Guest Post: Why blockchain is not going to wipe out OTAs

Guest Post: Why blockchain is not going to wipe out OTAs

Vinod Kelwani, chief executive of Technoheaven, says online travel retailers have nothing to fear from decentralised marketplaces and, in fact, have the scale and technological knowhow to profit from them

When you evaluate the basis for a decentralised hospitality market, as a travel agent or OTA, when the subject is raised you’d be forgiven for telling most people to go and wash their mouth out. 

Anything that could potentially cut you out of the supply chain is an absolute non-starter and should be stamped out immediately. On the flip side, for a hotelier and their paying guests it all makes perfect sense. But the reality is far less black and white.

Blockchain technology forms the foundation for a decentralised platform that connects consumers to hotels without requiring large commission fees. Tech companies that provide blockchain solutions can save consumers as much as 50% on traditional booking fees. 

This is no small beer and hotels are seeing the benefits of blockchain platforms on a global scale. Tui has been using the system to swap beds across its properties, moving 100 million beds nights to its private blockchain to wherever there is higher demand. 

We are seeing more hotels using our own system with reservation systems, payment processing, and data sharing for direct transactions with customers.  The software enables real-time transactions with no middleman fees. 

Blockchain technology has been making steady progress in the last few years. Hotels can publish and modify listings for their rooms, lock down deposits for future disputes and refunds and take direct payments. 

Customers can find and book rooms and if there are any disputes an independent arbiter can step in to resolve the issue.  

But this does not mean that OTAs will struggle to find their role in a decentralised market or are going to be squeezed out with smaller margins and less bookings. Far from it.

As someone who’s been involved in travel technology for a long time I’ve seen the hype and many panel debates on the future of OTAs. I’ve seen tech come and go and new innovations supposedly marking the end of this key part of the travel ecosystem. 

But OTAs are still here. Blockchain technology enables buyers to execute a transaction without the need for a trusted bank, credit card or clearing house but it's not always trust that attracts buyers to OTAs. 

They choose them because they offer a choice. They offer content and relevant search results in an efficient way and greater user experience with clear messaging. 

OTAs spend $billions acquiring customers through their marketing and ad spend and they maximise conversions by investing in technology and easy-to-use websites with options and pricing levels. 

Current centralised systems are equally engaged in the adaptation of blockchain technology. The 'big four' in the world of centralised booking platforms possess all elements needed for instantaneous and profitable implementation – financial recourses, sophisticated IT structures, global commercial networks, and vast international customer community.

OTAs might be faster in developing blockchain-based concepts to outperform any aspiring independent start-ups since OTAs have the capital, portfolio, and established infrastructure to switch technological concept.  

The current centralised system uses blockchain technology as an adjustment to eliminate new competitive threats. The world’s four major travel booking platforms have all the elements needed for instant and profitable implementation.  

Their competitive advantage will surpass any institution new to this industry at all levels.

There is still a long way to go but blockchain is not going to wipe out OTAs. It gives people a choice and it encourages competition and that’s not a dirty word.