Skip to main content

Blockchain Could Revolutionize Hospitality


A new term is beginning to gain popularity among hospitality technology professionals: blockchain. For those unfamiliar, Blockchain is a digital ledger of economic transactions that is incorruptible and can be programmed to record financial transactions. The blockchain also records virtually everything of value, not just financial transactions.

Today, various businesses, banks, and governments, all have been paying close attention, and even allocating investment and resources to better understand and develop Blockchain. This is because startups and large enterprises alike are seeing an evolving market for a range of blockchain applications beyond cryptocurrencies (a virtual or digital currency that utilizes cryptography for security), including tracking shipments and documenting legal contracts.

Blockchain provides internet users with the capability to generate value and authenticates digital information. This technology is used in business scenarios where multiple parties form a network to take part in a transaction. Blockchain has some essential features that make it suitable for various kinds of businesses.

For example, blockchains accomplish money transfers at a greater speed than traditional international banking which can often take days to process money transfers. This can save money and time for the financial industry. One of the significant value propositions for blockchains is the creation of immutable ledgers. Any centralized database can be corrupted and usually requires trust in a third party to maintain accurate information. Like Bitcoin, blockchain keeps the ledger in a permanent state of forwarding momentum as the hashing power worth millions of dollars confirm new transactions that are recorded. And one of the remarkable things about blockchain is that it can enhance the capacity of an entire network. Blockchain contains thousands of computers working together, and this can have higher power than a few centralized servers.

By looking at the above features, it is evident that blockchain is suitable for various kinds of businesses. This article from will look at the applications of blockchain in the hospitality industry and the advantages it offers to this sector.

Blockchain in Loyalty Management Programs

Today, the working of a loyalty program is limited to the business that owns the program. In some cases, the loyalty program also works for the alliances of the business that owns the program. However, the alliances’ loyalty systems are independent systems and integrating with them is not an easy task. So, it is becoming difficult for the users to use the loyalty points earned from their air miles to shop at the airport or on a hotel stay.

Think of an open system for multiple providers where loyalty points could be exchanged easily across different sectors (airlines, the coffee chain, car rental agencies, hospitality chain). So, it becomes easy for the users to recover loyalty points from any sector on the network that is included in the open system. Thus, the points gained by the user on air miles can be spent by staying in a hotel. This type of program is inspired by blockchain and is known as the Distributed Ledger technology (DLT).

One of the major aspects of the DLT is that it enables users to anonymously take part in a transaction and still get the value as a trader/participant. In the blockchain system, the transaction encryption maintains the anonymity. Redemption and treasury based on smart contract rules leave no doubt from the perspective of the user and brings about a high amount of user’s trust into the system. It provides a rich experience and convenience to the end users.

The higher value addition would be the system’s open nature for all the stakeholders - system managers, loyalty program owners, companies, merchants, and consumers. This DLT based solution helps lower operating costs and cuts out the redundant operations. Hence, the loyalty programs’ maintenance cost is reduced, and the smaller merchants will also be able to pay for them.

Maintenance of Transparency in the Supply Chain with Blockchain Technology

Large hospitality enterprises follow the franchise model where the company owns the brands but not the physical properties. This decreases CapEx requirements but puts the responsibility on the enterprise to ensure supplies’ quality to the enterprises. Besides, the image and reputation of the brand is at stake. The blockchain is a perfect fit in this scenario as it helps in maintaining transparency within the supply chain.

For example, a hospitality chain’s franchise owner who runs a chain in the east coast of the United States is usually required to buy supplies such as tea, coffee, towels, and other in-room kitchen items. He would also have to acquire toiletries such as shampoos and soaps. Usually, he acquires all these items from various suppliers and from various locations across the world. It is mandatory that they should meet the quality and standards of the hospitality chain. In such procurements, at least two parties are involved most of the time. Take, for instance, Bazillian tea. The farmer grows it in Brazil, it is bought by an exporter in Brazil from the farmer, then an importer brings it to the United States, distributes it to different wholesalers and a packer before it finally lands on the kitchen table in the hotel.

If the hospitality brand owner, franchise owner, packer, importer, and exporter take part in a private permissioned blockchain network, it introduces immediate visibility of supplies from factory or farm until it lands in the hotel room. Once the tea is bought by the exporter from farm, details of the place where the tea is grown, when it was grown, price, quantity, and any other information required by the hospitality chain are recorded as a transaction on the blockchain. Transactions can be recorded on the blockchain at each stage of the supply chain.

This brings in transparency as hospitality chain and the franchise owner have instant visibility of the position of the supplies. Because of this, the franchise owner can optimize the shelf life of supplies and plan his procurement better. Simultaneously, blockchain establishes the source of supplies that can be leveraged to increase the trust of the customer in the brand by obtaining supplies from ethical enterprises and proving it to the customers with the help of blockchain.

Blockchain can provide even more benefits to the hospitality chain. For a vast chain with thousands of suppliers and hundreds of franchises, it gives in-depth visibility of the quality of procurement of the supply chain. Franchises can use this data to optimize the supply chain, resulting in increase of bottom line for enterprises and the franchises. As every transaction’s data is immutable and secure, it saves valuable time in dispute resolution, costly paperwork, and process time. Thus, blockchain technology helps make the backend processes efficient, and improve brand value and customer experience.    

This ad will auto-close in 10 seconds