Not too long ago, people, institutions, and governments disregarded cryptocurrencies altogether. Nowadays, the situation is very much reversed, as governments are forced to acknowledge and regulate cryptocurrencies. But, most importantly, the blockchain proves with each passing day that it’s a technology capable of changing the fundamentals of how we do business.
The Internet once revolutionized the way people do things, and now, there are many who believe that blockchain is, in fact, the next logical step towards moving away from centralized and costly management and into a self-managed, completely autonomous systems.
Blockchain has proven particularly appropriate when it comes to changing the status quo within the booking and reservation industry, as well as the travel and hospitality industry.
The current situation of the hotel booking market
As we’re sure you can imagine, the hotel booking industry is nothing short of massive. Not only there are a staggering number of suppliers with an incredibly wide range of offerings, but the main problem of the industry is the abundant presence of middlemen. As mentioned above, the Internet once revolutionized the way people do things, and one of the main reason for this achievement has to do with the fact that it cut out intermediaries from global markets.
Therefore, stating that blockchain is the second generation of disintermediation of global markets is not at all far-fetched. Of course, since the Internet made its mark on the online hotel booking world, multiple hotels and similar institutions soon realized that travel agencies are still required in the market. Online travel agencies somewhat streamlined the process of hotel booking making the task more accessible for both parties.The main problem with these online travel agencies is the fact that they usually charge big commissions from their consumers, even though they seem to offer the best deal. Because these types of services charge a high commission to accommodation providers this, in turn, cause the prices to rise or the service to have a lower quality. Another big problem is that of centralization. In more cases than one, this type of centralization has led to various price manipulations.
This brings us to the following question: Can blockchain change all of this?
How blockchain can change the hotel booking industry
If there’s one thing blockchains are good at, it’s cutting out the middlemen. A blockchain is fully decentralized, autonomous, and open-source. This means that it can be supported and controlled by all involved and cannot be manipulated to benefit one party over another.
Blockchains are also capable of offering an easy way for customers to interact with retailers (cutting out the middleman, as specified). Since blockchains are also immutable and provide a high degree of anonymity, they are perfect as reliable payment platforms. With the help of blockchains, all interactions between a retailer and a customer can be recorded on the chain where they are identified using unique private keys. There are various other advantages as well. For example, blockchains have low barriers to entry. Furthermore, customers can easily connect to a blockchain-based platform by simply using their mobile phones. The only requirements are establishing the connection with the blockchain service and set up a wallet, as well as some personal details.
Blockchains can also bring a higher degree of transparency to the hotel booking industry. It goes without saying that this prevents market participants from cheating each other. On a blockchain, every participant, be it hotel owner or guest can view the transactions and how the funds are used.
Last but not least, it’s also a matter of cost, as implementing a blockchain-based system is a lot cheaper than creating and maintaining online websites. It does so through automation which is also something that blockchains are more than properly equipped to handle through smart contracts. These smart contracts can actually replace legal contracts on paper. This automation will eventually lead to a lower degree of fraud. For example, let’s imagine that a customer/guest wants to avoid payment. Through smart contracts, the funds are taken in escrow and transfer to the hotel after the guests’ stay automatically.
One extra aspect worth considering is the power of tokenized assets. By implementing a blockchain-based reward system, retailers can reward their customers with tokens.
Is blockchain the future of hotel booking systems?
Currently, all evidence suggests that it indeed is. Hotel booking is still a very fragmented and problematic market. Even though most of the industry has migrated online, there are still a lot of problems that require fixing. However, with the implementation of the blockchain, the hotel booking industry will soon cut off intermediaries, will become more transparent, will lower costs, and will definitely increase the trust and honesty between all parties involved.
Not only this but with the help of smart contracts the whole process of booking will become automated (automatic updates of room available on the hotel’s websites, as well as automatic payments). Of course, there are still various barriers to blockchain implementation. Integration with the traditional systems already in place might prove to be a problem, and so is the low speeds usually associated with blockchains. Most traditional hotel reservation systems are capable of processing more than 200,000 transactions per second.