The travel industry’s next “mini-bar moment” will come from blockchain

keyocoin (25)in #online • 6 years ago (edited)

The year is 1974, David Bowie is playing on the radio, pocket calculators have started appearing in the shops, and the world population has just hit 4 billion, half the number it is today.

Over the preceding decade the hotel industry has been incrementally improving in-room amenities for guests. Miniature shampoos, lotions, and mouthwashes have started appearing in bathrooms, and five years after first emerging, 24 hour room service is beginning to become the norm.

It’s in this year that the Hong Kong Hilton decides to go out on a limb, installing liquor-stocked mini-bars in each of its 840 rooms. The plan is a simple one, put their most profitable products in front of their guest’s noses, right when they’re wanted (or needed) most, and consumption will increase.

The strategy was an overnight success. In-room drink sales skyrocketed by 500%, and the company’s overall revenue jumped by 5%.

Love them or hate them, hotel mini-bars quickly spread, becoming a reliable companion for weary travelers in the years that followed. Even though an explosion in convenience stores and spiralling management costs subsequently decimated the economic case for many hotels to offer them, in their time, they were something of a retail phenomenon.

The science of their success is fairly straightforward. Put food or drink easily within reach, and people will consume more than if kept out of sight. The same rule applies for today’s search engines. When was the last time you clicked through to the third page of Google’s search results before pouncing on the top (probably sponsored) answer?

The fact is, we’re suckers for convenience, a simple behavioural trait that combined with the recent digital revolution has fuelled the meteoric rise in e-commerce over the past two decades. The industry has grown by 14% year-over-year since 2010, while much-loved brick and mortar stores have closed down left, right and center as people choose to shop online and spare themselves the effort of a trip to the high street.

But while many industries have done well to capitalize on this new retail channel, not all have been able to keep up. Tourism is one such industry. Yes, flight, hotel, and car booking services have successfully ridden the e-commerce wave, especially the travel agents and global providers with sufficient scale to adapt to the times, but the vast majority of independent travel businesses, particularly tour, activity and local experience providers, remain digitally in the dark.

Even today, in 2018, more than 80% of tours and activities are still sold offline. This fact is somewhat explained by the impulse nature of tourism activities, but this is really only half of the story. The reality is that most small to medium sized businesses in this space have simply not yet put their services online. Fewer than 2 in 5 accept bookings online (either directly or through an online travel agent), and 1 in 5 have no website of their own at all.

It’s amazing to think that 20 years after the web reached mainstream adoption, it has yet to resonate with huge parts of the retail world, especially when over 75% of travelers list their mobile as one of their top 5 accessories, but there are some compelling reasons why this is the case.

Online Travel Agencies (OTA’s), for their part, have played a significant role in bringing travel experiences online, but they have fallen short of creating a universal online travel marketplace for tours and activities. With commission charges as high as 30%, and a tendency to withhold customer data from the actual service providers, registering on an OTA is a high price to pay for an uptick in bookings, especially when margins are already so tight.

For the vast majority of providers, stuck between the high cost of using a third party, and the specialist skills required to launch and market their own website, let alone app, most have decided to stick with traditional print marketing and point of sale tactics.

However, for the millions of independent travel businesses that find themselves in this position, there is a new alternative, made possible by emerging blockchain technology.

For the past year and a half, we at KeyoCoin have been building a new kind of mobile app, called KeyoPass, for travel, hospitality and local experience providers. One that is free to join, and charges close to zero commission for bookings made through the app. So far we’ve built an inventory of over 12,000 travel products, in four US markets and six Latin American countries, allowing consumers to discover the best a city has to offer and book it directly through the app, wherever they are, without paying a premium just because they booked through an OTA that spends millions on marketing their own platform every year.

By cutting out the centralized operating systems relied on by OTA’s, and giving providers a low cost customizable shop-front for their services, we can virtually eliminate middlemen commissions and help foster direct relationships and bookings between travel providers and their customers.

In the same way as the mini-bar used product positioning to turn latent demand into direct sales, KeyoPass is giving providers a location-sensitive on-demand mobile solution, that puts tour and activity providers’ services in the hands of customers when they need it most. Democratizing the marketplace, and giving the little guy access to the same opportunities as the giants.

The blockchain is a critical part of this infrastructure, because it profoundly enhances the scalability of our solution. The technology relies on a distributed ledger (an immutable public database where nothing can be deleted or changed, only added to) which enables providers to list and market services, confirm bookings, receive payment, all without the need for labour intensive processes, marketing overheads, or credit card charges.

What’s more, through our blockchain-based universal travel rewards platform, we can actually help these businesses generate more revenue by incentivizing customers to perform actions that ultimately make them more money, whether that’s through purchase volume, submitting reviews, social media recommendations, or just visiting their nearest tourist attraction.

With the introduction of KeyoCoin, our universal travel rewards token, providers and travelers can not only eliminate payment barriers, but also engage in a loyalty and rewards ecosystem free from borders, expiry dates, and other limitations piled on by multinational players.

In building the KeyoCoin marketplace, we have found that tour and activity providers share our common vision of making travel more rewarding, and would much rather deliver more value to their end customer than pay a high-commission to a middleman.

It seems like a simple ask. Mom and pop providers want a commission-free booking platform that is simple to use, and puts them in front of potential customers when they are actively looking for things to do in their area. Thanks to blockchain technology we are on the cusp of realising that dream, and with one of the fastest growing marketplaces in travel - the independent travel industry is listening.

UPDATE: Sarah Dandashy, our Head of Hospitality and Tourism, adds her thoughts on how blockchain could be the catalyst that the tourism industry needs.