Maybe you remember going in person to a brick and mortar travel agent’s office, having them tell you about available flights and looking through catalogs to choose a hotel. If you do then you know how radically the travel industry has changed in recent years. Websites that let travellers book flights and hotels themselves with just a few clicks have changed the playing field. They have eliminated almost all physical travel agencies in the process. Now, however, the travel industry is set to be disrupted again by blockchain technology.
The Problem with OnlineTravel Agencies
The existing online discount travel agencies (OTA) like Travelocity, Priceline, Booking.com, and Expedia, pass on unnecessary costs onto travellers through bloated profit margins and hidden fees. This is because over the years these companies have built monopolies over online travel booking. Small hotels and airline companies lose out over larger companies and customer pays more for less choice. This is because the online travel industry is centralized.
Blockchain Disrupts OTA Monopolies
Blockchain technology has the potential to cut out OTA middlemen and disrupt steep corporate profit margins. A blockchain-based system can provide all the service that companies like Expedia do. However, it can do this without the need for a centralized website. In addition, smart contracts can make sure agreements are upheld and the full value of a transaction is transferred. This process does not need any intermediaries or extra costs, just a simple, secure transfer of funds between a buyer and seller.
An Example: Traveler.com
One project that plans to use blockchain technology to destroy the monopoly of OTAs is Traveler.com. Traveler is a crypto-friendly discount travel platform. It will offer lower prices than traditional OTAs through smart contracts and an internal real-time crypto to fiat exchange. In addition, it will accept cryptocurrency and use its own Traveler utility token (TVLR). In this way, Traveler will be the first online travel platform to accept cryptocurrency for hotel bookings, flights, car rentals and other travel services. Moreover, zero profit margin is added to the prices customers pay on current online travel agencies. The savings are estimated to range from 15% to 50%.
The proceeds from the TVLR token sales will support the development of a new blockchain sold as a SaaS (Software as a Service) to travel industry customers. Users of the TVLR Token will be buying travel at the lowest prices negotiated by wholesale buyers around the world. Traveler will use the proceeds from the token generation event to expand the supplier and reseller base, bringing further value to TVLR tokens.
There is great potential for blockchain technology to disrupt the global travel industry. Traveler.com is one new startups aiming to do this in different ways. However, Traveler is interesting because it plans to let users to pay for travel with either cryptocurrencies or fiat. Therefore, its business model is based on the assumption that bitcoin users will flock to such a platform. Traveler could be right but there is still a long way to go before mass adoption of cryptocurrencies is a reality. Consequently, it is also a risky presumption.
Another lingering question I have about this project is whether it is necessary to use blockchain at all. I think the real money and utility is with using smart contracts to execute sales of travel, insurance, housing, etc. That is a multi billion if not trillion dollar industry in its own. It all comes down to how sophisticated a smart contract can become and how well its been coded.
Full disclosure: I do not own TVLR tokens and have not participated in the TVLR ICO. This article is not intended as investment advice. It is just my personal opinion. You should always do your own research.