Have blockchain technology and blockchain businesses promising to transform travel been overhyped?
David Brillembourg, CEO of the Brillembourg Group, which has launched STEP, a simple travel ecosystem protocol for the hotel business, reckons that than 95% of the blockchain businesses around today will not survive, a view echoed by recent findings from data analyst GlobalData.
However, Joerg Esser, a theoretical physicist, consultant with Roland Berger consultant and former Thomas Cook executive, who presented a blockchain workshop at EyeforTravel Europe last week put it like this:
“It is very fair to say there are some very mature [blockchain] topics, but there is also a lot of hype.”
While Esser acknowledges that as many as 95% of blockchains around today could fail, many projects are already delivering value in supply chain management and other business processes. These ‘private blockchains’, like that of Thomas Cook and WebJet – where the two companies agreed to share bookable room inventory – are fully mature and are being widely used by numerous organisations.
In cases like this, Esser explains, “nothing changes except the two companies share a database with a certain governance in it”.
On the other hand, ‘public blockchains’, those that underpin currencies like bitcoin, and Winding Tree’s open source, decentralised platform for travel – are still works in progress. Developments here are likely to happen exponentially with the potential to fundamentally transform and challenge future business models. For this reason, Esser argues, it is “crucial to be proactive, and to develop an informed view”.
That too, however, seems work in progress. During the conference, numerous C-Level executives admitted to having their heads in the sand, and 89% of delegates polled during a focused blockchain workshop said they were unprepared for the changes that lie ahead.
Meanwhile, another poll revealed that executives were equally split (43% in each camp) on whether blockchain would be a key technology, or nice to have add-on for travel.
Brillembourg is one who has no doubt that blockchain will be a key technology. This, he argued, is being driven by the “unstoppable” behavioural change of millennials and Gen-Z’ers.
“Two billion people are playing video games and they are living virtual lives. For them it is completely natural to own tokens.”
Hospitality investment guru Brillembourg has been focusing his attention on how the phenomenon of blockchain and crypto-economics impacts the travel industry. In doing so, he has come up with a multi-token ecosystem, which he believes will solve the three different issues facing the hotel industry.
The first token is a mechanism for reservations, and the idea is that anybody will able to use it, including the OTAs. However, Brillembourg argues that for a coin to be transactional it needs to be a stable, global currency for hotel reservations that consumers and the hotel industry alike can use. Instead of being speculative like the coins or tokens issued today, it will be backed by room inventory. If there is no inventory, then there can be no coin.
The second token in the STEP ecosystem will be to finance the platform. “We are creating an equity token for the platform itself,” Brillembourg explains, and any interested parties, which could include OTAs, are welcome to own part of platform.
The third token will be for the securitisation of the actual real estate, the physical hotel asset.
According to Brillembourg, the three coins will interoperate, and anybody who wants to be involved in the hotel business can do so by owning the hotel, owning the room night or owning the platform.
Unlike Winding Tree, and many other hotel platforms with big goals to disintermediate the industry, Brillembourg’s view is that “blockchain is not a substitute for OTAs, it’s just an alternative distribution channel”.