As it becomes more accepted and widely adopted, blockchain may influence the way we book, market and manage holiday rentals.
Blockchain is a technology that allows digital information to be distributed securely and transparently.
The size of the blockchain technology industry has grown significantly over the past couple years and is expected to have massive growth with projected value to be over $39 billion by 2025.
Blockchain enables the existence of cryptocurrencies like Bitcoin and Ethereum, and has many other advantages. Blockchain is inherently decentralised in that it doesn’t rely on a single server. It consists of a global network of computers that store copies of the same database in blocks. This ensures that a single entity cannot control the blockchain.
Much of the conversation around blockchain focuses on how this new technology could alleviate the challenges our industry faces. The main issue that the proponents of blockchain point to is that on today’s internet, all data is centrally stored.
Thus, it’s not controlled by individual users, but by those who manage the servers that the data is stored on. Not only is our data out of our control, but it’s also vulnerable to cyberattacks.
Blockchain has the potential to trigger a paradigm shift because it allows us to build completely decentralised organisations and applications that are open, transparent, secure, fast and cheap to use.
Winding Tree, a B2B travel marketplace, provides a blockchain platform where buyers and sellers of travel inventory can find trusted partners. They believe in open-source technology. The computer, the internet, Firefox, WordPress, Wikipedia are all examples. Anyone can freely use this technology which allows you to be in full control of your data, who can access it and use it. And the overall security is established.
Maksim Izmaylov, chief executive of Winding Tree, says: “A truly decentralised system can't be built on proprietary technologies. That is why Winding Tree is not just built on Ethereum mainnet (as opposed to nonsensical private blockchains), but it is also 100% open source. Opening access to the source code of our systems is an unprecedented move for the travel industry, that's never been done before, and the benefits for the travel community are hard to overstate”.
He continues to say that one of the benefits of open-source technology is that it creates a vibrant community that is all working creatively to improve the industry as a whole.
Value of blockchain in the holiday rental industry
The adoption of blockchain in holiday rentals can transform the industry by empowering users to own their data and digital assets.
Building decentralised booking platforms
All the digital information on today’s internet (known as Web2) is stored on servers. These servers are controlled by large corporations - in the holiday rental industry, they are OTAs like Airbnb and Booking.com.
Using blockchain technology, data no longer needs to be stored by large corporations on servers. Instead, your data can be stored online in a decentralised manner; this is how Web3 works.
Trips Community, for example, has a vision to create a ‘decentralised OTA’ on the blockchain, made up of a set of open protocols that power bookings, messaging, payments, reviews and everything else that OTAs do today.
“Your listings, reviews and bookings won’t sit in the OTA’s servers anymore. They will be on the blockchain and IPFS (The InterPlanetary File System) and you have control over them, not the OTAs,” says Luca De Giglio, founder of Trips Community.
The most evident benefits of this is it’s cheaper and a decentralised and peer-to-peer rental platform isn’t governed by OTA commissions. But according to Luca, the real benefit is that ‘companies will own their digital assets’.
Of course, this doesn’t mean that Web2 will disappear and everyone will store data on Web3. The two can co-exist. “Every single company in the space will choose whether to run their business on the old internet or the new one,” Luca explains.
Using cryptocurrencies as a form of payment
Another way that blockchain is transforming holiday rentals is the utilisation of cryptocurrencies as a form of payment. Cryptocurrencies are now a widely accepted digital assets across the world. They have lower processing fees than traditional currencies and make fast, secure and traceable payments possible.
According to Vipin Mahasayan, CIO at EzyStayz, cryptocurrencies represent the core principles of blockchain - power to people, trust and transparency - by rewarding various peers in the blockchain ecosystem.
“The global crypto market cap is $373.34B and this can factor to a huge market share for utility and purchase of travel services where crypto can be accepted as a form of payment,” Vipin says.
Improving loyalty programmes with tokenisation
Tokens serve as a form of payment and also have the opportunity to improve and expand loyalty and reward programmes.
“By tokenising reward programmes and transforming them into a decentralised network of value, loyalty programs could become what customers really want them to be. Firstly, they could expose a range of products and services from different providers. Secondly, rewards could be easily exchanged if points are tokenised into digital assets,” Vipin says.
As a result, customers would be able to compare the relative value of schemes and the rewards they offer and make their choices accordingly.
Increasing data privacy and security
Blockchain technology allows for a level of privacy and security that isn’t possible on traditional platforms.
“Blockchain technology provides the ability to protect data from malicious attackers, preventing potential fraud and reducing the chance of data being stolen or compromised,” says Vipin.
By accepting cryptocurrencies such as Bitcoin or Ethereum, booking sites built on blockchain can provide safe and transparent payment options.
For example, the EzyStayz blockchain system uses a highly secure multi-signature digital wallet capable of storing a variety of cryptocurrencies. This means that EzyStayz users can make secure crypto payments without the need for debit cards or bank accounts.
Blockchain-enabled holiday rental businesses
There are various holiday rental booking sites that use blockchain technology to provide an alternative way of booking and paying for travel accommodation as the ones we mentioned above (Trips Community, EzyStayz and Winding Tree).
Further examples of companies like LockTrip and Travala have developed blockchain-powered booking platforms that allow guests to directly book rooms from accommodation providers. This way OTAs don’t dominate and costs are cut for the provider and guests.
Companies like KeyoCoin also use cryptocurrency rewards as an incentive to attract customers to book through their mobile app instead of an OTA. There is a plethora of other holiday rental companies who are early adopters of blockchain technology.
Blockchain and cryptocurrency allows for ease of transactions (transfer of monies) and creates transparency in transactions. The self-sufficiency of blockchain eliminates the middleman, further cutting costs. The tokenisation system allows for a ‘reward’ system that fuels the ecosystem.
The current limitations of blockchain are accessibility of cryptocurrency, including the ability to get on exchanges with ease, the question of where to store one’s currency, and the market instability of the currency itself.
The significant volume of held cryptocurrencies of the largest publicly traded companies, such as Square Inc. (mobile payment) and MicroStrategy Inc. (business intelligence, mobile software, cloud-based services), in the world indicates that there is a huge movement of companies towards alternative payments/investments. This trend cannot be ignored.
As Maksim says: “Just like any new technology, there is a learning curve with blockchain. It is not rocket science, the tech is pretty easy to understand, but changing the technologies that you work with could be hard”.
As accessibility and knowledge become more commonplace, the role of blockchain will expand to become a more trusted and common way to run business in the future.
*James Burrows is the CEO and co-founder of Rentals United, a global enterprise channel manager for the holiday rental world. He currently resides in Barcelona.