When guests become revenue managers. Of Blockchain, Tokenization, NFTs and the democratization of travel
Blockchain technology allows secure, decentralized and transparent data recording, making it an attractive solution for various industries, including ours. It can be used to track and distribute reward points, coupons or other loyalty program benefits, verify customer identities, prevent fraud and improve supply chain management efficiency. Another potential use of blockchain in travel is in customer identity management to create secure and decentralized systems for storing and sharing customer information (such as passport and visa details), not to mention the obvious uses for digital payments and transactions, baggage tracking, NFT rewards , tokenization, collaboration with crypto artists, NFTs and so on.
In addition, in the hospitality and airline industries, decentralized systems can be used to manage the distribution of hotel rooms and airline seats, leading to better pricing and inventory management and -gradually- increased income. Several companies, such as LockChain, BeeToken and Winding Tree, are already combining the blockchain and travel spaces. They have been using decentralization to improve various aspects of the industry for some time now. However, it’s only been in the last couple of years that I’ve seen the technology’s most exciting (and possible) potential outside of the usual hype.
Tachyon
The first company that piqued my interest was Tachyona “Travel Exchange” which allows guests to buy and sell travel as easily as a purse or an iPhone. The platform offers a “Resaleable Price” feature, a pre-paid, non-refundable reservation that can be purchased directly from hotel websites at an average of 20% cheaper than the refundable rates. Users receive an email with an NFT representing their order when they purchase it. This NFT can then be connected to the Travel Exchange, where users can sell their trips at a separate price, creating a virtuous circle of decentralized micro-economy.
We are creating something new: a secondary market for travel bookings. We are not building a booking platform, as there are already hotel websites and travel agencies where people can book rooms. Instead, we improve the customer experience by upgrading the non-refundable rate to a resale rate, allowing travelers to resell their rooms, just as they would with physical goods, on our travel exchange. All of this is done while removing the traditional barriers to Web3 adoption, such as the need for a wallet or crypto payment. We believe that NFT and blockchain should enable, not block, innovation. Antonio Picozzi, CEO and co-founder of Takyon
Pinktada
The last edition of Florence BTO, the leading event in Italy for digital tourism, innovation and training, allowed me to meet Lyon Hardgrave, CEO and co-founder of Pinktada. Like Takyon, Pinkdata is leveraging blockchain technology to revolutionize how people book hotel rooms. The platform provides guests with virtual hotel room tours before making a reservation and allows for the exchange or sale of reservations in case of changes in plans. This user-centric approach also benefits accommodation providers by allowing them to receive full payment in advance and showcase their facilities and unique features. The main difference between Pinktada and other platforms is to use tokens to represent individual hotel stays, which can be combined or decomposed to create or modify a hotel reservation. For example, a guest can book a 7-night stay (7 tokens each representing a specific date and room type), but then sell back the last two nights if they need to leave early. If there is an increase in the selling price, Pinktada shares 30% of the profit with the hotel, and the transaction is transparent and secure through blockchain. Hotels have full visibility and access to the secondary marketplace and can even offer to buy back the rooms for special events or groups. In a secondary trade, hotels have no downside and can receive a share of the profits if the reservation is sold at a higher price.
With room tokenization, both hotels and travelers benefit. The system offers the combination of a non-refundable price with full flexibility to exchange or sell orders on the marketplace. Each hotel night is represented as an individual token (RNT), making reservations decomposable and allowing travelers to sell or trade them, in whole or in part. By eliminating intermediaries, the marketplace is also highly efficient and less expensive than online travel agencies. Lyon Hardgrave, CEO and co-founder of Pinktada
LIFE
The third is LIFE Rewards, founded by former Priceline Chief Scientist Eddie Ibañez. LIFE is a blockchain-infused destination marketplace that aims to reduce friction in the hotel booking space and create value from bookings that currently “death” assets. What’s interesting about LIFE (and what makes it distinctive in the space) is that it uses machine learning and blockchain technology to power the travel engine. The company has made headlines as one of the first platforms to produce significant volumes of hotel bookings on secondary markets, not unlike how we buy and sell concert tickets today. Even in this case, both hotels and travelers will gain more flexibility and an improved booking experience by creating liquidity in bookings.
Divide an Impera
The main idea behind all these companies is to democratize travel and hospitality through blockchain technology and machine learning, eliminate friction in the hotel booking process, and -gradually- reduce reliance on third-party platforms, such as OTAs, bed banks and wholesalers.
I had the pleasure of sitting down with Eddie Ibañez and better understand how decentralized apps can be the best possible future for hotel room distribution.
Simone: Eddie, first of all, thank you so much for your time. Can you explain what you are trying to achieve with LIFE? And on top of that, what’s the difference between what you’re doing in the space and what other companies are doing?
Eddie: I would say that we try to give people the opportunity to buy rooms that might not be available for purchase. Currently, as a user, if a hotel is fully booked, you have no access to the property. There is no secondary market like traditional tickets for someone to increase the price and get a room. We focus on experiences. I care about letting these users order. Other users may find it advantageous to buy rooms in advance and sell them because they may know something others don’t about a particular market or hotel at a particular time.
Simone: Oh, that’s interesting. Are travelers becoming revenue managers? Self-service is the best service after all…
Eddie: Exact. It is about bringing liquidity into a market that is by definition illiquid.
Simone: Where do you see the main adoption blocker of decentralized distribution?
Eddie: The user experience must be seamless. Users sign up with a wallet and we keep the flow consistent with the current order path. The wallet is the entry point, then we take care of the marketplace, much like eBay. We try to keep the user interface in line with things that non-crypto travelers are used to and familiar with.
Simone: I would add that, at least from a European perspective, the main problem here is that many properties are still running on old systems. And we have challenges integrating channel managers… Can’t see a local spaghetti code PMS integrating with a decentralized distribution system anytime soon. What am I missing?
Eddie: We have entered into cooperation with a large number of large hotel groups that own several chains and a few large online travel agencies. For the hotel, they get the reservation in the same way as at any third-party travel agency or directly.
Simone: Do you think that to some extent this could increase the number of reservations coming through third party intermediaries?
Eddie: I would say hotels would get more reservations, period.
Simone: Let’s say a hotel sells a room for $200, and an event or concert comes up, or – for whatever reason – the price for that night just explodes. And the traveler who bought that room for that price can resell it for, say, $500. Will this create value for the hotel, or will this create value for the user who resells the room? Or for both?
Eddie: Right now, the way we’ve engineered it is that it’s beneficial for resale. This is an excellent benefit for the end user, isn’t it? And we don’t have that right now. Its nothing. But there is a market here: there is a need and a demand for it, but technologically it has not been created, or it has not been technologically feasible to the point of scalable use. And that is exactly what we are trying to do.
Simone: Ok, so how do I sign up? Can I use my MetaMask wallet, for example?
Eddie: You can buy the room normally through a primary booking without having to KYC. But if you want an actual membership, there is a KYC process. It’s easy, just like signing up for Coinbase.
Simone: I think that it could probably just be the normal evolution of space distribution, especially from a crypto-native generation of PoW. Not even an innovation, just pure evolution…
Eddie: Hey, if you look at the evolution of ticket sales, if you want to order Chicago bull tickets, most people don’t come to the direct primary market anymore…
Simone: … Right. You are going to a third party, such as Ticketmaster.
Eddie: That’s it. And then it evolved from that to having these secondary markets. So we look at travel and the same evolutionary flow…. Decentralized marketplaces will be the Ticketmasters of our industry.
Innova Evolution?
Tokenization of hotel bookings could revolutionize the hospitality and travel industry by changing how guests interact, discover and establish loyalty with global brands. By offering greater flexibility, a seamless online experience and increased revenue for hotels, the industry can benefit from incorporating NFTs into their booking processes. Although with different approaches, all of these companies seek to bring features found in other industries to the hospitality sector. The main point is that decentralized distribution is not at all about being innovative for the sake of it, but rather about catching up with the rest of the world. Eddie himself confirmed that this can be a pretty good elevator pitch. And who am I to argue with that?
