Travelport is developing a blockchain solution to streamline hotel commission reconciliations, working with IBM and travel management company BCD.
Last year saw Travelport announced that it was working with IBM “to streamline the hotel ecosystem” in a move it hoped would mean lower costs and expanded supply.
The trio said that Travelport would use IBM’s Hyperledger Fabric “to put the lifecycle of a booking on blockchain” to reduce the occurrences of payment disputes, by tracking and accounting for the commission payments that hotels owed when travellers used booking agencies. The three worked with three, unnamed hotel chains on the trial.
Travelport’s senior product director, Ross Vinograd said: “Blockchain technology applied to commission reconciliation has the potential to deliver real ROI to both a travel agency and the hotel. Traveler modifications at property, no shows, and complimentary room nights are just a few examples that drive commission discrepancies which in turn generate escalations, cost, and revenue loss. Our aim is to put the lifecycle of a booking on the blockchain and we believe doing so will drive transparency, trust, and ultimately booking volume.”
At the end of last year Travelport said that, by implementing blockchain, both travellers and the hotel ecosystem would see “notable benefits” around the management and increased availability of so called ‘long tail content” which independent hoteliers may offer such as a walking tour or fishing expedition.
Travelport and IBM said that, by using blockchain technology, they hoped that travel agencies would be able to supply such content with ease, while suppliers could offer it with minimal technology and investment.
Discussing the move with Hotel Analyst, Beth Pollock, IBM travel & transportation industry client lead and Mike Croucher, Travelport chief architect, said: “The most important aspect of the blockchain implementation is traveller satisfaction. And we know that satisfied travellers are more likely to be loyal to a brand who have provided a good experience.
“While cost savings are expected as the blockchain enables smart contracts between Travelport, travel agents and end suppliers, it’s too soon to say what these might be. Travellers increasingly want to be able to manage their trip with ease and simplicity, and the proposed Travelport and IBM blockchain solution would facilitate this. By bringing blockchain to long-tail content distribution, we would remove the processing barriers and enhance the experience all along the value chain – not only for the small hoteliers but also by fuelling even more choice for the individual traveller.
“We’ve completed a proof of concept on using blockchain for long tail content distribution, and are moving into the minimum viable product testing phase. Until we complete that phase of development, we won’t be looking for additional content partners. The possibilities are exciting and we hope this will open up a new, wide range of content for travellers.”
The pair added: “We expect many of the smaller independent hotels to be able to offer much more content – especially around bolt on extras that are usually offered on arrival or by concierges. We also see the blockchain smart contract being used for in-destination experiences and local attractions.”
Looking ahead, the two said: “Currently this is aimed only at facilitating the distribution of long tail content across the existing travel ecosystem. While Travelport’s customers are usually travel agents and corporate travel management companies, we’re always aware of the traveler at the end of the chain, and want to be proud of the travel experience they have. We’ll continue to look to innovate and fuel further travel experiences for travellers across Travelport and IBM’s innovative partnership.”
The company is also using IBM’s Watson Analytics Studio to mine its data and, the pair said, develop new services to aid travel agencies, such as highlighting the best time to buy or providing personalised offer travel recommendations based on previously combined travel. The two said these would enable travel agency subscribers to bring more value to the travellers they served, while making it easier to buy the range of travel supplier content Travelport offers.
The group follows TUI into blockchain technology. In 2017 the group announced that its in-house blockchain worked alongside its Cyrus yield system, controlling the group’s inventory. The company said it was also working on a common purchasing system across its operations and pointed to a future in which it saw a digitised and automated supply chain.
Chairman & CEO Friedrich Joussen told analysts: “If you want to address 20 million customers individually, you need the most modern IT technology. In the blockchain, you avoid hierarchical structure, the world is flat, it’s open, everybody can know everything. So, the blockchain is not in the internet, the blockchain is the next internet. It’s the disintermediating technology for internet platforms.”
He added: “It’s interesting to see what your customers do, equally is interesting when you cannot offer what the customer has asked for. And in the long tail, you see exactly that, you see demand building somewhere.”
HA Perspective [by Katherine Doggrell]: Of course hotels would like to exist in a world where they didn’t have to pay commissions to booking agents, but this is a hope far, far removed from reality. So best exist in a time where everyone knows what’s happening and rage can be repressed between the parties.
Blockchain is not the magic-ponies-for-all option which many hoped it would be when it was first conjured, but it is giving the sector something which has been much lacking: transparency. This is important for the relationship between the myriad parties which bring each booking to fruition and go a long way to reassuring that other consumer, the investor.
The second, although more important aspect of blockchain is all that lovely data it generates. Hotels may be grumpy about paying commissions, but with a bit of AI sprinkled over that which blockchain brings in, the efficiencies could be worth it.