Bingo! When a panelist said the word "blockchain" at
BTN's recent Tech Talk event in San Francisco, a travel buyer joked it was the last
term he needed to complete his tech buzzword Bingo card for the day. Despite the
chatter about blockchain, its impact on the travel industry is still speculative.
Few have developed applications directly tied into the industry, and those that
have cropped up are still in their genesis. Travel tech experts, however, say blockchain
could alter distribution, payment and traveler tracking, to name a few.
What Is Blockchain, Anyway?
Blockchain is a type of database, built by an expanding list
of records, or blocks, each linked to a previous block and connecting back to an
original "genesis block." In a traditional database, users add, alter
and remove data. The blockchain setting allows users only to add data (though private
blockchains are a different beast). "Blockchain allows you to move from trust
to truth," Mezi VP of travel strategy and partnerships Johnny Thorsen said.
"Every time a new transaction is created, it points to the past and the future,
so there's a complete audit trail."
Blockchain also is transparent: Anyone can view the data, although
it is encrypted to protect identities. "The data is very secure while being
very accessible," Thorsen said. "Does that sound like today's travel world?
Not quite. We have a lot of problems getting the data, and it is not secure."
Corporate Travel Uses
Blockchain technology is not new. In practical terms, it's been
around for about a decade and is best known as the technology behind the cryptocurrency
bitcoin. A few suppliers are working on travel industry-related applications, and
impacts on other industries are likely to ripple into travel, as well, Thorsen said.
Payment. Considering its bitcoin origins, the payment
industry is among the ripest for blockchain disruption. While bitcoin itself has
had bumps and has detractors, the technology behind it has attracted interest from
banks. On the settlement side, the technology could provide real-time transactions
direct from buyer to supplier. Those transactions would be instantly trackable and
auditable and would eliminate the need for cards or a bank as a middle point. Any
attempts at fraud, meanwhile, would be instantly detected. "The existing financial
system is very complex at the moment, and that complexity creates risk," Joichi
Ito, Neha Narula and Robleh Ali wrote in the Harvard Business Review this year.
"A new decentralized financial system made possible with cryptocurrencies could
be much simpler by removing layers of intermediation."
Distribution. Essentially, airline tickets and hotel bookings
are nothing more than database entries, according to Accenture's consulting division.
So what could suppliers do with bookings made in a blockchain environment? "Through
the use of smart contracts associated with the asset, airlines can add business
logic and terms and conditions around how the ticket is sold and used," according
to Accenture. "This opens the door for tickets to be sold by different partners,
and in real time, from anywhere in the world." A few startups already are exploring
blockchain as a distribution platform. Winding Tree, which bills itself as "travel
distribution without intermediaries," plans to offer distribution without transaction
fees, instead charging only about a penny to incentivize people or companies to
participate in order to "give computational power to the network," according
to a white paper from the company.
Traveler Tracking. One blockchain-based startup, ShoCard,
is developing a singular traveler ID, or token, that connects to all relevant identification
needed for travel, such as passports and photo IDs. Airport security and other the
traveler experience aspects could improve, but a singular traveler ID also would
provide new opportunities for corporate traveler tracking. "Whenever someone
is traveling, [corporate] security can get into that framework, so you will know,"
Thorsen said.
Because blockchain systems are transparent, so are the travel
transactions made on blockchain platforms. Companies no longer would need booked
data from travel management companies for traveler tracking. "When you have
databases in real time all around the world, as long as you can get over the security
aspects, it can be quick and seamless," said Toby Houchens, CEO and founder
of travel risk management supplier Travel Recon. "You can find out locations
based on transactional data, which will be extremely powerful."
Blockchain technology that aids traveler tracking can evolve
from other uses. One startup, for example, aims to tie cryptocurrency to fitness,
sending people micropayments every time they move their bodies. That would provide
location data that the company could monetize, Thorsen said. "Completely new
data sources will become available," he added. "It's time to think of
a duty of care program that does not rely on itinerary data, which has lots of errors
and inconsistencies."
Back to Reality
Blockchain also could enhance loyalty programs, could create
"smart contracts" that self-monitor contract terms or could improve basic
supplier operations, such as making aircraft maintenance more efficient. For travel
buyers like the one who considers "blockchain" nothing but a Bingo buzzword,
though, it also will mean a lot of noise. This is already happening in the financial
industry, according to the Harvard Business Review: "There were many 'pre-internet'
players—for example telecom operators and cable companies—trying to provide interactive
multimedia over their networks, but none could generate enough traction to create
names that you would remember. We may be seeing a similar trend for blockchain technology.
Currently, the landscape is a combination of incumbent financial institutions making
incremental improvements and new startups building on top of rapidly changing infrastructure,
hoping that the quicksand will harden before they run out of runway."
Suppliers promising to turn the travel industry upside-down
overnight via blockchain technology will warrant similar skepticism, but those who
dismiss it completely risk looking like those who were certain online booking would
never work in the corporate realm.