Some companies are betting big on blockchain's bandwagon effect. Time will tell whether the new technology materializes into cheaper, better, and faster travel experiences.
Call it the Sputnik of travel.
Most of us probably know the story of Sputnik and how the Soviets jostled America in 1957 by beating them to launch the world’s first orbiting satellite. What followed was the costly Space Race that eventually got us to the moon. While the lunar landings added little direct benefit to humanity, the spirit and the efforts that went into research and development spurred advancements in rocket propulsion, avionics, telecommunications, and other innovations no one had imagined possible. Where would Elon Musk and SpaceX be without Sputnik?
In that way, blockchain could become the travel industry’s Space Race — completely insane yet likely revolutionary with spin-off effects across the entire ecosystem.
Short of completely transforming the industry in 2018, blockchain will become a yardstick against which travel enterprises measure their tech prowess. Dabbling in blockchain will send a message to partners and investors. It declares that your company has the bandwidth to look beyond today’s mundane operational challenges. During these early stages, having a self-proclaimed blockchain specialist-in-residence qualifies.
The long-run question is whether blockchain can add real value and make global travel better, faster, and cheaper. At this point, though, it may not really matter. Its mystique and disruptive potential as the next big thing since the Internet will send the industry chasing its lofty promises. Blockchain and “decentralization” is also starting to catch on as a statement against big tech. Early adopters will be rewarded with accolades as innovators and “knowers,” well before blockchain actually lives up to its disruptive potential.
Travel Content Moves Into the Ether
Blockchain technology has the potential to disrupt a lot of things in travel. Everything from loyalty programs to hotel distribution has a place on the blockchain — in theory and increasingly in practice. One of Europe’s biggest tour operators is using a private blockchain to better track its hotel inventory. Airlines and various technology solutions providers are looking to blockchain to help streamline things like aircraft maintenance. Just about every global consultancy now has a blockchain “practice’’ ready to help enterprises understand the technology. One small company called Winding Tree is aiming its sights on Priceline, Expedia, and travel management companies by creating a decentralized repository of travel content.
Think of Winding Tree as a self-sustained, commission-free global distribution system. Picture the world’s travel content such as flights and hotel room listings floating around in the ether (the Winding Tree blockchain), accessible free of charge by enterprises, individuals, and travel managers via custom-built interfaces.
Blockchain is likely to disrupt corporate travel first. In today’s global economy, enterprises spend exorbitant amounts on travel. If companies like Winding Tree can power the back end and promise commission-free bookings, then those same companies will build the interfaces that connect them with air and hotel supply.
Leisure or unmanaged travel would come later. It boils down to market education and bulk versus individual purchasing. Reaching the consumer still takes marketing dollars. Arguably, airlines and hotels still see value in paying intermediaries to spend those dollars for them. The future of tokenization remains unknown. Bitcoin, Ethereum, Bitcoin Cash, and other tokens have sprung up on a regular basis. Some power and fund applications through initial coin offerings or ICOs. Others aim to become the next global currency. The idea that any would replace fiat currencies like the dollar or euro or yuan is unlikely — at least anytime soon.
During these early stages, technologists are fixated on blockchain’s disruptive “potential” rather than existing applications. That’s like pouring gasoline on a fire when it comes to momentum and hype.
A Self-Fulfilling Prophecy
Injecting FOMO, or fear of missing out, could be the biggest contribution that blockchain makes to travel in 2018. Hype spurs interest and interest spurs action. Bonny Simi, president of JetBlue Technology Ventures, has said that blockchain is what the Internet was in the 90s. Those that missed out on the early days of the Internet will look to hedge their bets with blockchain. And it seems like things are actually starting to get real.
Blockchain could become a self-fulfilling prophecy with spin-off effects tackling some of the bigger friction points in travel. Distribution is a big one. Hoteliers and airlines often gripe about their overdependence on trusted third parties. Hotels hate working with intermediaries because of commissions and limited access to customer data, while airlines dislike them mostly because rigid distribution systems of yesteryear no longer work in today’s e-commerce reality.
Momentum behind blockchain will, at the very least, motivate the two sides to think about where they should be cooperating — or not. That conversation goes beyond squabbles over distribution.
One hotel executive currently exploring blockchain also pointed to things like artificial intelligence and voice search, and wondered whether blockchain will be the digital bedrock that powers that tech. Where blockchain goes is still based largely on vision and assumption.
Cultural Backlash Against Big Tech
Just as blockchain hits the mainstream, the big tech companies have built something of a bad name for themselves. The “fearful five,” as they have been dubbed, are gobbling up everything in tech. Google, Amazon, Apple, Facebook, and Microsoft now account for the majority of our screen time. Once symbols of the hip hoodie-wearing geek counterculture, the platforms have been turning consumers off due to issues like Russia’s meddling with elections through fake news and questionable best practices in digital advertising and data privacy. And that doesn’t include the swell of digital disruption coming out of China and companies like Tencent, which owns WeChat, and Alibaba.
Blockchain-powered applications and currencies could turn into the anti-establishment thing that becomes the establishment. Empathy for the underdog is a powerful force. Decentralization and cryptocurrencies were born from the ashes of the global financial crisis as a backlash against big banks and corporate greed.
The whole idea behind blockchain and distributed ledger tech focuses on eliminating the middleman. No big banks, no big government manipulating cash reserves. The steady wave of resentment against these entities could give blockchain a lift in 2018. As this turns into a David and Goliath story, the big players will start paying more attention.
Perfect Storm Brewing
The current landscape is a “perfect storm” of sorts for a nascent technology like blockchain. Global business is generally good. The economy is strong. Companies are hungry and willing to take risks. Technology is moving so fast that visibility is limited, and executives and investors want to be there before it happens. Taking calculated and moonshot risks is how technology investments get made these days. Hotels also see an opportunity to break from the online travel agencies. Airlines are profitable and looking for ways to insulate themselves against the next inevitable oil price rally. Blockchain could be a perfect thing to throw money at in 2018.
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Photo credit: Blockchain is becoming a yardstick against which travel enterprises measure their tech prowess. For now, the focus is on the technology's potential rather than existing applications. Bing Qing Ye