Another travel brand is looking to gain a foothold in the
booming in-destination experiences sector.
Following a successful proof of concept study done in partnership
with IBM, Travelport is developing a private blockchain to simplify, expedite and
validate the distribution and settlement of tours and activities.
Within the next six months, Travelport chief architect Mike
Croucher says it will launch a minimum viable product, possibly with a focus
on tours and activities provided in cruise ports or through large
hotels in a tourist destination.
Croucher says as travelers’ interest in unique experiences has
grown in recent years, it has become clear that traditional distribution
channels do not suit this sector, which has a high percentage of small,
independent suppliers.
“For all the large platforms, including ourselves, the cost of
entry is actually quite high,” Croucher says.
“The cost for us to put content onto our system takes quite
a lot of work - the expense of surfacing it and then the expense of settlement,
managing contracts. What we saw with the opportunity of blockchain is, could
this actually solve this long-tail content in a different way?”
And on the other side of the equation, he says, is the need
to help travelers discover and trust experiences from small, local suppliers.
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“The way you are doing this today is you are seeing a
walking tour [for example], and you are going on TripAdvisor and you are seeing
hundreds of reviews on there. But there are lots of false reviews out there,
there are lots of issues and it takes a lot of search,” Croucher says.
Beginning last spring, Travelport began working with IBM to
explore how the distributed ledger model of a private blockchain could solve
these issues, adding transparency and automation to serve operators, resellers
and consumers.
The idea
The solution has several components.
To ensure that the experiences available through this
blockchain are trustworthy – that they actually exist and are of suitable
quality – Travelport will require every piece of content, every walking tour or
fishing expedition for example, be endorsed by a person or entity in the local
market.
So after adding their inventory to the blockchain, suppliers
will be responsible for contacting an “endorser” from a list supplied by
Travelport and developed through their worldwide industry network.
“Whether that be a local travel agent, a tourist board or
something like that that endorses the content, and therefore it means that
content has some seal of approval around it on the chain,” Croucher says.
“From a Travelport perspective, this saves us from having a
very large sales team around the world, trying to source content and endorse
content.”
Once the content is endorsed, it becomes visible on the
blockchain to resellers, such as a hotel or cruise line, and the endorser would
receive a commission on the sale of their endorsed products.
And this is where another characteristic of blockchain kicks
in.
Smart contracts are self-executing agreements that delineate
the rules of transactions on a blockchain.
In this case, the tour or activity operator would complete a
contract template provided by Travelport that specifies the commissions to be
paid on each transaction.
“For example, maybe the retailer, whoever sells it, gets a
5% commission, the endorser of the content gets a one-off fee of $100 and maybe
Travelport takes a .5% fee on every transaction,” Croucher says.
When a sale takes place, the smart contract executes automatic
payment to each participating party.
"It’s an instant settlement of commission, whereas today the
settlement of commission on any sale is a six to eight-week process - or
sometimes a never process,” Croucher says.
“And that transparency of contract exists within the
blockchain to cement that that transaction has taken place.”
Settlement in this system is done in fiat currency based on
the location of the recipient.
The potential
Based on feedback they received after sharing the proof of
concept at a variety of Travelport customer events during the summer, Croucher
says they are focusing on a few specific use cases. One would be large hotels in
tourist destinations.
“If you take Las Vegas, the big casinos there, we are beginning
to get traction with them to say this might be a way for us to offer something
very different than the concierge desk we have today,” he says.
“Currently for many of the localized tours you want to do at
a hotel, you need to go down to the concierge desk, ask for it, they need to
phone up, they need to sort it all out, they keep a record and then they get
their commissions. Automating that is difficult for them. So they see how they
could build this into their in-destination resort-type websites.”
Croucher says this platform could also benefit cruise lines,
by connecting them with many new, uncommon activities to offer to their guests
while in a port, each one affirmed by a local tourist board or travel agency.
“It’s very hard for them in each port of call to coordinate
those types of unique experiences like a cooking class or a Segway tour or
something, because actually booking it in advance and getting assessment and
fulfillment of that is difficult,” he says.
Travelport is working to identify launch markets as it
builds out the minimum viable product.