Slowly but surely the travel industry is adopting blockchain. At this stage, we're not sure what it will do to the landscape, but smart companies would do well to pay close attention.
Nordic Choice Hotels aims to lower distribution costs and raise additional revenue by utilizing blockchain technology.
The company, which is a franchise of Choice Hotels, will put one of its properties onto an open-source blockchain distribution platform developed by Winding Tree.
There is a great deal of excitement about blockchain and its still-unproven transformational potential. By its very nature, blockchain is decentralized, meaning there is no information gatekeeper – something that has clear ramifications for the travel industry fee-driven distribution system.
All users share Information in any blockchain, enabling anyone to access and verify the particular database. It is widely associated with the cryptocurrency bitcoin,but it has the potential to disrupt other industries like hospitality.
Starting in Stockholm But Poised for Chain-Wide Test
Nordic Choice Hotels’ test will gauge whether the theory can work in practice. Should it prove successful and and get wide adoption, blockchain could lead to a big change in how hoteliers record and sell their rooms. It is being trialed at the hotel’s Hobo property in Stockholm before being rolled out across the rest of the portfolio.
Hobo Hotel’s distribution is currently on a Winding Tree test system and the companies plan to move it to a live site in February, a Winding Tree spokesperson said.
Christian Lundén, director of future business at Nordic Choice Hotels, said the blockchain trial would hopefully help create further innovation in the hotel distribution segment.
“It’s the open platform, and that is basically how I see it. We have a place where we can have our inventory and others can also store their inventory in the same place with the same open interface API [application programming interface] and that will bring new possibilities for new companies or new types of services that we seek,” he said.
Lundén said it could even open up new revenue opportunities for the company, and gave the example of local businesses in Stockholm easily and cheaply packaging hotel rooms. He also said it might lead to lower distribution costs, which could then be passed on to guests.
Hotels, like airlines, currently rely on the global distribution systems and other intermediaries for distribution. Bypassing them could be an attractive proposition if it would lower costs, but the demise of Priceline, Expedia, Amadeus, Sabre and Travelport may be a long way off. In addition, these distributors have big audiences and marketing power for hotels and airlines.
Lundén sees blockchain at least in this early phase as a business-tobusiness play with “other companies building solutions on top of the blockchain.”
All the companies involved have agreed to participate in Winding Tree’s token sale, which is slated for early next year. Token sales are a way for blockchain platforms to raise money.
Photo credit: The Hobo hotel in Stockholm, Sweden. The property is the first to appear on Winding Tree's blockchain distribution platform. Nordic Choice Hotels