How blockchain could rewrite the rules of distribution
 
How blockchain could rewrite the rules of distribution
04 OCTOBER 2017 12:24 PM

Switzerland-based nonprofit Winding Tree hopes to use the same technology that powers cryptocurrencies like Bitcoin to remove intermediaries like OTAs and global distribution systems from the hotel distribution process.

WASHINGTON—Imagine a world where hoteliers can get their inventory in front of consumers without having to deal with the commissions related to online travel agencies and global distribution systems.

That’s the world of hotel distribution a new nonprofit is looking to create via the use of blockchain technology.

Blockchain, which is most typically associated with cryptocurrencies like Bitcoin, has been described as a digital ledger that is duplicated and verified across a network full of users to avoid abuse or fraud. Winding Tree, a Switzerland-based nonprofit, is hoping to create an open-source iteration of blockchain technology it believes can largely take intermediaries out of the hotel distribution process.

Speaking at the recent Hospitality Technology Next Generation North American Insight Summit, Winding Tree COO Pedro Anderson said blockchain is nothing short of revolutionary technology.

“Developers are flocking to blockchain as a technology they want to work with,” he said. “And despite the number of people who want to do that work, there’s still a labor shortage. These are jobs that pay high salaries, and there are endless openings.”

How it helps hospitality
Anderson said the concept behind his company’s efforts is to create “an open, permission-less marketplace where anyone can list their inventory and sell it.”

In layman’s terms, what the technology would do is provide a database where any hotel could insert its own inventory for sale. Anderson acknowledged that the baseline technology is complicated and not consumer-friendly, but some third-party company could create a more user-friendly platform for guests to search—similarly to how they search on OTAs—and any sales made on the platform would go back to the property commission-free.

Anderson said hotels would also have the ability to apply specific rules, and what he referred to as “smart contracts,” for things like discounts on large-volume sales, which ultimately could mean less of a headache at the property level.

“Those can be automatically applied with smart contracts,” Anderson said. “You can carry out those rules with them being supervised.”

He said the overall potential of the technology should be enough to push more hoteliers to research what it is and what it can mean at their properties. That research should include experimenting with currencies like Bitcoin.

“We should do whatever we can to educate ourselves,” he said. “And that starts with owning cryptocurrency.”

Lif Token
A whitepaper published by Winding Tree outlines its vision of a blockchain technology for travel that Winding Tree is currently developing called “Lif Token.”

In that whitepaper, the nonprofit states it believes “booking fees are a business model of the past.” It states the only fees associated with using Lif Token will be “a minuscule fee to incentivize miners to give computational power to the network.”

In a blockchain system, miners are the ones responsible for confirming transactions and updating/verifying the ledger.

Winding Tree officials note these fees are fundamentally different and much smaller than things like OTA commissions.

“These fees will be automatically calculated by the blockchain at the time of transaction and will have no correlation with the total booking amount,” they write.

Transactions in the system are described as “near-real time.”

Winding Tree officials also note they believe the new underlying technology will be beneficial not just for hoteliers but travel agencies, which will “enjoy access to data and low fees” and travel-focused startups, which will suddenly have access to a large database of hotel inventory.

“Just download our library, read the API documentation, and you're good to go in almost no time,” they write.

2 Comments

  • Bigboss October 6, 2017 11:32 AM Reply

    Just another utopia.
    The problem with these tech guys, is that they are not super connected to the reality, there was always intermediaries between a hotel & a customer, not because the customer is not smart enough to ask good deal with the hotel, but he has on himself a fear of (room not meeting expectations, abuse, overbooking,...) For these threats that exist on a customers mind, an intermediary is the warranty of when things go wrong.... Just because of that simple aspect in the industry, hoteliers and guys like that are loosing time & are taking a battle they will never win.

  • JT October 10, 2017 12:13 PM Reply

    Wow! Not only will this diminish the OTA influence, it could very well render chain global sales teams obsolete. Stay tuned!

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