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Blockchain in tourism: another dimension of old problems


Margareth Nail

Blockchain is one of the most “fashionable” technologies today, and almost every industry tries to "try it on". Tourism is also of no exception to that. The developers of products which operate on the basis of distributed ledgers, claim that the blockchain system will help in getting rid of monopolism in the market. Thereby it will make services cheaper and more comfortable. Bitnewstoday decided to ask experts whether the technology of distributed ledgers can make the fourth revolution in the tourism industry and what kind of value will it bring to the markets.

Blockchain technologies were developed to solve trust issues, so they can be used for reputation and identity management in tourism. Blockchain allows storing publicly available information about the quality of hotels and tourists’ manners.

The hotels will have their cryptocurrency

According to experts, one of the most upcoming trends of the blockchain technology in tourism is the tokenization of hotel services.

“Everybody who traveled abroad, faced an extortionate exchange rates when purchasing local currencies. It is particularly relevant for card payments. Also, there are risks of frauds in private exchanges. To resolve this problem, hotels (especially large club hotels and chain hotels) can issue their internal tokens and sell additional services, souvenirs, guided tours," — experts say.

Supporters of the cryptocurrency believe that tokenization of hotel services will be profitable for hotels themselves — as tourists spend much money in the hotel, it is easier to spend purchased tokens. In addition, hotels will be able to attract additional funds by selling tokens. Tourists will also benefit if they know the exchange rate in advance and can buy the tokens of a hotel without any frauds. Unspent tokens would be sold on the stock exchange. Besides, tokenization provides a large scope of promotions, sales during the low season, etc.

The transaction costs will be close to zero if the mutual settlements are transferred into cryptocurrency. “There are a lot of cross-border payments in different currencies in the travel segment. Payment intermediaries and banks earn 2-3% of the transfer. It causes an increase in the cost of the service for the end user or reduces the margins of market players. These are the significant figures because the margin is not high in travel-segment —  from 3% to 15%," — experts also say.

Blockchain will help tourists to keep their nerves

“Tourism insurance is another promising area for the introduction of distributed ledger technology. Currently, the process of obtaining compensation for a delayed or canceled flight is associated with a lot of problems, which means that travelers lose time, money and nerves. Smart contracts will help in this situation — they will automatically  transfer the insurance payment to injured tourists, as well as book new tickets,” — says Stefan Karpichek, co-founder and CEO of Etherisc project.

Besides, many specialists believe that blockchain technology will soon allow tourists to control their payments and trips. A smart contract can be operated in such a way that the tourist’s money will be immediately redirected to certain agents — the hotel, the airlines, contractors. Thus, a system of decentralized and transparent transactions is being created.

Simple identification

The use of biometric technologies in conjunction with blockchain technology will significantly simplify the procedure for identifying a person. "It means that you can no longer carry an international driver's license with you —  it's enough to take a picture of face or provide a fingerprint. The new technology will be important in other areas, for example, to gain access to insurance, hotel entry or car rental. It will be all accessible without tedious credit card procedures and other identifications," — said James Song, a representative of the Exsulcoin project.

Down with monopolism!

Developers of various blockchain platforms for tourism believe that the technologies will help to exclude the monopolists and establish equal conditions for loyal competition.

Some specialists suppose that blockchain will destroy such monopolists in the tourist business as Expedia.com, Travelocity.com, Priceline.com and even Airbnb. In the nearest future, this may affect other platforms such as Aviasales, Onetwotrip, and others. Blockchain allows you to make all transactions between the buyer and the seller directly and instantly. That is much cheaper and more efficient. Decentralized services will do all the same, but it is going to be cheaper and with no control by a single company.

Experts note that smart contracts will ensure the strict observance of all the terms of the transaction, which will make a double booking of rooms impossible. In addition, the architecture of blockchain technology will allow booking a room without commissions — that is a real alternative to popular reservation services.

It is worth noticing that large companies also study blockchain technology and consider options for creating an internal system of distributed ledgers that will help to optimize the processes inside the company and reduce the cost of services. Therefore, it’s not possible to predict whether small startups will be able to exclude the monopolists. Anyway, it is possible that the monopolists will takeover promising startups and become even stronger in the future.

We can confidently assert that innovations will help in solving certain problems that were previously considered as a fact of life in any travels. Also, tourists will have more opportunities for independent traveling.

Dubai Airports, the operator of the world’s busiest airport, will test a new facial recognition technology this year

Foreigners Affairs (GDRFA) has signed up with a British startup ObjectTech to install biometric tunnels that will scan passenger faces as they walk to baggage reclaim — that will eliminate long queues at its flagship, Dubai International Airport (DXB).

Passengers arriving at the Dubai airport will be able to step off their flight and walk straight to baggage reclaim section via a biometric verification while walking, allowing them to be registered into the country using a pre-approved and entirely digitised passport which will contain information from the electronic chip in physical passports, fingerprints, iris scans and facial recognition data. The facial scan will be done through the use of LIDAR technology, a technology currently used in Google’s driverless cars.

ObjectTech, in a statement on its website, said the agreement paves way to create the world's first “gate-less border”, combining the power of biometric verification and the immutability of blockchain technology.

“Dubai is really committed to improving the lives of their citizens and visitors through technology and we’re very excited to be a part of making that a reality.”This is an identity that is fit for the digital age,” — says Paul Ferris, co-founder and CEO of ObjectTech.

GDRFA launched 'Emirates Smart Wallet' to allow passengers to use their smartphones at the Terminal 3 smart gates instead of their passports.

Blockchain is being entrenched in services of booking accommodation

Airbnb or Booking have transformed the travel industry: a user can contact the landlord of a house or a room in a foreign country and rent it all by himself. The fees for booking did not disappear, now people just pay the booking site instead. The Swiss non-profit organization seems to have found a solution: Winding Tree, a blockchain platform focused on this particular topic, will allow to communicate and make travel-related deals and agreements without any traditional 3rd party fees.

However, transactions costs to execute contracts will remain, but they are not comparable to anything one can see on today’s travel-related websites. “Blockchain allows these unnecessary [travel] costs to be eliminated entirely”, so that both travelers and suppliers win. We should not just expect Airbnb and other platforms to ignore this. They might be developing something to counter this threat to their business at this very moment,” says the founder and chief operating officer of Winding Tree, Pedro Anderson.


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