Perhaps you remember the days of going in person to a brick and mortar travel agent’s office, having them advise you of available flight itineraries, and looking through catalogs to choose a hotel. If you do remember this then you know how radically the travel industry has changed in recent years. The internet changed the playing field with the emergence of aggregator websites that allow travellers to book flights and hotels themselves with just a few clicks, eliminating almost all physical travel agencies around the world in the process. Now, however, the travel industry is set to be disrupted again by a new blockchain technology.
The Problem with OnlineTravel Agencies (OTAs)
Despite the existence of online discount travel aggregator platforms like Travelocity, Priceline, Booking.com, and Expedia, unnecessary costs continue to be passed onto travellers by way of bloated profit margins and various hidden fees. This is caused by the fact that over the years these major companies have managed to build monopolies over online travel booking. The result is that small hotels and airline companies tend to lose out over larger companies and the end customer pays extra for less choice. Another way of describing these monopolies is that say that the online travel industry is centralized, which has lead to higher prices.
A Solution to OTA Monopolies
Blockchain technology has the potential to effectively cut out the centralized middleman in the online travel booking industry with its peer-to-peer capability, and thereby disrupt steep corporate profit margins. A blockchain-based system can perform all of the functions that companies like Expedia currently do. It can link airlines and hotels directly to potential customers, without the need for a separate centralized website. Since blockchain technology is capable of verifying customer identity, the use of smart contracts can ensure that agreements are upheld by all parties and that the full value of a transaction is transferred. No chain of intermediaries is needed for this process, just a simple, secure transfer of funds between a buyer and seller with no additional costs.
An Example: Traveler.com
One example of a project that is hoping to use blockchain technology to destroy the monopoly of online travel agencies is Traveler.com, which describes itself as a consumer facing crypto-friendly discount travel aggregation platform. Traveler claims it can offer lower prices on travel products and services to consumers than traditional OTAs through the efficiency of blockchain technology combined with an internal real-time crypto to fiat exchange and use of the Traveler utility token (TVLR). By accepting cryptocurrency and allowing for the use of its own TVLR token, Traveler will be the first online travel platform optimized to accept cryptocurrency for hotel bookings, flights, car rentals and other travel services with zero profit margin added to the prices customers pay on current online travel agencies. The savings for customers are estimated to range from 15% to 50%.
The proceeds from the TVLR token sales will support the development of a new blockchain suited to the travel industry, sold as a SaaS (Software as a Service) to travel industry customers. Buyers of the TVLR Token will effectively be buying travel at the lowest prices negotiated by wholesale buyers around the world. The proceeds from the token generation event will allow The Traveler blockchain will also expand the supplier and reseller base, bringing further value to TVLR tokens.
There is great potential for blockchain technology to disrupt the global travel industry. Traveler.com is just one of several new start-ups that are aiming to do this in different ways. Traveler is interesting however because it plans to use an internal crypto-fiat exchange system to let users to pay for travel with either cryptocurrencies or fiat. Part of its business model is the assumption that crypto users will flock to use such a platform. The people behind Traveler could be right but considering that there is still a long way to go before mass adoption of cryptocurrencies become a reality, it is also a risky presumption.
Full disclosure: I do not own TVLR tokens and I have not participated in the TVLR ICO. This article is not intended as investment advice. It is just my personal opinion about Buddy. You should always do your own research. Frauswif.
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Will Blockchain Technology Destroy the Monopoly of Online Travel Agencies? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.