In the last few years there has been much hype and resultant industry buzz around the concept of blockchain technology for the hospitality industry. Blockchain technology in theory offers much promise for hotels in a number of ways. The technology offers solutions to some looming issues for the hotel industry, most notably security and third-party fees that are eating up revenue. However, it remains to be seen if blockchain will live up to its full potential for hoteliers. The application and implementation of the technology within the hotel industry is in its infancy as it is a still-emerging, yet clearly disruptive force.
What Is Blockchain Technology?
While most hoteliers have probably heard of blockchain, many are lacking a clear understanding of the concept. Put into the simplest of terms, blockchain is a list of records, a public ledger, where transactions are recorded digitally. These records are called blocks and once the blocks are recorded, they become a permanent and verifiable digital recording of an anonymous transaction between two parties. Since the blocks are shared in a distributed network, the data is decentralized and stored across multiple places in a cloud-based network.
Blockchain technology provides the highest of security standards since the entire database is encrypted. The block cannot be modified or altered in any way once the transaction is recorded with a time stamp in the ledger. The block is then traceable as well, providing completely verifiable transparency and cross checking in the process.
Hotel Applications For Blockchain Technology
Blockchain technology blocks are not necessarily restricted to financial transactions, which presents to hoteliers several relevant hotel applications for the technology. Probably the most important and highly disruptive application of blockchain in the hospitality industry is the possibilities the technology offers for eliminating or at least greatly reducing the role of online travel agencies in hotel inventory distribution. Independent hotels in particular would greatly benefit from adopting blockchain because of the higher commissions paid on their bookings made through OTAs.
Since blockchain can track any type of transaction involving an exchange of value, the technology is a perfect fit for recording hotel loyalty programs and disseminating their member benefits. Because of the highly publicized and damaging data breaches suffered recently by a number of hotels worldwide, another application of blockchain is the processing and storage of secure payments for hotels. Blockchain offers hotels and chains a means for entirely secure and transparent bank transactions or even a step further into the blockchain realm, cryptocurrencies.