Blockchain in the Hotel Industry: A Primer & Practical Roadmap

Blockchain Blog
By Klaus Kohlmayr, Chief Evangelist

What is the likely impact of blockchain in hospitality—and where are we now?

Hospitality Technology Next Generation (HTNG)’s recent whitepaper, Blockchain for Hospitality, not only increases awareness on the emergence of this new ledger technology but serves as a practical knowledge framework for hospitality leaders and technology innovators who serve the industry.

I am honored to have been part of this project and look forward to continuing to help industry decision-makers understand and embrace the new advances in blockchain technology.

Some say blockchain will disrupt the entire double-entry accounting basis of our financial system. Many agree blockchain may be the next significant disruptive technology of the digital age, maybe the biggest. Here is primer on what it all means in the hotel space.

What Is Blockchain?

The term “blockchain” describes a method for storing data in a way that is architecturally different from traditional transactional database management systems (ledgers). What makes it unique is that users may only append records, never delete or edit. Additionally, data is distributed across a community of connected peer-to-peer devices, each of which stores an identical full or partial copy of the database.

Proven chronological integrity and a tamper-evident design within blockchain creates a trusted environment where transactions can be conducted between non-trusting parties without the need for a formal trusted authority/third party (such as a bank, or in hospitality, a third-party booking channel). A blockchain therefore has the potential to reduce the need for intermediaries and bring parties to a transaction even closer together.

Five Tips to Stay in the Loop

For the hospitality industry—which in many cases runs on decades-old technology and is dominated by intermediaries with even newer gatekeepers emerging on the horizon—the idea of implementing blockchain may seem far away.

But it may be closer than you think.

Forward-thinking brands such as TUI Group, Lufthansa and Nordic Choice Hotels are already implementing elements of blockchain into their thinking and future strategy.

So, what can hoteliers do to stay ahead of the curve?

  1. Get educated – The best way to stay on top of any emerging technology is to immerse yourself in it. Blockchain is still in its infancy, so keeping up with the latest advances will enable you to make more informed decisions in the future. Below are a few resources to help you stay up to speed.
  2. Study potential applications of blockchain in hospitality – There are already a number of use cases for blockchain in hospitality. Blockchain platforms certainly have the potential to streamline and disrupt the distribution channel. Several use cases include streamlining availability, rate and inventory (ARI) and descriptive content updates, payments for bookings, the enablement of direct bookings and loyalty programs to name a few. Download the HTNG whitepaper to understand some these use cases, and others, in detail.
  3. Understand blockchain ecosystems in greater depth – There are multiple blockchain ecosystems that take advantage of the underlying capabilities of blockchain platforms. Keep your eye on Bitcoin, Ethereum, Ripple, R3 Corda and Hyperledger. Start acquainting yourself with how they differ, what specific advantages they offer, and how they might lend themselves to applications in hospitality.
  4. Keep your eye on the OTAs – Watch what the OTAs are doing. Some industry observers believe blockchain has the potential to put many of these players out of business in the future. But OTAs have been traditionally resilient and adaptive in the face of change. Platforms such as Swiss-based Winding Tree claim they are poised to disrupt the industry by offering an open-source blockchain that supports a decentralized travel industry, effectively cutting out Expedia, Airbnb and Booking and other third-party players. Watch this space closely, and draw your own conclusions, as the battle unfolds.
  5. Watch what the industry market leaders are doing – As I mentioned, market leaders such as TUI Group, Lufthansa and Nordic Choice Hotels are currently on the cusp of implementing blockchain technology into their businesses. Following their progress will provide you with the insight you need to make better decisions.

Obviously, as with any new technology, it’s advisable to take a cautionary approach. At the same time, this is no time to be left in the dark. With the rate at which blockchain technology is advancing, taking a broad and deep approach to understanding its potential, and implications in the hospitality industry, will prove invaluable.Click to Tweet | IDeaS Twitter

Klaus Kohlmayr

Chief Evangelist at IDeaS Revenue Solutions

Klaus Kohlmayr challenges strategic processes, stimulates thought-provoking conversations and reinvigorates the future of revenue management and pricing within the hospitality and travel industries.

A natural contrarian, Klaus has challenged the status quo for over 20 years. He re-joined IDeaS from TSA, where he led the company’s global commercial, operations and strategic partnership initiatives. During his previous stint with IDeaS, he started the company’s global consulting division -- leading a team that partnered with top hotel companies. Together they pioneered the industry’s first group price optimization and function space revenue management proof-of-concepts in a real-world environment.

Klaus developed his passion for the hotel industry at the Hotel Management and Catering School in Villach, Austria, where he received a Bachelor of Science in Hotel Management. An advocate of lifelong learning, he has since studied business at Henley Management College, real estate investment and asset management at Cornell University’s School of Hotel Administration; and finance and strategy at the Singapore Management University.

Klaus has been an active participant in various advisory boards, including HSMAI in Asia Pacific and the Americas, and the Cornell-Nanyang Institute of Hospitality Management, Singapore. He not only loves to challenge the status quo, but wholly welcomes being challenged in new ways of thinking.
Klaus Kohlmayr