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Blockchain could pay big dividends for hotel loyalty and rewards

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By: Kelly Shermach |

Posted on May 22, 2018

The decentralized, secure and shareable nature of blockchain technology has captured the imagination of fintechs. And other industries want in, too.

Hotels, for instance, want efficient payment management outside of online travel agencies (OTAs). Sites like Expedia extract up to 25% of booking payments in commissions. They also charge huge integration fees to include hotels on their platforms and require minimum inventory volumes.

However, in making room availability and rates directly visible to consumers, hotels could better control their costs and revenues. Hotels' clearer picture of demand also could improve their inventory management.

Experts agree

"The saving far outweighs the costs associated with blockchain transactions," says Edward Cunningham, founder and CEO of Trippki. The hotel booking and rewards platform runs on TravelChain, a decentralized, open-source blockchain, and leverages SmartRewards, a route to a sustainable global cryptocurrency.

"Online booking agents could be at risk to blockchain-based direct marketplaces," adds Glenn Nagao, senior associate with Shuttle Holdings, a digital investment management firm focused on innovative technologies. "Credit card fees, booking and other middlemen fees would be eliminated."

Alternative aggregation

What alleviates the hotelier's pain, however, does not necessarily comfort the consumer. Thus a better build than single-brand blockchains may be multiple travel companies on a platform.

Trippki has this in the works. It uses reward tokens to incentivize direct consumer reservations across travel brands. And LockTrip has created a marketplace of more than 100,000 hotel properties as well as a proprietary token for hotel and hospitality bookings. Consumers may fund their wallets with tokens or other cryptocurrency, US dollars or a credit card. LockTrip partners pay no commission.

Data advantage over OTAs

"If there are multiple hotels or other sectors that participate, then potentially more of the consumers' behavior can be tracked," Nagao says. "The customer info and booking details are the main points of data that would be stored on the blockchain."

To leverage the benefit of rich new data, participating companies could create a marketing application to launch highly targeted marketing communications. Pre-defined triggers could initiate offers that enhance and personalize customer experiences, he says.

Rewards on and off the 'chain

While loyalty marketing communications and rewards do not need to rely on the blockchain, Trippki has chosen to make the most of the technology. It hosts two transactions through an OTA-like interface. In the first, consumers pay for hotel reservations with bitcoin, Ethereum, credit or debit card through a central system. And after a confirmed hotel stay, Trippki adds their rewards.

In summary, Cunningham emphasizes the benefit of greater data capture. "By disintermediating the OTAs, Trippki allows more direct connections between the hotel and its customers. Trippki will act much like a co-op and create direct relationships between the hotels and their guests," he says. And with lower commissions, hotels may share their increased net revenue with guests through savings or bonus Trip tokens.

Kelly Shermach is Reporter at Large for The Wise Marketer.