How blockchain tech might interact with hotels
How blockchain tech might interact with hotels
05 DECEMBER 2018 1:30 PM

Experts outlined some of the top things to know about how blockchain technology might play into the future of hospitality.

REPORT FROM THE U.S.—Blockchain is one of the top buzzwords in the tech and business world, though it’s still not completely clear exactly what role it will play in the hotel industry.

On a recent webinar, HTNG shared research that offers some insight on the topic.

1. There are multiple potential applications
Blockchain, which is the underlying technology for the cryptocurrency Bitcoin, is based on what the HTNG working group described as “distributed ledger technology.”

It’s often suggested this technology could provide the hotel industry an alternative form of distribution, but it could also play a role in things like loyalty, payment systems or identity management.

“Those are really the four areas where there’s been the most exhaustive discussion of use of blockchain in hospitality,” said technology consultant and HTNG founder Doug Rice.

2. Three flavors of blockchain
Based on the HTNG research, there are fundamentally three varieties of blockchain technology: public, private and consortium.

Public blockchains are designed to ensure the integrity of transactions on a public marketplace. Anyone can participate in, create or see transactions in this environment.

Rice noted the draw back for this form is they’re often “slow and expensive.”

He also said this is the “only option that can fully eliminate middlemen.”

Rice noted private blockchains don’t go as far to ensure integrity, and thus must exist in a trusted environment, for example within a single company or within companies with trusted relationship. It also restricts the creation of transactions to approved users. This form often is less costly and faster, and favored for “in-house applications.”

Consortium blockchains are a hybrid of the two other options, Rice said, noting this form similarly requires trust between users or entities.

“It’s often, as the name would suggest, when you have a consortium of different players within an industry who want to share information and maybe have a certain degree of trust with each other but maybe not total trust,” he said.

3. Public perception and reality differ
Rice said blockchain technology sometimes gets a bad rap, particularly when it comes to its most commonly understood use: the Bitcoin cryptocurrency.

“The first you often hear is blockchain, and Bitcoin, is used by criminals,” Rice said. “It absolutely is used by criminals, just like the internet is used by criminals. Just like almost any other technology is used by criminals. Just like the highway system is used by criminals.”

He said the technology is also attached to concerns about fraud, which he also acknowledged is sometimes true, but that’s far from the whole picture.

“Many blockchain projects are also undertaken by reputable, large companies,” he said.

4. Blockchain as a distribution tool
Among hoteliers, blockchain is most often pointed to as a platform for information in distribution—essentially, as the HTNG research points out, to create “a public record of current availability, rates and inventory.”

That information could be used by any company, including existing intermediaries such as online travel agencies or global distribution systems, along with new startups or even hotel companies themselves, to create an environment for consumers to book hotel stays.

The HTNG research indicates that could potentially disrupt the current landscape of distribution. The logistics on how that would exist—for example, whether it would be set up as either a public, private or consortium blockchain—still need to be settled.

5. As a payments platform
Setting up payments for consumers using blockchain is currently impractical, according to the HTNG research, but has some applications for the “settlement of B2B accounts.”

This could also relate to a popular blockchain concept known as “smart contracts,” which are described as “self-executing code blocks deployed on the blockchain, which follow decision trees, interact with other contracts, store data and transfer cryptocurrency among users as the unit of currency for payment.”

This is useful because “smart contracts can enforce business logic, such as releasing funds upon fulfillment of certain requirements of a transaction,” the research states.

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