Chain4Travel raised money to promote blockchain-based travel sales, but the track record of success is short and the technology's comparative advantage over what travel agencies use now remains to be proven.
Travel Startup Funding This Week
Each week we round up travel startups that have recently received or announced funding. Please email Senior Travel Tech Editor Tim Mullaney at [email protected] if you have funding news.
Based in Baar, about 35 miles from Zurich, the company raised about $4.5 million (4.3 million Swiss francs) to develop blockchain technology to process travel purchases, from hotel rooms to microtransactions like a cup of coffee on an airline flight. Supporting data like maps, Covid policy updates, and regional tourism information will be available in the form of non-fungible tokens, or NFTs, a piece of digital data, stored on a blockchain-based network, that can be bought and sold.
Despite the hype, blockchain has had trouble gaining a foothold in the travel industry, Skift Senior Research Analyst Seth Borko said. The question is whether a decentralized network like blockchain, which is designed to more easily accept payments in cryptocurrencies, is really safer or cheaper than more centralized networks run by incumbents that favor government-issued money.
“As far as I can tell, there’s no real benefit to a distributed ledger,” Borko said. “The challenge is building a network. Whether it’s distributed or not doesn’t matter. Expedia connects a bunch of hotels. [Global distribution services like Sabre provide data to travel agents] do that. They just do it with a centralized database.”
Chain4Travel is run by a group of industry veterans, led by Ralf Usbeck, who founded Peakwork, a vacation packaging technology company, and Traveltainment, a German-based provider of booking engine technology that was sold to Madrid-based global distribution service Amadeus in 2006. He continues to serve as chief executive of Peakwork.
Chain4Travel plans to raise more money later this year by selling its cryptocurrency, the company said in a release. In the future, it plans to donate its intellectual property to a foundation that will run the blockchain-based network. A spokeswoman did not respond to an e-mail posing follow-up questions, including the undisclosed identity of its venture investors.
The list of travel-industry blockchain players is short. The most successful to date may be Travala, a UK-based agency that accepts credit card payments, usually denominated in government money, and in cryptocurrency. Travala says its sales rose 571 percent in the fourth quarter of 2021 from a year earlier to $17.4 million, driven by the recovery from Covid and the addition of a concierge luxury travel unit. It has said that 60 percent of its transactions are paid for with cryptocurrency.
But some travel executives, like TUI Group executive chairman Fritz Joussen, have argued that blockchain can break the near-monopoly control of reservation data by a few giant agencies and global distribution services.
Travala has benefitted from a partnership with Expedia, the online travel giant, forged in 2020 and expanded last year, under which hotels partnered with Expedia can offer rooms on Travala’s site and app.
Several temporary housing-related startups also reported new capital this week.
>>Hostfully, which offers software services to vacation-rental property managers, raised $4 million from a group led by Disruption Ventures to add a mobile app to its offering and expand its sales team. The San Francisco company has now raised $7 million total.
>>Ukio, a Barcelona-based startup that offers apartment rentals in European cities, said it raised 2.5 million euros in debt funding led by Extension Partners, to expand to more cities. It previously had raised $9 million in a round designed to capitalize on work-from-anywhere trends driven by the Covid pandemic.
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Photo credit: Zurich, Switzerland during spring 2020. Source: Photo by Kuhnmi via Flickr / Creative Commons. Kuhnmi / Flickr / Creative Commons