Blockchain And The Hotel Industry – Time For A Commitment

Blockchain, Opinion | June 5, 2019 By:

When it comes to the transition to blockchain in the hotel industry, it’s less about the “if” and more about the “who.” As in, who will be the first major player to embrace this technology? And when will they commit?

The most likely early adopter would seem to be Marriott based on the data breach they announced last year in which the personal information of an estimated 500 million people who had made reservations at their Starwood properties was put at risk. Yet, they are not the only hotel group or hotel that has experienced system hacks, with nearly a dozen others reporting data compromises over the past eight years or so – including Radisson, Hilton, Hyatt, Intercontinental, Kimpton, Mandarin Oriental, Wyndham, Westin and on and on.

So, what does blockchain have to do with hotels and preventing data breaches? In a word: Everything.

But first, here’s a quick super-simplified primer on blockchain: Blockchain is a distributed, decentralized public ledger. At its most basic level, blockchain is digital information (blocks) stored in a public database (chain).

Blockchain has the potential to revolutionize the hospitality business but as pertains to hotels, here is where it can, and will, have the biggest impact:

  • Database Security – With blockchain, the hotels’ databases can never go offline and therefore cannot be removed by hackers.  
  • Secure Transactions – This is where the biggest potential lies. Blockchain technology can effectively counter the threat of identity theft and help hotels establish a better booking transaction model by eliminating the need to book a room using a credit card and access a room by first providing photo ID upon check-in. All information and documents can be stored in a blockchain network rather than on the hotel’s server, ensuring a higher level of security.
  • Loyalty Programs – Because keeping customers is more lucrative than acquiring new ones, blockchain can help hotels to elevate the value of loyalty programs for the customers who matter most to them through multi-partner relationships. Blockchain can simplify relationship management and simplify point transfers between partners. In other words, loyalty program members can collect and spend points with multiple partners in real-time and securely, making the rewards more beneficial to them and strengthening the relationship they have with the hotel. Blockchain can even make gifting loyalty points a seamless experience, again reinforcing customer loyalty.

Ultimately, blockchain is expected to integrate all the different hotels’ loyalty programs by giving an individual a unique code that can be used in those hotels’ databases. Hotel guests would no longer have to manage their various brand-specific loyalty program accounts; and each hotel brand can boost profits through the savings on maintaining its loyalty program database.

Some hotel industry experts have even suggested that guest tracking may not be far in the offing as blockchain technology takes its foothold. Guest tracking would be on an opt-in basis only and is expected to improve the customer experience by reducing their wait time for hotel check-in and allowing the hotel to ensure it is ready for their arrival. Prior to guests arriving at the hotel, guest tracking would allow the property to know the location of their guests on a real-time basis with the hotel receiving alerts when the guest heads to the airport from their home, when they check-in to their flight, and when the guest arrives at the hotel.

The hotel industry has already begun to adopt blockchain capabilities in smaller ways via platforms like Lockchain, which allows hotels to rent out their property; and Trippki, a loyalty reward program that provides a direct connection between hotels and customers.

The future looks bright for hotels that adopt blockchain technology as well as their customers – but the question remains, who will be first and when will they take the leap?

Dr. Sungsik Yoon is an assistant professor at the Collins College of Hospitality Management at California State Polytechnic University, Pomona, whose research projects include the impact of blockchain technology and cryptocurrency on the hospitality industry, sharing economy, and collaborative (peer-to-peer) consumption. He is a graduate of the University of Nevada, Las Vegas with Ph. D. degree in Hotel Administration, and Michigan State University with M. S. degree in Hospitality Business.