Not long ago blockchain was used as a synonym for cryptocurrency. Today after this topic has been dissected a lot on authoritative blogs we know that blockchain is the technology that powers cryptocurrencies. And whats more important this tech can be used in other industries; the hotel industry too.
Well then lets see what blockchain has in store for the hotel industry; can it become the more dominant payment method in this industry?
What Is Blockchain and How it Works
Blockchain is a technology used for structuring data. In the instance of cryptocurrencies it is used to structure the data that represents a financial ledger entry. Each transaction in this closed ecosystem is digitally signed. This ensures that every transaction is authentic and that nobody can manipulate transactions and the system as a whole.
The main advantage of relying on blockchain is that it distributes the entire data ledger through the entire infrastructure. This means that each node in the infrastructure has copies of the entire ledger and all the data distributed among them. Each instance in the blockchain network has its history of transactions.
Each time a transfer has to be completed this history is verified and evaluated by other nodes to assess authenticity. After it goes through this procedure and gets approved another block of data is added to the chain thus the name blockchain
Blockchain and the Hotel Industry Go Hand in Hand
Blockchain technology is already made available for the hotel industry. Thanks to LockChain a Bulgarian based tech company hotels can now enter the decentralized hotel booking and vacation rental marketplace. And here is the real twist to the story - this marketplace has 0% commissions.
Which technology made this possible? A majority of the cryptocurrencies are generated on their specific platforms. Some of the top cryptocurrencies provide a decentralized virtual machine which can be used by third party companies for executing custom made scripts on the network of public nodes. With appropriate hotel software hotels can use this network to list available accommodations their prices and the entire history of completed transactions.
With the access to dedicated API hotels and other venues will be able to build their own web or mobile apps or integrate it into any hotel software and enable their customers to book and pay for accommodations with no commission whatsoever. This tech can also be used with your Hotel PMS. OwlNest blockchain is another great example of how well Hotel PMS and blockchain can work together and make a cutting-edge hotel technology solution.
Will Hotelier Accept it as an Experiment?
With so many online travel agencies booking an accommodation has never been easier. When we just take a look at Airbnb and Booking.com we can see that their revenue is constantly increasing. Since these online travel agencies require of property owners to pay an OTA commission for each reservation you might guess how much money the hotel industry is hemorrhaging.
OTA and other commissions depending on the property owners country may go up to 25% of the total reservation value. Since the global hotel industry is worth 500 billion dollars we can easily calculate that blockchain can deliver up to 125 billion dollars to the hotel industry each year.
Since it is a secure and transparent payment system with built in technologies that make transition as seamless as possible there is no reason for us to assume that the hotel industry will say no to blockchain..
In addition a marketplace based on blockchain technology doesnt require middleman processors such as the aforementioned Booking.com or Airbnb. It opens direct lines of transaction and communication between customers and accommodation owners.
Considering security easy of use smooth implementation to existing hotel PMS solutions and the opportunity for increased revenue we can safely assume that hoteliers will accept this tech at least as an experiment.
Blockchain as Payment Method
Blockchain is a technology which can be easily integrated as a payment method. The main concerns are currency exchange and price hedging. Fortunately the developers of this technology for hoteliers had this in mind both in terms of making it easy for hoteliers and their customer.
For instance the blockchain-based marketplaces can leverage built in real-time currency conversion and price hedging system. This way any fluctuation in cryptocurrency prices used on a specific market can not affect the price of the listed accommodations. In addition a real-time currency conversion system makes payments easier for people who are not familiar with the concept.
These two features alone are more than enough to make the process of transition to the blockchain payment method both smooth and straightforward for property owners and customers.
It seems that the full potential of blockchain is yet to be discovered. But from what we can see it is completely viable for implementation in the hotel industry. We are eagerly waiting to see new applications for blockchain in hotel software as well.