Here’s How Blockchain Might Create A Fairer Playing Field In The Online Travel Market

by Trefis Team
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The online travel behemoths like Priceline, Expedia, and Ctrip are increasingly gaining markets and becoming synonymous to travel booking, especially among the Millennials and Generation Z demographics. With their growth in clout, the online travel players, much to the suppliers annoyance, are continuing to raise the commissions that hotel suppliers or airlines need to pay to them. In an attempt to cut out the OTA middlemen, many large hotel chains have also started offering incentives to lure customers to directly book from their websites. Even then, the power of online travel agencies with their vast offerings and their widespread presence seem to be a formidable force to reckon with. Hence, regulatory boards are stepping forward to check the growing power of OTAs. A few months ago, the American Hotel & Lodging Association introduced a “Search Smarter” campaign to raise consumers’ awareness about the deceptive marketing practices pursued by the OTAs in the U.S. However, the hotel suppliers and regulatory body might heave a sigh of relief with the advent of this new technology called blockchain. Blockchain is the technology that drives the cryptocurrency, Bitcoin, the first decentralized digital currency in the world. Blockchain is a distributed database where data can only be added implying that the historic data cannot be lost or corrupted in the long run.

Currently OTAs Are A Powerful Lot

PhocusWright claims that the OTA accommodations bookings in the U.S. overtook the gross booking through hotels for the first time in 2016. Not only do Priceline and Expedia own 95% of the U.S. online travel market, in more fragmented markets like Europe and Asia, OTAs are growing even further, thus demonstrating the sheer bargaining power that both these leading OTAs command.

How Can Blockchain Help Create A Fairer Market Place?

The idea behind a platform powered by blockchain is to reduce the power wielded by the OTA middleman and give some of the distributing power back into the hands of hotels and airlines. The public blockchain is secure and prevents one entity from controlling the entire market (as is somewhat the scenario right now). This, in turn, will dissolve the high barrier to entry into the online travel market and encourage smaller players to offer their services along side the bigger names.

 

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline

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