Blockchain Technology in the Hospitality Industry

Blockchain technology in hospitality enhances secure data sharing and improves guest experiences. It’s crucial for its ability to streamline operations, ensure transactional transparency, and foster trust between service providers and customers, thereby revolutionizing industry standards.

Key Takeaways

  • Secure Payments: Blockchain enables secure, transparent payments in the hospitality industry, allowing for the acceptance of cryptocurrencies and streamlined bank transactions.
  • ID and Security Services: Blockchain can create a shared digital ID database, reducing wait times and enhancing security for travelers at various journey stages.
  • Enhanced Loyalty Programs: Blockchain improves loyalty reward schemes, simplifying point access and redemption. Rewards can be distributed as digital tokens, which are usable anytime, anywhere, reducing fraud risks.
  • TUI Bed-Swap: TUI utilizes blockchain for ‘Bed-Swap,’ an in-house project for real-time inventory management and dynamic pricing based on demand.
  • LockChain: A blockchain-powered direct marketplace allowing hotels to rent property with zero-percent commission, integrating property management and payment.

Table of Contents:

Introduction

Blockchain technology is one of the most exciting digital technology innovations of recent times. Despite its relative youth, it has the potential to alter the way transactions are made fundamentally and information is stored and accessed. In this article, we take a closer look at the blockchain, explain it, and explore its current and potential future uses within the hospitality industry.

What Is Blockchain?

Blockchain is a public ledger, or list of digital records, where transactions are recorded anonymously and permanently. The database’s records, or ‘blocks,’ are secured using cryptography. Once the information has been recorded in the blockchain, it resists modification, meaning the data cannot be altered.

Blockchain technology is decentralized, meaning information is not stored anywhere. This prevents manipulation and makes all data transparent. Many people share the record of events across a network, which provides additional security benefits, as there is no central point of failure or vulnerability. According to the Global Blockchain Market Report by SkyQuest, the global blockchain market size is projected to grow at a CAGR of 80.8% until 2031.

Moreover, all information added to the blockchain is time-stamped. This ensures that all data entries are traceable, further enhancing the database’s transparency.

The following video will explain more:

What Are the Advantages Of the Hospitality Industry?

Blockchain technology has several advantages for those operating in hospitality management, one of the most obvious being the security and stability benefits. For instance, all data is decentralized and traceable. The database can never go offline or be removed through a cyber-attack, which can be important when dealing with financial transactions.

In addition, technology could play a vital role in simplifying actual payments. This can be somewhat complicated, especially when dealing with overseas settlements. With blockchain technology, the entire process can be streamlined and made more transparent, increasing trust.

Furthermore, the travel industry relies upon information and personal possessions being passed between multiple companies. The blockchain can make accessing and storing information much easier, allowing for enhanced collaboration and ultimately improving the overall travel experience for customers.

More information about the advantages of the hospitality industry can be found by watching the following video:

4 Ways the Blockchain Can Be Used Within the Hospitality Industry

Although the potential uses for the blockchain within the hospitality industry are almost limitless, some applications have emerged and have a transformative effect, while others are just around the corner. Four of the most important ways the blockchain can be used are explained in more depth below:

1. Secure Payments

Secure payments will be blockchain’s most obvious practical application in the hotel industry. Whether it is accepting cryptocurrency like Bitcoin or Ethereum or simply providing a transparent, safe, global ledger, bank payments can be streamlined, and associated hotel costs can be reduced. According to the Worldwide Blockchain Spending Guide by IDC, cross-border payments account for around 16% of the total blockchain market.

2. ID and Security

One of the most exciting potential uses of blockchain within the hospitality industry is related to identification and security services. Passengers must provide ID at various stages of their journey, but industry-wide adoption of the blockchain could potentially allow for a shared digital database. Passengers could provide a fingerprint to quickly and seamlessly verify who they are, reducing waiting times.

Blockchain Technology Hospitality Industry - ID and Security

3. Loyalty Programs

Loyalty reward schemes are an important part of generating return customs. Blockchain technology can enhance the quality of loyalty programs by simplifying the process, making it easier for customers to access and redeem their points. With the blockchain, rewards can be distributed through digital tokens that could potentially be used anywhere, at any time, while the inherent security benefits could reduce loyalty scheme fraud.

4. Baggage Tracking

Finally, the uses of the blockchain within the travel industry extend to things like luggage tracking. Typically, a traveler’s luggage changes hands many times throughout a journey, which can result in logistical issues. The centralized nature of the blockchain allows different companies to share and access related data easily.

Table: More Ways to Use Blockchain in Hospitality

Blockchain Application Implementation Details Benefits for the Hospitality Industry
Personalized Guest Experiences Storing guest preferences securely on the blockchain for personalized service delivery. Enables the delivery of customized services while maintaining guest privacy and data security.
Guest Reviews and Feedback Recording guest reviews on the blockchain to ensure authenticity and immutability. Enhances trust in guest feedback, providing reliable information for future guests.
Smart Contracts for Bookings Automating booking and cancellation processes through self-executing contracts with the terms directly written into code. Reduces manual handling, minimizes disputes, and ensures transparency in booking transactions.
Inventory Management Using blockchain to manage real-time room inventory and distribution across various channels. Decreases overbooking and underbooking by providing accurate, real-time inventory data.
Supply Chain Management Tracking and verifying the authenticity and delivery of goods through the blockchain. Improves transparency, reduces errors, and ensures ethical sourcing practices.

Examples of Blockchain Usage Within the Hospitality Industry

It is important to stress that, aside from the hypothetical future potential of the technology, the blockchain is already in use within the travel and hotel industry. Some of the most significant examples of this are described below, complete with details of how they are helping hotels, customers, and the industry as a whole.

1. TUI Bed-Swap – Inventory Within the Blockchain

TUI, the largest tourism company in the world, was among the first to truly commit to blockchain technology, through the launch of ‘Bed-Swap’; an in-house Blockchain project. The technology allows TUI to assess demand and move inventories between different points of sale in real-time. From there, it can flex selling margins based on demand.

More information is contained in the following video:

2. LockChain – Direct Marketplace With 0% Commission

LockChain is a direct marketplace powered by blockchain technology, allowing hotels and other hospitality companies to rent their property. It is an all-in-one platform, allowing property management and payment to occur in one place. The decentralized booking engine cuts out ‘middlemen.’ Another major advantage is that LockChain operates a subscription model with a zero-percent commission policy.

An introductory video about LockChain can be found here:

3. Trippki – Loyalty Reward System Via the Blockchain

Trippki has started using the blockchain through the launch of its loyalty reward system. Again, the service benefits from cutting out third-party involvement and directly connecting hotels and customers. Customers are rewarded with native ‘TRIP’ tokens for staying at a hotel or using hotel amenities. The TRIP tokens are recorded in the ledger, do not expire, can be used to book future visits, or can be exchanged for cash.

The following video explains more about this system:

4. BeeToken – Home-Sharing Blockchain Platform

BeeToken, or Beenest, is a blockchain home-sharing platform that connects customers with hosts and allows customers to arrange and pay for stays. Its peer-to-peer transactions mean that no commission is charged, while the platform’s decentralized nature provides added security benefits. The BeeToken platform includes payment, reputation, and arbitration protocols, helping to keep both customers and hosts safe.

More about BeeToken can be learned from this video:

5. Winding Tree – Booking and Baggage Tracking

Finally, Winding Tree is an existing open-source demand and supply-side marketplace for inventory tracking. Several airline companies, including Air New Zealand and Lufthansa, have already entered into a partnership with the platform, with advantages including an example of a blockchain booking and baggage, a lack of third-party involvement with booking procedures, and greater transparency and traceability when it comes to baggage tracking services.

More about Winding Tree can be learned from this video:

More About Blockchain

Understanding blockchain technology can be a little daunting. Still, the technology is less complicated than it initially seems, and its potential to disrupt the entire hospitality sector is enormous, so it is worth learning more about. If you have some spare time and want to find out a little more, we recommend the following video:

The Potential of Blockchain To Disrupt The Hotel Industry by Ron Galloway:

Blockchain Technology in Hospitality Opportunities and the Metaverse

In addition to the blockchain technology hospitality trends and uses outlined, blockchain is also a concept closely associated with the metaverse. This refers to a network of 3D metaverse virtual words where users can interact socially, and a growing number of hospitality businesses are waking up to their full potential.

Read the “Metaverse Opportunities for the Hospitality Industry” article for a lot more information on the metaverse, how hospitality companies use metaverse technology, and future opportunities in this area.

Blockchain Technology in Hospitality Industry FAQs

Blockchain technology is primarily used within the hospitality industry to facilitate payments, authenticate identities, and boost security. Blockchain technology transactions benefit from greater security, privacy, and transparency. Furthermore, blockchain technology may be used to power customer loyalty schemes.

Luxury hotels may use blockchain as the underlying technology for a customer reward program or to accept and process secure transactions. These hotels may also use blockchain technology to enhance security for their customer database, authenticate customer identities, or manage supply chains.

Blockchain technology is increasingly used in the food industry, assisting with supply chain management. It can enhance transparency and allow companies to trace supplies more easily. This ensures food industry businesses know the origins of products and ingredients, making it easier to guarantee quality.

While blockchain is still an emerging technology in the hotel industry and is primarily used by larger chains or luxury hotels, its use is becoming more widespread. In particular, more hotels are using blockchain technology to accept cryptocurrency payments, manage customer loyalty schemes, manage supply chains, or provide security.

One of the best-known examples of blockchain technology is the cryptocurrency Bitcoin, which allows for decentralized financial transactions that are safe, fast, transparent, and secure.

Blockchain is a relatively new digital technology that serves as a decentralized database, allowing information to be entered and stored across an entire network. For the hospitality industry, this offers enormous potential in reducing third-party involvement, enhancing security, improving the speed and ease of transactions, and allowing important information to be accessed anywhere.

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This article is written by:

Martijn Barten
Hi, I am Martijn Barten, founder of Revfine.com. I am specialized in optimizing revenue by combining revenue management with marketing strategies. I have over 15 years of experience developing, implementing, and managing revenue management and marketing strategies and processes for individual properties and multi-properties.