Blockchain Pivot To Millennial-Style Hotels Is Game Plan For Entrepreneur’s New Venture

Innovation, Investing, News | June 15, 2018 By:

David Brillembourg has every attribute of a seasoned entrepreneur. He’s inventive, willing to take risks, insightful, and, perhaps most important, willing to change when he realizes change is needed.

Thus, what started out as a blockchain search engine that will determine the value of various digital goods has now pivoted to a new service that will focus on his core competancy – hotels. The chairman of Brillembourg Holdings, he saw that with his four children becoming full fledged millennials, consumption patterns of the millennial generation were going to fundamentally change the hospitality and technology industry.

From 2006 to 2016, Brillembourg Hospitality (Bricapital) has acquired, invested and exited hotel properties across six nations, including The Raleigh Hotel in South Beach, sold to SBE; the Isle de France Hotel in Saint Barths, sold to LVMH; Cap Juluca Hotel in Anguilla sold to Belmond Hotels, and One Bal Harbour Hotel, which was sold to individual investors. The existing hotel portfolio includes the Viceroy Hotel Zihuatanejo, Mexico.

Now, Brillembourg is launching The Loop Hotels, a new ventured-backed hospitality concept focusing on the needs of millennials for fully experiential travel and an integrated tech experience, that includes actions sports, e-sports and immersive experiences.

He talked with Block Tribune about the venture.

BLOCK TRIBUNE: You started out with quite different intents on the blockchain. Tell me about the pivot.

DAVID BRILLEMBOURG: Well I think the pivot was just, we took a year to really explore the technology based on all the possibilities of the technology. One of the things we did was just sort of figure out where it could go in terms of the different industries we understood. Some of them, obviously one of them was hospitality. Some of them were payments. We explored all of the angles, and then eventually realized that we wanted to go to our core competency, which was hotels and travel. And took all that knowledge that we had been working on for a few years, and put it all on the travel space.

It’s more of an evolution of understanding the possibilities, and then really evolving towards what we really felt we could really execute correctly and effectively with …

BLOCK TRIBUNE: How far along did you get in the first concept? Did you actually build a blockchain that allowed digital trades?

DAVID BRILLEMBOURG: Yeah. We built similar core basic technology on it early on and started deploying. But after we realized that it was a concept that basically, it would have been very hard to execute and get scale. We went back to the basics and we said, “What can we scale that we know well and where we have all our quality industry knowledge and contacts and pivot and travel space.”

BLOCK TRIBUNE: Did you issue any tokens on the first concept?

DAVID BRILLEMBOURG: No we didn’t.

BLOCK TRIBUNE: Okay. Right, tell me about the millennial hotels and explain the concept of that.

DAVID BRILLEMBOURG: So yeah, we’ve been looking at behavioral change in the, obviously millennial behavioral change and how that’s gonna change the travel industry in general, statistically the hotel space and how they, Millennials and digital natives, what we call now crypto-digital natives, and crypto-native travelers are going to experience this convergence of the crypto world with blockchain crypto with hotels. So obviously we have a different demographic, two billion people in the world are Millennials. They are experiencing, they’re more experiential oriented, they’re very digital oriented. They’ve all been trained as video gamers, they all have video games in their cell phones, and they already live in virtual world-they’re already accustomed to using virtual currencies in those video games, correct? So when we looked at that, we said they’re gonna be a big impact on the stage, and how are reservations gonna be made, how are our hotel rooms gonna be treated, eventually, and how people gonna want to do that. So we really dug deep into the possibilities of potential tokenization of the room night, and how the reservation systems are gonna work for the next generation, the demographic, millennial hotel.

So our conclusion, basically our thinking around it is the creation of a stable token that basically is backed by room reservations. But that hotel issues, that hotel backed by the room reservation, the room nights, and those room reservations are basically locked through a smart contract. We build the whole, basically now, we’re building the technology, we build the several patents around it, and several IP. We designed the whole technology around it, the stable token that we call STEP, which is a Simple Travel Ecosystem Protocol, which is basically a protocol that allows you to issue tokenized room nights, similar to, basically resecuritizing the room night, making it a possibility to be traded into the future, by both the hotel issuing the room night plus the traveler buying the coin and then locking the coin to a specific reservation, for a specific hotel on a specific night, for a specific price.

BLOCK TRIBUNE: Okay, so walk me through how that would work. Somebody decides they’re traveling to Rome, and they want to get a hotel room in one of your hotels. So they would order a token and then what happens?

DAVID BRILLEMBOURG: So the way it works, any hotel can use it, so it’s not necessarily our, specifically our hotels, it’s just any hotel brand in the world that wants to tokenize the room night and make it a financial asset, they can do that. So basically, what we’re taking is an asset, it’s highly a liquid, highly call it non-tradable, call it a room reservation, and we’re basically making that tokenized, correct? So we’re issuing a token that is backed by the overall reservations of the system and then that, so basically an individual, similar to what they do today with Expedia or Booking.com, they would go to an app, and that app, or to the site of the specific hotel, and say I wanna pay with a token. I wanna buy tokens. I wanna buy a STEP token, and I wanna lock this reservation for three room nights for two hotel rooms in, let’s say Paris or London or Cancun.

So that becomes then a specific smart contract tied to that hotel that issued the reservation and the hotel basically will become locked with a smart contract with the hotel. And that hotel’s smart contract is held by your wallet, so you now have your smart contract on your wallet, and you basically go to that hotel when you’re gonna check in, and you show that and basically you check in.

BLOCK TRIBUNE: What is the advantage of doing it that way versus just paying cash or with a credit card?

DAVID BRILLEMBOURG: Well there are three advantages. First, there’s an advantage in terms of the hotel … First, there’s advantage for the traveler, and there’s an advantage for the hotel. So for the hotel, they’re really, they’re creating a tool similar to what the timeshare companies, what they have been now doing for decades, which is the ability to predict and log the reservations more securely than what they do today with Expedia or Booking.com. 50% of reservations in the system today are canceled before the reservation gets done, so this allows the hotel to predict and to better sell their room [inaudible 00:06:49] yield management tool for the hotel so hotels can better predict their future cash flows.

The second thing is for the traveler. First it ties obviously existing, if they are already a coin holder for any coin, you can actually pay with coins. And third, it allows you to indicate that you end up not going to that specific reservation. Let’s say that you decide you’re doing an article and you’re in Orlando, you don’t have, you just bought two rooms for a week with your family in Orlando, and you decide something happens and you cannot go. Now that smart contract can be traded. Potentially, you could potentially sell that or give away that to anybody that you want and sell it for either obviously a profit or depending, you know, depending situation a loss. So it actually did erase … it makes your reservation a financial tradable apple.

BLOCK TRIBUNE: Okay, are you going to have incentives for token holders?

DAVID BRILLEMBOURG: Yes, yes, we’re working now in the system because it’s meant to be a stable token system, we’re gonna have our parable token that’s basically the platform token where all incentives are gonna be tied. Ultimately, the tokenization of room night works also … solves two additional problems, correct? It solves basically two unintended issues. So we went out to solve the actual tokenization issue to help hotels predict better their revenues, correct? But ultimately it also works for distribution mechanisms, so you can actually book, it works like a booking [inaudible 00:08:25].

It also works as a loyalty mechanism because obviously you have the issue of a coin can tie that reservation to any number of additional coins that you can issue the moment that reservation is. So lets say somebody wants to make a reservation 6 months in advance, you could then say, you know if you do it six months in advance and log this coin now, making my predictions on my revenue better, I’ll give you more tokens. So basically, they call it the bounties and the incentives are gonna be driven by the hotel reservation systems that are gonna say, give me a reservation a year in advance. I’m gonna give you a better incentive in coin wise, so I’ll give you a better discount, or I’ll give you additional tokens for you to use.

BLOCK TRIBUNE: Tell me about the Loop Hotels, and what your plans are for that.

DAVID BRILLEMBOURG: So Loop Hotels is a crypto-ready hotel brand that we basically designed for Millennials. It’s 100% focused on Millennials and crypto reservations. We’ve been building that brand over three years before actually we dog-dipped into the crypto space. The idea is that Millennials entertain themselves differently, so it’s driven by esports and immersive entertainment, like virtual reality. The brand is driven in terms of pricing for Millennials, it starts at 25 to 35 Euro. The brand … even though … obviously a family can go if your aspirational Millennial, with the younger kids. Action sports [inaudible 00:10:06]: skateboarding, surfing. And so STEP and Loop are basically interconnected in the sense that Loop is already ready to distribute all the rooms through the STEP system, and all the reservations can be done, we have all the technology to be able to basically book your rooms, basically, with any virtual currency.

BLOCK TRIBUNE: So these are blocks of rooms that are going to be within the existing properties, not standalone hotels?

DAVID BRILLEMBOURG: Obviously in the case of the Loop hotel and the pool hotel, it’s tokenized. But if you had a hotel, for example, that’s the beauty of the system is that, if you had an existing hotel, no matter what the brand is, you can potentially just tokenize 10, 15, 20%. And you can tokenize pieces of your room, you can tokenize types of rooms because yield management for hotels is very specific. The hotel owners try to maximize rates and occupancies. Ultimately, the hotel owner is gonna say, “The number of rooms that I wanna have – “.

What’s gonna happen is, if you look twenty years ago when the Internet started, basically the percentage pie of OTAs, Online Travel Agencies, into the distribution mix of hotels was zero, correct? Now, globally, it’s, in some cases, it’s up to 30%. So 30 or 40% of a hotel gets distributed through OTAs. We believe that room night tokenization will be similar. A decade from now, 10 to 20% of all rooms in the world will be tokenized, and will be sold to a token ecosystem. So eventually, really what we’re doing by tokenizing the room, we’re creating a new additional alternative distribution channel for hotels. So any hotel can say, “I wanna just tokenize this type of rooms. I wanna tokenize just my suites, I wanna tokenize just these rooms during the spirit of the time of the year.” So it’s very flexible for the hotel to choose when and how they wanna tokenize it, and then put it in the system.

BLOCK TRIBUNE: Tell me about your ICO plans.

DAVID BRILLEMBOURG: Well we don’t plan to do ICO. We plan to list the tokens that we’re working now, plus with several exchanges to list the tokens, and we’re gonna be privately funded. We’re working with VCs and potential investors, so far we’ve been privately funded.

BLOCK TRIBUNE: Why are you going that route rather than an ICO?

DAVID BRILLEMBOURG: We think that, at this point, probably it’s easier to scale the platform with a lot of the existing partners, we’re talking to a large hotel partners that own thousands of rooms and millions of clients. And we believe that’s a more cleaner, easier way for us to convince some of the bigger players to come in and become [inaudible 00:12:57] partners with us. Not having that revelatory element of the ICO, which requires a different type of setup. From our point of view now, we don’t have immediate ICO plans, but I mean it’s gonna change. Alternately, we’re not doing an ICO anytime soon.

Ultimately, our goal is to do room night tokenization, and that’s really the ultimate solution and then have several side effects, which one is distribution and one is loyalty. But ultimately it’s a system that is … we’re different than other travel platforms that are being very aggressive in the disruption for the OTAs. We are an industry friendly disruption, we’re working with the OTAs, we’re working with hotel clients, we’re working with big operators. To bring room night tokenization to travel, and I believe, that over the next decade, we’re gonna have 15 to 20% of the world travel. Rooms will be tokenized.