Distributed ledgers is a concept set to revolutionize the world of business – and business travel
The tectonic plates of technology are continually shifting and travel professionals know to in order to keep their footing, they need to stay on top of these ground-breaking changes. It isn’t only about improving their job performance; it’s about staying relevant in the field.
BTE’s latest Going Deep webinar explored three critical topics: The impact of blockchain on practically every aspect of travel management, how artificial intelligence makes traveler personalization smarter, and the creative ways chatbots are enabling and enhancing program compliance and traveler satisfaction.
The participants on the panel were John Packel, hard core decentralization developer with ConsenSys, someone who has worked on blockchain-based solutions in travel and loyalty, and Johnny Thorsen, vice-president for global travel strategy and partnership for Mezi.
Among the three topics covered, blockchain generated the most questions from the audience. Also known as distributed ledgers, this new technology is comprised of non-centralized (distributed) ledgers of cryptographically signed and verified transactions that are grouped into blocks of data to form chains of blocks. Hence, blockchain.
As much as all three technologies are changing the industry, both experts said they aren’t about to replace buyers. Nonetheless, Packel said, “I do believe that blockchain is a paradigm shift. It’s on the order of what we saw with the Internet and the way that the Internet and the World Wide Web impacted every industry, all aspects of social, political, business.” He added that the hype surrounding blockchain is a good thing because that sort of hype leads to companies to invest in and explore new ideas.
Buyers won’t necessarily become extinct, Thorsen noted, but those who don’t adapt might. “We’re going to see a dramatic change in how you can solve problems and more importantly, how reliable the solution is,” he explained.
“The biggest problem in the travel industry for a long time has been the data quality and the lack of data sharing,” Thorsen said. “These new technologies are making it possible to solve data quality much more elegantly. As a result of that, you can do a lot of other things faster and more intelligently.”
More Than Travel Packel noted that virtually every industry is looking into blockchain, beginning with financial services. He added that enterprises, governments and NGOs already have invested billions of dollars into blockchain. “They see the potential,” he said. “Looking back at how the Internet impacted industries and business models, people are seeing parallels here as well.”
But in the travel industry, antiquated technologies still have the system hamstrung, he pointed out. Even with new advances such as virtual payments, faxes are sometimes being sent to hotels to complete the transaction. Part of the problem is middlemen who have impeded progress in technology.
What makes blockchain different is the information stored in a distributed ledger stays unchanged until a new block of information replaces it, and limited access to the information keeps it safe. “The key concept,” Packel said, “is keeping everybody honest through having a layer of foundational technology where information is immutable, so that we’re not relying on somebody to tell us that something is accurate.”
Another important feature of blockchain is smart contracts. In the same way bitcoin allows the transfer of value, blockchain allows the creation of agreements or business logic – “various different, essential applications that can be stored in this trust layer and be guaranteed to work every time they are activated,” Packel explained.
As an example, he pointed to automated trip cancellation insurance payments. In this scenario, if someone’s flight is canceled or delayed for more than five hours, the flier is guaranteed to be paid automatically without having to wait for the insurance to pay out.
The same feature can be used for payments, Packel added, and payment can be separated from the underlying technology. He compared it to e-mail; when the World Wide Web was launched, e-mail was the first “killer app,” but the Web also had many other potential uses.
“People certainly use the technology to essentially keep track of things on the same page without involving any payment,” he said. “But when you do want to involve payment, it’s native to the system, it’s built in, in contrast to the Internet and the Web, where early developers tried to build-in payment processes and essentially the banks refused at the time.”
The technology is having an impact in other areas in travel as well, including enhancing transparency, settlements, loyalty programs, policy and overbooking. Specifically, he noted the increasing importance of identity applications that will improve security, increase convenience, and bring savings and opportunities to managed travel programs.
Beyond BitcoinCurrently, there are many applications of blockchain or distributed ledger technology, among which cryptocurrencies are certainly the highest profile to the general public. However, while cryptocurrencies are often considered synonymous with blockchain, they are not.
“Cryptocurrencies are just one application of distributed ledger technology,” says Ralph Kaiser, president and CEO of Universal Air Travel Plan, a global corporate travel payment solution owned and operated by the world’s airlines. “UATP is able to offer to its airline merchants the ability to accept cryptocurrencies – primarily Bitcoin – as a form of payment,” Kaiser notes. “Beyond cryptocurrencies, the applications of blockchain technology are still untapped.”
While the finance industry has been researching blockchain technology for quite some time, there are efforts underway to use the technology to improve distribution and settlement. One such development is Winding Tree, according to Diane Laschet, head of Americas and CEO and president of AirPlus International Inc.
“We took part in the Winding Tree hackathon and experimented with merchant agreements on blockchain to enable payments,” Laschet says. “A solution like that could enable travel suppliers to achieve more competitive pricing for payment acceptance as well as enable alternative payment acceptance at the time of booking.”
Kaiser notes that distributed ledger technology can improve the business traveler experience in other ways as well – from improving check-in times and queues in airports by creating identification databases to creating a blockchain-based luggage tracking solution.
“Essentially, wherever there is a need for immutable storage of data or where there are issues of trust or incidences of fraud, blockchain can be a very useful tool in ensuring data integrity,” Kaiser says.
Airlines are just now beginning to recognize how important blockchain technology is for creating a frictionless travel experience in bookings and payments. For example, smart contracts are being used to quickly share important data within the airline to guarantee that a fixed number of tickets are issued to prevent overbookings and reduce revenue loss.
“Airlines use smart contracts to offer a volunteer bidding process to reduce the cost of overbookings and prevent dissatisfied customers,” Kaiser said. “If a traveler happens to be on an overbooked flight when checking in, they’re given the opportunity to submit the travel voucher amount that they’d be willing to accept to give up their seat for on that flight.”
Blockchain can further enable booking according to corporate rates which are written in smart contracts and would be immediately valid after their set up. “We will see corporations allow bookings via different platforms to benefit from open market competition and lower pricing,” Laschet says. “That will be possible because blockchain-based solutions will provide the ability to monitor spending in an efficient manner despite the fact that numerous platforms could be used.”
Although blockchain technology is still in its infancy, Laschet says. “There will be eventually more automation and service integration. This change will affect pricing and therefore business travel might become cheaper, or at least give corporates more negotiation power.”