and achieve the established goals . In the case of hotels and resorts, rewarding guests accordingly is very important. The reward is based on different aspects, such as number of bookings, amount spent within the hotel, referrals and not only. An easy way to make all this information available is by creating an ecosystem, therefore enabling to differentiate between gold and silver members for example. 

Supporting local businesses by partnering up with hotels and resorts

Hotels and resorts might choose to partner up with different businesses and contribute to the local economy. Depending on the purpose of your trip, the likelihood of willing to explore the surroundings are very high. For this reason, partnerships with local restaurants, cafes, shops, museums have a positive impact on the customer purchase experience. One creative way to achieve this, is to integrate the internal payment system of a hotel or resort with its partners. Guests will have the option to pay with their key card at partner locations, therefore expanding the ecosystem. Since all transactions are recorded, external vendors have access to relevant reports. They will be able to reward their loyal customers on their behalf.

The cashless payments solution that Oveit has put into place can easily achieve the above mentioned for any hospitality and tourism business. There might be times when internet is not available in every location that uses our system. We thought about this scenario and came up with a solution for it. Our technology has the capacity of working both online and offline, meaning that whenever internet goes down, the customer experience and the recorded data won’t be affected at all. We bet that you are asking yourself how we achieved that, but we invite you to find out for yourself!