Blockchain for Hotel Distribution Will Come Down to the Economics



Blockchain technology has started to permeate the travel ecosystem. Companies like German tour operator TUI have reportedly taken bold steps to migrate at least part of the company’s hotel data infrastructure onto a private blockchain. Whether we see wider-scale adoption of blockchain as a platform for distribution will depend on direct and indirect switching costs from existing systems.

For instance, development teams and administrators will need to retool with new coding skills to build and manage decentralized applications. Talent acquisition could prove challenging as blockchain tech competes for high performers who could earn more working with existing languages and protocols.

Nevertheless, the hotel industry is screaming for alternatives to the status quo in distribution.  Blockchain could be one answer to reducing the total cost of doing business.

The bigger opportunity for blockchain platforms could be with the independent pool of global hotel properties. On the whole, this segment is much more dependent on third parties for distribution and also tends to pay a commission premium, due to a lack of bargaining power.

On the high end, independent properties pay as much as 25 percent commission on an online travel agency booking.

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