The benefits of blockchain in the travel industry

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Blockchain technology advocates say it is poised to disrupt numerous industries, from finance to supply chain tracking to real estate. Blockchain promises to drastically change the way data is stored and used, and improve the transparency and security of transactions.

For these reasons, several industries have started experimenting with the technology, and one of the most exciting segments is the travel industry, where it could be potentially transformative in many areas.

First a short explanation. Although blockchain seems complicated, it is a fairly simple concept. It is essentially just a ledger hosted across multiple public nodes used to store transaction records. Each of these transactions is stored in a cryptographically secured “block”.

Because blockchain records are stored on many computers, the data is considered decentralized. Each block contains both transaction information and a timestamp, and they are stored on all nodes that make up the network. This way, blockchain records cannot be changed across the network without consent, a design that makes it almost impossible for anyone to make changes unnoticed.

Since the blockchain originated in Bitcoin, the world’s first cryptocurrency, in 2009, many people assume that the technology only has practical applications in the financial and related industries. But the truth is, distributed databases can offer benefits across many different industries.

Some examples are advertising, which can be used to prevent fraud by providing transparency into ad impressions. Other use cases are elections, which can form the basis for a transparent, open online voting system.

Additionally, the traceability benefits of blockchain could be used to verify the authenticity of things like educational certificates, qualifications and licenses, which can be recorded in a distributed ledger and made immutable. Because of this, blockchain could eliminate the need for educational institutions to fully authorize credentials.

How blockchain is benefiting the travel industry

There are many reasons why the travel industry might consider adopting blockchain. The industry particularly relies on the collaboration of multiple players in the industry such as travel agencies, airlines and hotels all sharing information with each other. For example, travel agencies need to share their customers’ information with hotels and airlines.

Meanwhile, these customers’ personal belongings may also be passed from one organization to another. Blockchain can potentially make this information easier to access and store, and the data would be more reliable due to its immutable properties.

Financial transactions also play a big role in the travel industry, and blockchain’s ability to simplify and secure payments is well known. After all, payments were the first major use case of blockchain (think Bitcoin). This is especially helpful for international payments, as cryptocurrency knows no borders.

Such benefits become all the more compelling given the size of the travel industry. According to Statista, the combined travel industry contributed to this more than $9 trillion on the global economy in 2019. Although the COVID-19 pandemic severely impacted travel in 2020 and 2021, the sector still generated $4.7 trillion and $5.8 trillion in those years, respectively.

The travel industry is also made up of several sectors, including transportation (airlines, car rental and public transport), accommodation (hotels, Airbnb, hostels, cruises, etc.), food and beverages (including restaurants, bars and cafes). ,) and entertainment (such as theater, shopping, nightlife, etc.). Each of these segments is a multi-billion dollar industry in its own right, and there are many ways to apply blockchain technology to all of them.

While the travel industry has been hit hard by the global coronavirus pandemic, the sector has made a strong recovery since the world began reopening. According to the United Nations World Travel Organization, the number of international tourist arrivals worldwide in January 2022 increased by 130% compared to last year, with the 18 million additional visitors recorded this month equaling the overall increase for all of 2021.

After being trapped indoors for almost two years, it’s clear people are dying to get outside and exploring, and 2022 is shaping up to be one of the best years ever for international travel as a result.

With that in mind, it’s worth exploring some of the more exciting ways in which blockchain can potentially be used to improve efficiency and transparency in one of the world’s fastest growing industries.

New possibilities with blockchain interoperability

One of the most relevant blockchains for the travel industry is flare networkwhich has developed a unique protocol known as State Connector which allows to connect to any type of network including other blockchains and also public APIs.

flares status connector was developed to solve problems around blockchain interoperability. Those familiar with how the technology works understand that there are multiple blockchains in the world – such as Bitcoin, Ethereum, Avalanche, Binance, Solana, and so on – all of which work independently and cannot communicate with each other due to technological incompatibilities.

Additionally, blockchains also have no way of communicating with non-blockchain systems like traditional databases and APIs.

The State Connector changes that, providing a trusted way for a blockchain to read the status of transactions on another chain or system. So not only does it allow information to be passed from one blockchain to another, but it also allows blockchains to access other, real-world data sources in a decentralized manner.

In short, the State Connector is a smart contract that allows decentralized, blockchain-based applications to query information from outside the network they are running on. This is accomplished through a network of independent authentication providers who have an incentive to collect and verify the requested information before it is submitted to the Flare network. The State Connector ensures that enough of these independent attestors agree that the information is correct and then publishes it on the network.

For example, the State Connector can check whether a deposit has been made on another blockchain. So if someone pays for their plane ticket with bitcoin, it can notify an application on Flare or another network once the payment has been confirmed.

The State Connector can also support other types of dApps that react to real-world events, such as B. traditional bank transfers, the results of sporting events, home purchases, educational degrees, insurance claims or anything else that could be accessed via an API.

This has many potentially transformative implications for the travel industry. A hotel or Airbnb could start managing their bookings via the blockchain. Currently, when a traveler books a hotel through an aggregator site like Booking.com or Expedia.com, a significant portion (between 10% and 25%) of the price goes to commissions and other overheads. With blockchain, hoteliers will be able to cut out the middle man, meaning no commissions and cheaper prices for travelers (or more profit for the hotel).

Flare’s State Connector can be used to enable dynamic pricing to maximize efficiency. Most hotels typically change their rates based on demand and availability, using complex APIs and third-party providers. Hotels can simplify this by using the State Connector to connect to their website’s API to pull relevant pricing data at a lower cost.

The situation is similar with the airline industry, where flight bookings are often made through third-party providers such as e.g sky scanner. Again, airline prices tend to be dynamic, with tickets costing more at peak travel times and less when fewer people are traveling. Flare’s State Connector allows airlines to sell airline tickets via dApps that connect to real-world pricing systems via APIs.

There are even greater possibilities if we combine blockchain with related technologies like non-fungible tokens. For example, NFTs, as they are called, can be used to represent each passenger on a cruise ship. They could install an app on their smartphone when they board a ship that includes a wallet and NFT utility.

The cruise operator can then use this app to create various real-world related games and activities that passengers can use to earn points during their voyage. Points would be distributed via an API powered by the State Connector. Those who reach a certain number of points can receive prizes and benefits such as For example, a free dinner at a restaurant or a massage. These points would be linked to the passenger’s NFT for verification purposes.

A winning combination

Blockchain technology and the travel industry promise a winning combination. It has the potential to put forward-thinking travel service providers at the forefront of innovation while allowing them to build more trust with their customers through lower costs and more efficient systems.

One of the biggest challenges in adopting blockchain is the lack of standardization. Using multiple blockchain networks can be a major headache for an industry that relies heavily on data sharing. This is where innovations like Flare’s State Connector can pave the way forward, providing an easy way for blockchains and other systems to communicate with high trust and transparency.

Blockchain will have so many positive implications that its implementation in the travel industry is undoubtedly only a matter of time. Industry participants will benefit from lower costs and more efficient systems, but the real winners will be travelers as blockchain enables a safer and more trusted way to travel.

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