October 2018, Las Vegas
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Is blockchain the golden ticket for tours and activities?
Travelport’s chief architect thinks it has potential. Pamela Whitby finds out why
“Blockchain is no more than a database so get over it,” says Mike Croucher, a travel industry veteran and the chief architect at Travelport.
That is not to say, however, that Croucher, who has 34 years experience in IT in travel, including as head honcho of IT at British Airways, as well as in various roles at Galileo and Scandinavian Airlines, is not interested in the potential for blockchain.
It’s just that he doesn’t buy into using a public blockchain to replace a decentralised database. “The computing power for the number of transactions just isn’t there yet, which is why you see large blockchain miners moving to Canada to get cheaper power,” he says.
So, what does the man, who has worked through three decades of “significant change” in the travel industry, see as the future for a much-hyped technology?
“What becomes interesting is when you start to consider how you apply technology [like blockchain] to a business problem,” Croucher says.
What becomes interesting is when you start to consider how you apply technology [like blockchain] to a business problem
That requires looking at travel, which has traditionally been very siloed, with each supplier wanting to own the end customer in a different way. Because today it is clear that the customer no longer wants to be siloed; they want choice and they want more cohesiveness with respect to all elements of their trip. This explains why all big players in the travel space, including Travelport, are looking to capture more of the traveller journey – to deliver an end-to-end as opposed to an individual experience.
“The world is changing from a system of record - from who owns the booking, and what processes you put around the booking - to systems of intelligence,” says Croucher.
All this feeds into what Travelport refers to as ‘systems of engagement’, which raise the question: how do you intelligently manage the traveller in trip, in destination and throughout the journey? “In other words, I don’t want to have to leave where I am to go and consume your content. If I am in Facebook, Instagram, a salesman in salesforce.com, or an executive in Office booking a meeting, then I want to book and manage my travel from that ‘system of engagement’. I don’t’ want to break out of a website to do a Google search,” he says.
Tapping tours and activities
It was in attempting to solve this problem that piqued Travelport’s interest in the potential for blockchain, and specifically how it could be applied to the fast growing and increasingly coveted market for tours and activities.
Think about it. In destination you can find everything from Segway tours to skydiving lessons, cookery classes, movie-themed city walkabouts, and the list goes on. While that may seem like a huge opportunity for a global distribution system like Travelport it’s not that simple.
“Uploading that content, managing it, billing for it, taking the commissions out of it, sorting out back office process, proving the activity actually exists… just becomes way too expensive to make it worthwhile because the volumes aren’t there,” says Croucher.
Enter blockchain. “What we saw on a blockchain distributing ledger was that we could actually distribute those ledgers to very small companies. We could have a concept that would allow something like a tourist board to endorse that as a valid existing ‘thing’ and we could use smart contracts to implement it,” Croucher says.
What we saw on a blockchain distributing ledger was that we could actually distribute those ledgers to very small companies
He continues: “In other words, when it is booked, the commission, the distribution costs and so on are all stripped out and handled automatically to a smart contract. The individual can upload, set up and self manage the contract.”
Eureka! The result is nearly zero on-boarding costs, nearly zero billing settlement costs, and complete transparency of the transaction within the blockchain for audit purposes. “That means you can open up a whole list of long-tail content for a very different price point than we have seen before,” he says.
Among the segments that Travelport has been exploring are the opportunity for cruises and tourist boards. “Why wouldn’t you put that into Tourist Britain or sell to tourist boards? The concept being that you take 20 of these and join them on the same blockchain and now you are talking about a more significant global distribution capability.”
It is this type of use case that Croucher finds exciting and blockchains ability to:
- Store and manage data in distributed inventory
- Ensure transparency of transactions, a tracking mechanism and reduction in the cost of manual processing (which happens to be an on-going challenge for tours and activities).
Building the ecosystem
So how far is Travelport down the line with implementing its version of and vision for blockchain?
According to Croucher, they have already completed a ‘garage workshop’ with IBM to consider a proof of concept. That proved successful and achieved buy-in from customers at various industry events. “The feedback has been that they are interested in us doing it or investing with us to take it forward,” says Croucher.
The next step will be to secure funding to move the concept to the minimal viable product (MVP) stage. “We are in process of considering whether do we do it alone, or whether we partner,” he says.
You really want multiple people in the ecosystem
The team has also considered other working models, like the one being implemented by one of Travelport’s customers WebJet, which is using blockchain for hotel bill settlement using smart contracts.
Although the business can drive it forward alone to a point, “you really want multiple people in the ecosystem, so we are looking how to move that forward”.
One thing Croucher has learnt about blockchain is that ecosystems are good. In an industry where the status quo has been to protect and defend one’s turf, there is more “significant change” ahead.