Blockchain was designed to enable decentralized, peer-to-peer payments that cut out the middleman and eliminate government interference, effectively creating an alternative form of money, known as “Bitcoin”.
The inherent properties of blockchain, such as its decentralization, transparency and security, make it an ideal platform for supporting cryptocurrencies, but they are applicable to many other industries besides payments.
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One of the most promising is tourism, a multi-billion dollar global sector that has been growing rapidly since the end of the coronavirus pandemic. Within tourism, there are numerous industry segments, including accommodation, travel, food and beverages, entertainment, services and more.
Like many other industries, the tourism sector has embraced digital transformation, and online bookings, reviews and so on have largely replaced traditional travel agencies. But it’s still held back by a number of inefficiencies that blockchain has the potential to remedy, including payments, booking systems, insurance, loyalty programs, identity verification and so on.
Blockchain’s Impact on Travel
Blockchain technology has been around for more than a decade, so it shouldn’t come as a surprise to learn that a number of pioneering companies are already experimenting with the benefits it can bring to travelers, hotels, airlines, insurance providers and more.
Let’s take a look at how blockchain is already enhancing multiple aspects of the tourism industry.
Booking Systems
Smart contracts that self-execute when conditions specified in their code have been met, can transform booking systems. By leveraging these innovative contracts, blockchain can help with managing reservations, cancellations, payments and more, removing the need for intermediary platforms.
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As an example, the Australian online booking service Webjet, which was founded in 1998, moved to a blockchain-based platform in 2019 in order to improve accuracy and eliminate mistakes. With its platform, all bookings are recorded on the system in real-time, which ensures it can address inconsistencies such as double bookings. Moreover, it eliminates the added costs that come from booking a reservation through a third-party platform, such as Experian or Booking.com.
Payment Processes
The way payments are handled can be transformed by blockchain. Within the travel sector, many payments are processed by intermediaries, which means increased costs for consumers and delays in booking confirmations. Blockchain enables travelers and service providers such as hotels or car hire firms to do business directly, in a peer-to-peer way, eliminating those middlemen. Blockchain payments are therefore faster and more cost-effective.
In addition, by using crypto instead of fiat, the travel industry can eliminate the costs associated with foreign exchange, simplifying and reducing the cost of cross-border transactions.
The crypto-native travel booking platform Travala enables travelers to pay for their flights and hotels with more than 90 different tokens, include its native token AVA, and take advantage of generous rewards and discounts on their bookings. For instance, Travala offers “Givebacks” of a minimum 2% from the booking value that is returned in the form of AVA rewards, which can be redeemed for future reservations or else withdrawn to the user’s crypto wallet.
With Travala growing its platform to more than 2.2 million hotels, plus 600 airlines in over 200 countries, it increasingly makes sense for travelers to consider booking their holidays in crypto.
Identity Verification
Blockchain can streamline identity verification processes to enhance security for travelers. By using decentralized identities, it’s possible to do away with physical documents, streamlining processes and eliminating the risk of those documents being lost. Identity information can be stored securely on the blockchain, and the owners of that information can choose when and where they want to share it, and with whom.
Accenture is already experimenting with a system that can identify known travelers. It has developed a digital passport that has been used in pilot projects by Air France KLM and Air Canada. With this, passengers can provide airlines, customs and border offices with their biometric information and travel data in advance, in order to bypass time-consuming physical checks when they reach their destination.
Travel Reviews
Many travelers like to browse through review platforms such as TripAdvisor prior to making a booking, so they can be sure the accommodations they book are suitable for their needs. However, existing review platforms are susceptible to fake reviews that can make a bad hotel look better than it is, or a good hotel seem like it’s terrible.
Blockchain can help to prevent this and ensure travelers aren’t being misled. It provides a way to verify that someone who wrote a review really did stay at that hotel, increasing the credibility of their reviews.
Review.Network is the creator of one such platform, with its immutable review system only allowing verified guests to contribute. It incentivizes users to write more helpful, fact-based reviews by offering crypto rewards for those reviews that others deem to be the most useful and honest.
As a result, travelers can make informed decisions on where to stay, while hotels are encouraged to maintain the highest standards to ensure they receive positive reviews.
Loyalty Programs
Traditional loyalty programs often lack transparency and have limited flexibility in terms of points redemption, and blockchain can change this drastically. By tokenizing rewards, it’s possible to make loyalty programs more transparent and even more rewarding.
Coming back to Travala, it has enjoyed considerable success with its AVA Smart Program, which is a tiered loyalty system that offers travelers progressively better rewards the more they use its platform. Users can lock up their AVA tokens to access higher tiers that introduce more benefits, including higher discounts on bookings, up to an impressive 13% in some cases.
Other benefits of Travala’s AVA Smart Program include givebacks such as Bitcoin rewards on each booking and “Travel Drops”, which are free, once-in-a-lifetime travel experiences offered to the most loyal travelers, and more.
Travel Insurance
Travel insurance claims can be processed more efficiently using blockchain. By using smart contracts, the claims process can be largely automated, reducing the delays and mistakes that are common within the travel insurance industry.
In 2022, Germany-based Etherisc launched a blockchain-based insurance product that automates the process of issuing policies and payouts when claimant’s flights are delayed or canceled. The Flight Delay program offers coverage to travelers on more than 80 airlines globally. Travelers must pay in crypto to obtain a Flight Delay policy, and payouts are funded by investors who deposit tokens into a blockchain-based “insurance risk pool”.
Final Thoughts
Blockchain is applicable to so many use cases in the travel industry that its wider adoption seems almost inevitable. The technology improves transparency, enables bigger savings and enhances security while streamlining various common processes, and these advantages promise to be a game-changer for those that adopt them first.
Although the travel industry is still largely experimenting with blockchain-based applications, a number of pioneers are already leading the way, carving out a path for more rewarding and lower-cost tourism.
