Business Travel News By Michael B. Baker / July 11, 2017 / Contact Reporter
Bingo! When a panelist said the word "blockchain" at BTN's recent Tech Talk event in San Francisco, a travel buyer joked it was the last term he needed to complete his tech buzzword Bingo card for the day. Despite the chatter about blockchain, its impact on the travel industry is still speculative. Few have developed applications directly tied into the industry, and those that have cropped up are still in their genesis. Travel tech experts, however, say blockchain could alter distribution, payment and traveler tracking, to name a few.
What is Blockchain, Anyway?
Blockchain is a type of database, built by an expanding list of records, or blocks, each linked to a previous block and connecting back to an original "genesis block." In a traditional database, users add, alter and remove data. The blockchain setting allows users only to add data (though private blockchains are a different beast). "Blockchain allows you to move from trust to truth," Mezi VP of travel strategy and partnerships Johnny Thorsen said. "Every time a new transaction is created, it points to the past and the future, so there's a complete audit trail."
Blockchain also is transparent: Anyone can view the data, although it is encrypted to protect identities. "The data is very secure while being very accessible," Thorsen said. "Does that sound like today's travel world? Not quite. We have a lot of problems getting the data, and it is not secure."
Corporate Travel Uses
Blockchain technology is not new. In practical terms, it's been around for about a decade and is best known as the technology behind the cryptocurrency bitcoin. A few suppliers are working on travel industry-related applications, and impacts on other industries are likely to ripple into travel, as well, Thorsen said.
Payment. Considering its bitcoin origins, the payment industry is among the ripest for blockchain disruption. While bitcoin itself has had bumps and has detractors, the technology behind it has attracted interest from banks. On the settlement side, the technology could provide real-time transactions direct from buyer to supplier. Those transactions would be instantly trackable and auditable and would eliminate the need for cards or a bank as a middle point. Any attempts at fraud, meanwhile, would be instantly detected. "The existing financial system is very complex at the moment, and that complexity creates risk," Joichi Ito, Neha Narula and Robleh Ali wrote in the Harvard Business Review this year. "A new decentralized financial system made possible with cryptocurrencies could be much simpler by removing layers of intermediation."
Distribution. Essentially, airline tickets and hotel bookings are nothing more than database entries, according to Accenture's consulting division. So what could suppliers do with bookings made in a blockchain environment? "Through the use of smart contracts associated with the asset, airlines can add business logic and terms and conditions around how the ticket is sold and used," according to Accenture. "This opens the door for tickets to be sold by different partners, and in real time, from anywhere in the world." A few startups already are exploring blockchain as a distribution platform. Winding Tree, which bills itself as "travel distribution without intermediaries," plans to offer distribution without transaction fees, instead charging only about a penny to incentivize people or companies to participate in order to "give computational power to the network," according to a white paper from the company.
Traveler Tracking. One blockchain-based startup, ShoCard, is developing a singular traveler ID, or token, that connects to all relevant identification needed for travel, such as passports and photo IDs. Airport security and other the traveler experience aspects could improve, but a singular traveler ID also would provide new opportunities for corporate traveler tracking. "Whenever someone is traveling, [corporate] security can get into that framework, so you will know," Thorsen said.
Because blockchain systems are transparent, so are the travel transactions made on blockchain platforms. Companies no longer would need booked data from travel management companies for traveler tracking. "When you have databases in real time all around the world, as long as you can get over the security aspects, it can be quick and seamless," said Toby Houchens, CEO and founder of travel risk management supplier Travel Recon. "You can find out locations based on transactional data, which will be extremely powerful."
Blockchain technology that aids traveler tracking can evolve from other uses. One startup, for example, aims to tie cryptocurrency to fitness, sending people micropayments every time they move their bodies. That would provide location data that the company could monetize, Thorsen said. "Completely new data sources will become available," he added. "It's time to think of a duty of care program that does not rely on itinerary data, which has lots of errors and inconsistencies."
Back to Reality
Blockchain also could enhance loyalty programs, could create "smart contracts" that self-monitor contract terms or could improve basic supplier operations, such as making aircraft maintenance more efficient. For travel buyers like the one who considers "blockchain" nothing but a Bingo buzzword, though, it also will mean a lot of noise. This is already happening in the financial industry, according to the Harvard Business Review: "There were many 'pre-internet' players—for example telecom operators and cable companies—trying to provide interactive multimedia over their networks, but none could generate enough traction to create names that you would remember. We may be seeing a similar trend for blockchain technology. Currently, the landscape is a combination of incumbent financial institutions making incremental improvements and new startups building on top of rapidly changing infrastructure, hoping that the quicksand will harden before they run out of runway."
Suppliers promising to turn the travel industry upside-down overnight via blockchain technology will warrant similar skepticism, but those who dismiss it completely risk looking like those who were certain online booking would never work in the corporate realm.