In the new global digital world of the fourth industrial revolution, blockchain technology has been revolutionizing many industries from banking and insurance all the way to the art industry.
NB: This is an article from EHL
While companies in the aforementioned actively work on blockchain-based projects to assess the opportunity the technology provides, the overall technological trend has not yet passed through the hospitality industry. Yet, similar to the overall stage of technological infrastructure in the industry, this leap in technological adoption posits many questions and challenges for hoteliers.
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“There is the paid search, the SEOs and everything else you pay commission for. This is the landscape at the moment. So, you have as a hotel, you have a Greek salad, which is very tasty, but if you mix it, it doesn’t look very constructive. No direct business – Only middlemen”. D.A. President Swiss Hotel Association & Ambassador of Swiss blockchain start-ups.
While empirical studies progressively demonstrate their research interest for blockchain-based applications in the hospitality and tourism sector, scarce literature and case studies are found on the benefits and feasibility of blockchain technology in the hotel industry. For instance, Dong et al. (2020) illustrate the technical capacity for a decentralized booking system that used blockchain for hoteliers and travellers.
Even though a variety of blockchain-based start-ups exist for booking sales, reputation management and procurement, the technical development stage along with the understanding of all stakeholders involved in this sector is still scarce. Various companies within the travel industry such as Cool Cousin, Winding Tree, Webjet, LockTrip, Hotel P2P, Sandblock, Travelchain, and TUI with its BedSwap project (Önder & Gunter, 2020), implement blockchain applications into their operational systems to gain a competitive edge through various benefits of blockchain technology.
“But we really want to talk about what blockchain technology can do, that would be relevant to the industry… it is a mainstream technology that’s now in the arsenal of companies like IBM, Microsoft, and Amazon and others.” D.R., Global Industry Leader in Hospitality Technology.
Most empirical studies acknowledge blockchain technology as the new technological hype to introduce a new age of relationship between systemic applications and consumers away from a current B2B, B2C, or C2C liaison through intermediaries. While some consider blockchain technology as a potential disruptive application that will change society’s dependence on intermediaries forever, others are more reserved, assuming it to be a foundational technology, whose development and social-economic integration will take years to come. In that context, specifically critical are the lack of understanding by end-users, compliance regulations, as well as organizational and investing constraints of enterprises (Saheb & Mamaghani, 2021).
Furthermore, financial risks and an unpredictable return on investment make it difficult for independent hotels to join this chapter even though they may be the ones most in need or able to benefit from this technological trend.
“You have the idea that blockchain is decentralization – decentralizing current relationships. That is the important part. You get real peer to peer relationships. No middleman, just direct relationships, that’s important, this is how we make real business!” D.A. President Swiss Hotel Association & Ambassador of Swiss blockchain start-ups.
The first author of this article conducted an empirical study that encapsulated the perspectives both of the suppliers of blockchain technology to the hospitality sector, hospitality players, and technological experts to shed light on the potential and limitations of this technology, answering the question: Does blockchain have the potential to become the panacea to the OTA disruption 20 years after its launch?