Yes, there is a practical use case for blockchain – hotel commissions for agencies
August 16, 2019
In the travel industry companies come together. Whether you’re an agency or hotel or technology supporting both, we unite to make travelers’ experiences better by navigating and simplifying our complex industry for our customers. Through decades of experience, we have collectively developed significant levels of trust and established the processes that are in place today for hotels and travel management companies to effectively share information.
As a traveler, you might be unaware of the way our ecosystem works together behind the scenes each time you make a reservation, check into your hotel, or modify or cancel a room. The back-end processes and partnerships our industry has in place are designed that way - so that the experience for travelers is seamless, while we work together to simplify and resolve any issues that arise.
We’re at an interesting time in our industry, where we’re seeing how innovative technologies like blockchain can have a positive impact on the challenging processes that keep us – as an agency, management company or hotel – up at night. Again, we don’t want a traveler to be concerned with what goes on behind the scenes, but it’s how we simplify these complex processes that ultimately provides the seamless experiences travelers enjoy and companies appreciate. One of these back-end processes that is poised for innovation is hotel commission reconciliation.
For a TMC to receive commissions from a hotel booking and stay, the current processes are burdensome for both parties involved and, in some cases, pre-date the internet. Challenges include dealing with burdens of the existing process impacting the operational, financial, commercial sides of the business. Ultimately, these often lead to missed opportunities in hotel program management through missed payments, or inefficiencies and inaccuracies that bog down processes on both sides. In the end, the traveler experience and companies’ bottom lines are negatively impacted by everything taking place on the back-end.
Blockchain – a welcome disruptor
Luckily, the remedy we’re seeing lies within blockchain innovation – technology that behaves like an online ledger with the ability to collect data, build upon that data in real-time, and then independently and securely report information to any number of parties. Travelport and IBM, together with partners including BCD are working to add hotel commissions on a distributed ledger, so that complex commission processes can become accurately, transparently and quickly settled. While hotel commission settlements aren’t the most exciting part of the travel process, they’re crucial to ensure all parts of the chain of providers who work together to deliver a travel experience are duly compensated.
How does it work?
Often thought of for its cryptocurrency application, blockchain can significantly transform data management by facilitating smart contracts that make supplier agreements much more meaningful for both parties. We’re excited about the progress we’re seeing in prospects for hotel commissions settlements. BCD Travel recently published an article about this project collaboration, Can blockchain turn hotel program nightmares into sweet dreams? BCD Travel thinks so, where I explain: “Blockchain has the potential to provide real ROI with hotel commission settlements and benefits to corporate travel programs. With travelers having endless options for accommodations, a booking alone is not enough to provide a commission to an agency or TMC. With blockchain, we’re able to reduce costs and ease burdens for all parties involved by improving transparency, accuracy and efficiencies to enhance the process.”
Travelers’ experiences will be underpinned by blockchain-inspired technologies that provide the capability to link multiple content sources in the travel supply chain. For example, a traveler books a trip and then adds nights to their stay once they arrive at the hotel. An incident takes place in that city but reporting shows that the traveler checked out two days prior, when in fact they are still onsite and potentially in need of assistance. Blockchain technology would adjust the check-out date in real-time, providing the travel team with information they can use to provide support.
Travelport and IBM’s joint effort, “Commission Reconciliation Blockchain,” is currently working with BCD and collecting data from several major hotel brands who have signed-on to take the first step in an improved process tied with data clarity and timeliness. These early adapters will not only be able to execute more efficiently behind the scenes, they will also have a broad database of trusted information feeding learning systems that can further differentiate their value in the Travel Supply Chain – and for travelers.