Interested to learn more about how blockchain is making moves in the travel industry?

Since the introduction of Bitcoin in 2008, blockchain technology has attracted trillions in investment and disrupted the finance, digital asset, and gaming industries, to name but a few. However, when it comes to the travel industry in particular, we haven’t even scratched the surface of the potential of blockchain technology.  

We’ve been watching with interest as the rise of cryptocurrency has continued to change the way companies do business. From payments to investments and even art, crypto and blockchain are playing an increasingly important role in the lives of many of our guests and partners.

In this post, we look at five ways that blockchain technology could benefit the travel industry.

What Is Blockchain?

Before we dive into how blockchain technology can benefit the travel industry, let’s establish what blockchain actually is. Blockchain, in simple terms, is a type of data structure. In fact, a blockchain is similar to a database, only its data is arranged in blocks instead of tables.

Blockchains are often mentioned alongside cryptocurrencies because they’re used to store a cryptocurrency’s ledger: which contains all transactions made in a cryptocurrency and the amount held by each user.

Blockchains have four characteristics that make them ideal for storing a cryptocurrency’s ledger:

Now that we’re clear on what blockchains are, let’s take a look at the advantages they offer the travel industry.   

Booking and Customer Information Management  

The first way that blockchain technology could change the travel industry is in the area of bookings and data management.

Companies within the travel industry, such as booking sites, travel agents, airlines, hotels, tour operators, etc, consistently pass booking information and customer details between each other. 

However, between companies using different systems and simple human error, booking information can be entered incorrectly – or just lost altogether.

Storing booking information on a blockchain makes it easier for companies to both access and share information. Plus, the data is immutable so it can’t be altered or deleted – accidentally or otherwise. Best of all, because blockchains are decentralised, information is shared across the whole network; there’s no single failure point of failure. This protects all parties from internet or power outages, hardware failure, cyber-attacks, or anything else that prevents access to booking information.

A notable example of where blockchain technology could be especially helpful is tracking luggage. A customer’s luggage can change hands several times during a journey, especially on international flights. Consequently, it’s pretty common for airlines to temporarily misplace a customer’s baggage – and if this has ever happened to you, you know how much it can put a dampener on the start of your trip! Tracking luggage on a blockchain allows each company involved in the passenger’s journey to ensure their belongings arrive at the intended destination – on time.

Cross-border Payments

Another way that blockchains can benefit the travel industry is by making it easier to conduct international transactions. As well as passing information to each other, travel companies constantly exchange money when making customer bookings. However, because transactions are made in different currencies and processed by different banks, settling payments can take days.

If, on the other hand, the entire travel industry decided to introduce a single cryptocurrency as a method of payment, cross-border payments would be significantly easier. Companies, no matter where they were based, could pay each other directly – without the need for a middle man like a bank. This would allow them to confirm payments, and bookings, in minutes instead of days. Also, with no middle man charging transaction fees, companies would only pay blockchain transaction fees, which are considerably cheaper.

Customer Loyalty Plans

Blockchains and cryptocurrencies also give travel companies the chance to make their customer loyalty plans more appealing and effective.  Instead of offering customers reward points, innovative companies can develop their own cryptocurrency, or “coin”, and award those to their customers.

Offering a coin instead of points offers several advantages. First, it puts the customer, instead of the company, in charge of their points. As well as cashing in their coins for upgrades or discounts, customers could trade them amongst themselves. This allows companies to create communities around their coin – which could extend out into the wider crypto community, increasing their brand awareness.

An excellent example of this is FLOAT Alaska, which operates airlines Ravn Alaska and Northern Pacific Airways, launching a cryptocurrency reward programme: FlyCoin. Customers who fly with either airline will be able to spend the coin on upgrades and free flights, sell it to other customers for cash, and more.

Digital Identification

Blockchains could also revolutionise digital identification within the travel industry. Verifying a person’s identity is vital at every stage of their journey, from making bookings to returning to their home country at the end of a trip. Blockchain technology could streamline the identification process, reducing check-in times, queues at immigration, and so on.

One particular aspect of blockchain technology that could bring about this change is NFTs. An NFT stands for Non-Fungible Token and is a special kind of cryptocurrency. Whereas cryptocurrencies like Bitcoin are fungible, which means any two bitcoins are identical and worth the same, each NFT is unique – a 1 of 1 cryptocurrency.

 This makes NFTs perfect for making unique digital assets, as their uniqueness and ownership can be proven by the blockchain it’s stored on. Now, while NFTs are presently used for creating digital collectables and art, they could also be used to create digital IDs. It’s not outlandish to imagine, for example, that our passports could take the form of NFTs in the near future. Not only would it make it easier for authorities to issue passports to applicants but it would make them harder to lose or steal.

The Metaverse

Although it’s 5, or even 10, years from being fully realised, the Metaverse holds enormous potential for the travel industry. For example, the Metaverse will allow the owners of hotels and other tourist accommodations to develop virtual recreations of their property. So, whether you’re looking to book a suite in the Far East or a short-term rental in West London, you’ll be able to walk around it in the Metaverse first – and then book it right there on the spot!

Take a look at our West London short-term rentals or read our guides for activities to enjoy in the area. 

Alternatively, customers could use NFTs acquired in the Metaverse to claim discounts – or even unlock exclusive experiences – at real-life destinations. Subsequently, travel companies can use the Metaverse to kick off a customer’s holiday before they even leave their home.

To bring us in line with the blockchain world, we’ve been looking to onboard several crypto payment methods. Crypto solutions have the potential to empower the unbanked in developing countries, reduce transaction times to mere seconds, and slash excessive processing fees. We’ll then be able to pass those savings to our guests and put more money back into our properties and technologies.

We’re also in conversation with several blockchain OTAs and hope that in 2022 we can land long-term partnerships that will help us further reduce costs and increase efficiency.

A further point of interest for Nestor is blockchain’s potential for increased transparency and verification in the supply chain. We’ll use this year to explore how smart contracts can help us improve quality control, ensure contract compliance, and even potentially empower our guests to check the origins of our in-house supplies.

To take advantage of our best rates, book directly on our site.

Cryptocurrencies and other blockchain technology may be some way off from achieving mainstream acceptance but that doesn’t mean that day will never arrive. In the early days of the internet, it was also hard to envision the internet becoming anything more than a niche tool. Most people wouldn’t have dreamed of purchasing something from the internet – let alone being able to order food with a few taps on their phone.

Similarly, ideas like blockchain baggage tracking, NFT passports, and the Metaverse being commonplace can seem a little far-fetched right now. As blockchain technology progresses, however, and more people become increasingly comfortable with cryptocurrencies, a travel industry powered by blockchain becomes more of a reality.