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by Christopher Tozzi, May 15, 2018

How Blockchains Are Changing the Hotel Industry


Hotel

What can a blockchain platform do for the hotel industry? Quite a bit, according to several startups and entrepreneurs who are building platforms that use distributed ledgers and cryptocurrencies to improve hotel booking systems, review websites and more.

While a blockchain can’t resolve every challenge facing the hotel industry, blockchain-based platforms do offer promising solutions for three particular areas of difficulty in the industry.

Blockchain-Based Hotel Booking Platforms

The first involves hotel bookings. The role of online travel agencies (OTAs), such as Travelocity and Priceline, in facilitating hotel reservations has steadily increased in recent years. 

It’s easy to understand why: OTAs make it easy for consumers to shop a range of hotels in a given location and find the best price. They sometimes offer other advantages as well, such as the ability to bundle related services with a hotel reservation and receive a discount.

For hotels, however, this trend is a problem. OTAs typically charge hotels commissions of 15 to 20 percent when customers use their websites to make reservations, significantly reducing hotels’ revenue. And while OTAs often feel like a benefit to consumers, the commissions indirectly harm them, too, by pushing hotels to raise prices in order to offset commissions fees. 

Blockchain technology can help to solve this problem in two ways. Firstly and most significantly, blockchain technology could form the foundation for a decentralized platform that connects consumers to hotels without requiring large commission fees.

This is the solution envisioned by startups like Concierge.io, which uses the NEO blockchain as the backbone of a commission-free hotel booking platform. The company says that its solution will save consumers as much as 45 percent on traditional booking fees. For now, Concierge.io remains in development. Only hotels based in Vietnam are currently available for booking, but the company says that it will eventually list 10,000 international properties.

LockTrip is building a similar platform, with plans to roll out its decentralized applications in the spring of 2018. 

A secondary benefit of blockchain-based booking systems is that they can eliminate or significantly reduce payment transaction fees by allowing consumers to pay with cryptocurrencies. While transaction fees for credit and debit card payments do not contribute as significantly to online hotel booking costs as OTA commissions do, they are still a factor.

Transparency and Hotel Reviews Via the Blockchain

A second significant challenge facing hotels and consumers is fake or unfair online hotel reviews. Given that, on most online review platforms, anyone can write a review of a hotel without having to confirm that he or she even stayed there, it is difficult for consumers to know how accurate online reviews are. For hotels, meanwhile, inaccurate or unfair reviews can be hard to identify and address. 

A number of blockchain-based online review platforms with the potential to address this challenge, such as Revain and Lina.review, already exist. These review sites, which use blockchains to improve the transparency and reliability of online reviews, don’t cater to hotels in particular, but hotel reviews are an obvious use case for their solutions. 

By providing a more reliable place for online hotel reviews than the sites run by OTAs, these review platforms would further reduce the need for consumers and hotels to rely on centralized booking sites in order to locate each other.

Blockchain-Based Dispute Resolution

The third challenge that blockchain platforms can help to address is that of disputes between hotels and guests.

Currently, if guests arrive at a hotel and find that the room they have booked is not what was advertised — or, worse, that it doesn’t exist at all due to fraud or overbooking by the hotel — they have little means of redress, especially if they prepaid for their reservation. Similarly, the ability of hotels to recoup losses for damages caused by unruly guests is limited. They can require guests to register a credit card when they check in to cover possible damages, but credit limits, credit card fraud and other issues make this solution less than perfect. 

It’s easy to imagine an alternative where hotel bookings are moved to the blockchain and disputes are resolved automatically via smart contracts. While such a solution is not yet a major part of existing blockchain-based hotel reservation platforms, startups like Concierge.io have plans to make use of smart contracts for this purpose. 

Smart contracts could potentially streamline other aspects of the hotel experience, too. They could automate check-in and check-out procedures, and perhaps allow guests to check in at different times, rather than having to wait until an official, hotel-wide check-in time. They might even be used to guarantee the best price on a hotel room, regardless of when or where it was booked, by determining what other guests are paying.

While the implementation of blockchain-based platforms for hotel bookings, reviews and dispute resolution has been limited to date, several startups are working on such solutions. Blockchain technology may prove as disruptive to the hotel industry over the next couple of decades as was the advent of online booking sites in the 1990s.