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Impact of Blockchain Technology in Hotel Industry


Blockchain technology is one of the most exciting digital technology innovations of recent times, and despite its relative youth, it has a colossal potential to fundamentally alter the way transactions are made inside hotels and also, how information is both stored and accessed. In this blog, we are going to take a closer look at the blockchain, explain what it is, and explore its current and potential future uses within the hotel and the entire hospitality industry.

What is Blockchain?

According to Wikipedia, a blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp, and transaction data. By use and design, a blockchain is resistant to modification of the data. It is ‘an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way’. For the use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires collusion of the network majority.

Is Blockchain the new era of internet?

The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater, and the main question people are asking is: How Blockchain is going to change the way we transact? What will be its impact on hotels? How Blockchain will become the new era of internet? We know that by allowing digital information to be distributed (but not copied), blockchain technology created the backbone of a new type of internet which is secure, robust, and dispersed.

Blockchain technology is revolutionizing the hospitality sector by optimizing everyday tasks

Blockchain was originally conceived for a digital currency named Bitcoin. After its huge success, the tech community have found another potential uses for this amazing technology, which comes into picture in terms of hotels. Yes, you read it correct! According to international reports, to date, the total value of the currency in blockchains is close to $9 billion US and these can make other types of digital value as well. Just like the internet (or your bike), you don’t need to delve deeper to know how the blockchain works to use it. However, having a basic knowledge of this new technology shows why it’s considered revolutionary and also, how hotels can utilize it to its fullest capacity.

Features of Blockchain technology:

Shared Ledger

All the records of transactions or ownership status of assets are concurrently available to all the members in a blockchain platform, providing a single source of truth in a blockchain platform. A private blockchain will require permission (i.e. a personal key) to access and acquire the records and details of the transaction. Additionally, the extent to which the participants could access these records can be limited quite easily. In blockchain technology, few participants may only be authorized to see whether a transaction occurred between two parties, while certain participants can be given permission to view transactions in full detail.

Secure Transactions

Verification of transactions via blockchains is a cakewalk. Also, it can be verified through a consensus that are predetermined by the participating members in the blockchain. Internally, the records of transactions cannot be changed or manipulated by network members in a blockchain. Externally, the blockchain platform is extremely difficult (if not impossible) to hack because all these blockchains are stored in many computers and the transactions are encrypted by unique cryptographic signatures. The blockchain platform could only be hacked if all the computers within the network are accessed at the same time which is nigh-impossible and improbable.

Robustness and efficiency

With blockchains, the individuals don’t need the intermediaries to establish trust between them because transactions are processed and verified within the blockchain network (which is encrypted using algorithms as stated in the aforementioned point). In fact, the purists defines blockchain as the ‘trust machine’ suggesting that it eliminates the need for trust between people. In Layman’s terms, the involvement of third-party arbitrators, such as banks and governments, to verify or authorize transactions is not needed in a blockchain platform. The elimination of intermediaries from the process streamlines the process and significantly reduces transaction time and costs.

Smart Contracts

‘smart’ contract is a contract that can self-execute and self-enforce a set of rules or provisions in a contract. Sounds confusing? Let’s simplify it with this– All the provisions that require action can be executed autonomously, either immediately or at a specific time. Smart contracts must include a few or many contractual clauses and may or mayn’t require human involvement, meaning they can be partially or wholly self-executing, which is great! The transactions can be broadcasted to all parties involved and these records are immutable at all costs. Lease contracts, for the instance, can be prepared on a blockchain platform as smart lease contracts that include all the provisions that ordinary lease contracts include, such as a leasing period, lease amount, payment date, lessors’ and lessees’ information, and other governing rules.

Enforcing these governing rules and payments for the leased property (i.e., house, car, bike, etc.) can be an excruciating process in an ordinary contract, since the lessor has limited information and capability to enforce all these contract and thus requires a third-party involvement. In the blockchain platform, the lessee’s bank account can be linked to the lease agreement and payments can be completed automatically on the payment date. Similarly, an agreement between a travel booking site and hotels or airlines can be executed autonomously and immediately once the event occurs. In summary, smart contracts eliminate the costs and delays associated with ordinary contracts.

Gamut of Blockchain in hotels:

“A world with little or no intermediaries where there is no need to build trust between people and transactions are completed in seconds. This is the promise of the Blockchain Technology.” -Tarik Dogru, This powerful statement shows the capability of Blockchains and also it describes how it can revolutionize the every day transactions that we do inside or outside hotels. While the technology is still in its commencement, hotels, restaurants, airlines, travel agencies, and other hospitality businesses could improve their guest satisfaction, profitability, and service quality by integrating blockchain technology. As more hospitality businesses adopt blockchain technology, the stakeholders in hospitality industry will collectively benefit from its utilization.Now, let’s see how blockchain can be exploited inside hotels and also, how a hotelier can be benefited with this.

How can Blockchains be utilized in hotels?

Tracking guests

The impact of blockchain in hotels is going to be monumental! Now, hotels can be instantly updated right from the time that a guest leaves her home for the airport to when she checks in for her flight and even upon arrival at the hotel. This tracking can increase efficiency by reducing wait time during the check in process and thus increase guest satisfaction. While tracking guests’ movements might be considered an invasion of privacy, accessing the information will require the guest’s authorization and individuals will be able to determine the degree of information that is shared with hotels or other members in the network. Therefore, blockchain technology has the potential to provide seamlessly integrated guest services without intruding guests’ privacy.

Tracking food

Tracking and monitoring foods is applicable to the restaurant industry. Indeed, food consumed in restaurants is part of the supply chain beginning at the farm. Thus, extending blockchain based supply chain management systems to restaurants could provide better quality control and food safety in restaurants. That is, restaurants could collaborate with their food suppliers to be involved in the blockchain platform that tracks and monitors the food. Furthermore, restaurants can allow their guests to check the origins of and routes taken by the food used to prepare their meals, via blockchain technology. Simply put, blockchain technology can facilitate trust in restaurants in regards to the quality of the ingredients used to prepare meals.

Blockchain can be used to track several guest activities in a hotel

Airline and hotel points

Not always, but loyalty programs often create more problems than they solve! Hotels can build loyalty programs on a blockchain platform and issue loyalty tokens as rewards to their guests. The loyalty tokens are similar to loyalty points; however, blockchain technology enables customers to freely buy, sell, or exchange their loyalty tokens with others. Allowing customers to exchange loyalty points in an open exchange can also increase the competitiveness of loyalty programs and increase overall service quality. For example, the market value of company B’s tokens might be higher than company A’s tokens due to the quality of products and/or services those tokens can buy. So a company that is worth more than the other is likely to be the preferred in the market, incentivizing other firms and thus the system as a whole to increase the quality of their offerings to attract more customers. Furthermore, loyalty tokens could also be used across industries; consumers would be able to use their hotel loyalty tokens in restaurants, airlines, coffee shops and other businesses through blockchain platform. In collaboration with IBM, startup technology company Loyall is developing a blockchain platform where consumers can redeem, buy, sell, or exchange their loyalty points.

Digital ID

Blockchain technology could provide a solution to identity theft. In airports, hotels, and restaurants, customers must often present their IDs as proof in order to pass security and check in to their flights, hotel rooms, or consume alcoholic beverages. This makes consumers vulnerable to identity theft; not only by the person who is checking IDs but also other people around who might obtain important personal information. As a solution to this exposure, IDs, including birth certificates, driver’s licenses, social security numbers, and passports, among others, can be stored in a blockchain platform and people can be given permissions to check and validate IDs. Similar to QR codes, IDs can be in a form of cryptographically-secured codes that allow verification of one’s identity without seeing essential personal information. In addition to eliminating the likelihood of loss or theft of physical IDs or personal information, digital IDs that are stored on a blockchain could also eliminate forgery.

Smarter Contracts in hotels

Smart contracts can be adopted to facilitate both minor and major transactions in the hospitality industry. Hotels and travel agencies, for example, could streamline their business relationships with smart contracts on blockchain platforms. Similar to a legal contract, a smart contract between hotels and travel agencies would have the contractual provisions that are predetermined by the transacting parties. Anytime a transaction occurs, it is recorded and shared on the blockchain. Once transactions are recorded, the payments can be processed immediately based on contractual terms. Not only would this facilitate payment, but would also further optimize room sales through better collaboration between hotels and travel agencies.

Now, you know almost everything about blockchains. Schedule a demo with Trilyo and we will tell you more about this topic. Also, we can show you how to implement this in your hotel and grow your business and take it to a whole new level. So, don’t wait! It’s the high-time to incorporate blockchains and stay ahead of all your contemporaries. Be tech-savvy!

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