blockchain and its potential to upend the travel industryWe’ve been hearing a lot lately about artificial intelligence, “big data” and their potential for transforming the travel industry. But there’s another new technology on the horizon called blockchain, and it promises to upend much of the business world as we know it.
So what exactly is a blockchain? It’s the technology underlying virtual currencies like Bitcoin. It’s basically a living digital business record or ledger that can be updated in near real-time by multiple parties, creating permanent and inalterable records on everything from bank transactions to house and land sales, real-time shipping records and, of course, travel bookings and payments.
While most of the talk about blockchain currently is focused in the payments world, a recent report from IBM says blockchain already is disrupting the disrupters and could eventually eliminate whole sectors of intermediaries.
It’s both scary and exciting stuff, with unknown but potentially game-changing disruptions to the travel distribution world as we know it.
According to a new analysis from the IBM Institute for Business Value, blockchain has the potential to become “the foundation of a robust system of trust, a decentralized platform for massive collaboration.
“With that, intermediaries will be shuttered. Assets that were once dormant can be exploited. Profit pools can shift and be redistributed. News services delivered on blockchain networks can accelerate access and liberate those that were once locked out of efficient value creation to fully participate in an all-in economy.”
So how might this all impact travel and hospitality distribution? According to the IBM report, two new blockchain pilots are already attacking one of the industry’s newest disrupters, the sharing economy.
La’Zooz, being developed in Israel, cuts out the middlemen in ride-sharing services like Uber by establishing a trusted system that allows car owners to share rides with each other. An Austin-based company, Arcade City, is developing a blockchain-based system that allows riders to directly negotiate rates with drivers.
In the travel distribution space, a startup called Winding Tree is circulating a draft white paper about its vision for using blockchain to upend traditional travel agency sales and commission models.
And experts say blockchain also has huge potential to open new avenues for not only new payment and reservations management solutions but also helping travel companies achieve the Holy Grail of truly personalized services and one-to-one, persona-based marketing.
As the IBM report states, blockchain’s “leveling effects across frictions at various levels of the economy are startling. They suggest that transaction costs and enterprise friction could be so greatly reduced that organizations will be transformed in ways not yet imagined.”
In other words, this is a space we should all be watching very closely.
– CEO Toni Portmann