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11/04/2022

How Blockchain Technology Will Disrupt Hotel and Event Bookings

NFT’s are an ideal way to represent a digitized hotel reservation, and the blockchain is ideal for proving those reservations are authentic, showing who holds them, and enabling them to be displayed for sale and traded on a marketplace.
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digital links in a chain ending in two shaking hands

What do you do if you have tickets to see your favorite football team and a conflict comes up that you can’t get out of?  You can go to StubHub, SeatGeek, or any one of a number of marketplaces where you can buy or sell tickets.  You may receive a higher or a lower price than you originally paid for the ticket, but you have the option of selling it, and chances are it will be purchased quickly.

Now imagine you’d planned to drive to that team’s away game in another city and had a non-cancellable reservation at a hotel near the stadium.  You could plead with the hotel to let you out of it, but odds are you’re out of luck, and you’ve lost the money you paid.

Why the difference in the outcome?  A ticket is a right to occupy a certain seat at a certain stadium for a certain period of time, which sounds a lot like a hotel reservation, which represents a right to occupy a certain room in a certain hotel for a certain period of time.  Part of the reason you can trade tickets but not reservations is industry practice, and part is that the technology to create tradable bookings across multiple hotels and travelers around the world is quite complex.

Enter the Blockchain

Blockchain technology, including NFT’s (non-fungible tokens), is starting to penetrate the hospitality industry but in limited applications to date.  Relatively few projects have created real value in terms of practical applications.  As it turns out, NFT’s are an ideal way to represent a digitized hotel reservation, and they can incorporate all necessary metadata about the booking and make it easily transferable from one owner to another.  And the blockchain is ideal for proving those reservations are authentic, showing who holds them, and enabling them to be displayed for sale and traded on a marketplace.

Liquid Markets Benefit Everyone

The current system for booking hotels and hospitality was developed in a world when most reservations were made by telephone.  Travelers and hotels are changing and adjusting their plans constantly, and modernizing the system by introducing the blockchain to the hospitality market benefits all participants:

  • Travelers will have the option to sell their non-cancellable reservations even when their plans change; at present, around 20% of bookings expire unused.
  • Industry providers (hotels, restaurant owners, travel operators, etc.) can manage their revenues by pre-selling more of their inventory to travelers.  They will sell rooms knowing they are not at risk of cancellation, and they will receive a higher price for the primary bookings they issue, since sellers know they have an option to transfer them if their plans change.

To hotels, NFT-based bookings will look just like other reservations they receive from online travel agencies; they will receive the name and all required data of the traveler 24 hours before check-in, which is the last time that the NFT can be traded.  Travelers and hotels will receive e-mail or text confirmations of the bookings, and the NFT itself—which travelers will hold in their digital wallets—will contain all the metadata of the reservation, just as confirmation e-mails do today.

Blockchain and Customer Engagement

Hotels will find the blockchain can deepen their engagement with customers.  One very simple way that hospitality businesses can encourage loyalty is by creating unique art and design for each of their hotels and making those NFT’s into digital memorabilia.  The NFT’s will have value as collectibles for travelers who have stayed in a hotel and can show digital proof in their wallets.  Quests and games can serve as an incentive for certain hotel brands.  For example, if you stay in five hotels from the same chain in five different states, you can receive a digital reward for a discount at the same hotel. 

Blockchain implementation can also help the hospitality industry increase its engagement with travelers from younger demographics who are comfortable operating in the virtual economy.  The resurgence in travel, sports, music, and other events post-pandemic comes as many people have become more active participants in the virtual economy.  According to Fortune Business Insights, the Metaverse market could be worth $1.5 trillion by 2029 (Fortune).  And participants in various Metaverse and Web 3.0 environments are already transacting using cryptocurrencies to purchase NFT’s representing art, avatars in games, and other artifacts, which are estimated to grow to a $147 billion market by 2026, with a CAGR of 35% (Technavio).

Finally, digitizing reservations and event booking will enable travelers who want access to hotels and events that are sold out on the primary market to find bookings on a secondary market.  Imagine being able to get into that bucket list football game you’ve always dreamed of, including the tickets and the hotels.  Imagine finding rooms available on Labor Day weekend for that college reunion.  A two-way marketplace for travel makes it all possible.

Through gamification and NFT’s, a blockchain travel solution can offer a convenient way to book travel and monetize those experiences.  Travelers will be able to choose from millions of properties and thousands of events, as well as buy, re-sell, and manage their experiences with crypto.  The technology is all there to make it happen, and the disruption it creates in the industry will benefit travelers and the hospitality industry alike.

This technology and innovation are all within reach.  As blockchain technology disrupts hotel and event bookings, consumers and hotel owners will benefit.  The world of bookings will never be the same.

 

ABOUT THE AUTHOR

David Shuler is Cofounder of LIFE, the online booking platform offering reservations for hotels and travel experiences that are digitized and converted into tradable, collectible NFT’s.  LIFE will use industry-leading AI for hotel primary bookings, combined with blockchain market technology operating some of the world’s largest crypto exchanges for conversion into NFT’s and trading on the blockchain.