With a title of “director of future business,” Nordic Choice
Hotels’ Christian Lundén spends a lot of time thinking about what distribution
will look like in the coming years for the company that operates 40,000 rooms
in nearly 200 properties across Scandinavia and the Baltics.
What he envisions is a distribution landscape that is
much more open and much more creative than what exists today.
At the core of that new model is an open marketplace operating
on a public blockchain that will allow buyers and sellers to connect directly,
without the need for complex technical integrations. That type of system, Lundén
says, will spur innovation from startups as well as from big tech players such
as Google and Amazon.
Potential impact
Since December 2017, Nordic Choice has been working with
Winding Tree, a blockchain-based open-source travel distribution platform. In
May, the two companies completed the first successful hotel booking on a public
blockchain in a test at Nordic Choice’s Hobo Hotel Stockholm.
Rather than
pulling inventory from the hotel’s PMS system, this booking picked up a room
from Winding Tree’s blockchain platform.
But while this test is helping Nordic Choice learn about and
verify the functionality of the blockchain, Lundén says he sees the most
potential in the broader B2B environment.
“There are many startups that want to sell their ideas about
how they can make a better guest journey, but they need access to our hotel rooms
so they can sell packaging and activities. If we say you can have access to our
PMS systems, but you need integrations to each hotel - that’s complicated and
expensive, and the conversation stops there,” he says.
“But if we can say you can pick up the inventory from this blockchain
and there are many other hotel chains and car rentals and retail on there ... it
becomes much more useful for new companies to come up with new ideas to sell
services and guest-related things. And it’s up to us to make an agreement with
these external partners that if you make a reservation for us, we will pay you
this much.”
In addition to Nordic Choice Hotels, Winding Tree is working
with other brands including CitizenM, Air France-KLM and Lufthansa to develop the platform. Lundén says
once inventory from those partners - as well as from retail merchants - is on
the platform it will open up even more possibilities for consumers.
“You can imagine how third parties
can sell different packages to guests that they haven’t been able to do before
because now everything would be stored in one place,” he says.
It’s not just startups that Lundén expects to embrace
this new model. He says existing companies outside of travel could find value offering
booking functionality. For example, a company that makes beds used in a Nordic
Choice Hotel might want to offer the option to buy the bed and book a room in
that property.
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And then there are the big tech players, which have been
gradually expanding their travel offerings. In May, Amazon launched domestic
flight bookings in India and Google updated its travel interface by consolidating
research, reservations and related content on desktop and mobile.
“It’s no longer a competition between Booking and Expedia.
Now it’s a competition between those guys and Google, Amazon and Apple. These guys
have all the information about us, much more than we have, more than the online
travel agencies have or the global distribution systems,” Lundén says.
“So it’s obvious they will be a big player in the future,
but they need to pick the inventory and make the reservations from somewhere. And
I don’t see the possibility that Google, Amazon and Apple want an agreement
with Expedia or Booking to make the reservation through their channels, because
that will cost them quite a lot.”
Lundén predicts greater adoption of voice-controlled devices
will also spur interest in a public a blockchain marketplace because Google and
Amazon in particular will want a direct connection to inventory in order to
fulfill users’ requests to book hotels or flights.
“It could be a very
interesting thing in the future to see how this will affect the business model
for reservations,” he says.
Pros and
cons
Nordic Choice works with eRevMax as
its channel manager, and eRevMax has created an integration to Winding Tree.
“We take the customer transaction
from point A to point B, and Winding Tree is effectively a new point B we can
offer,” says Reuel Ghosh, eRevMax founder and CEO.
It’s no longer a competition between Booking and Expedia. Now it’s a competition between those guys and Google, Amazon and Apple.
Christian Lundén - Nordic Choice Hotels
“We connect to many OTAs, literally
100s of them. The hotel group or individual entity needs to have access to
wherever their demand can come from. So this is a new exciting possible arena,
but the demand still needs to come before it’s really a success in that sense.”
When - or if - that demand comes, Winding
Tree co-founder and COO Pedro Anderson says suppliers on the platform will gain
leverage with their traditional distribution channels.
“Right now they likely only work with
a handful of the big OTAs, and that leaves them at a disadvantage as far as
negotiations are concerned,” he says.
“We help them reach anyone who’s
buying travel. We are not against the OTAs - we don’t have an opinion. It’s an
open, decentralized marketplace, and [because of that] it makes it more
competitive.”
Anderson says another benefit of a
public blockchain is that no one entity owns or controls the relationship between
participants.
“You as a hotel or airline or OTA,
you have control of your data on the platform, how you interact with others, and
you can do anything with your account as you want,” he says.
“Winding Tree can’t interfere and say
this one’s going to be listed, that one is not going to be listed. Or this company
gets preference or if you don’t pay me I can de-list you. There’s where the
really exciting part is.”
But he acknowledges there are challenges with a public blockchain - for now.
“It can be slow and expensive. It’s not the most efficient thing
in the world. It’s still being built. The security and the immutability are
more important,” he says.
To address this, Winding Tree has modified its initial
strategy so now the blockchain is only used for functions for which it is best
suited.
“Not everything is going through the public blockchain. We took
the more complex functions - for example the rich content, dynamic pricing -
and we put it on the API level, and we stuck the blockchain component to what
it is good for which is control, ownership and identity,” Anderson says.
“We simply connect the two parties together, without intermediating,
and prove that it’s a real buyer through the trust protocols we’ve created. But
we don’t require that they use our platform for every piece of the sale. We provide
the API that lets them choose which payment channel they want to use, whether they
want to accept fiat currency or whether they want to accept cryptocurrency.”
Evolution not revolution
In early July, Winding Tree is preparing to host its second hackathon
in Lisbon. The event will bring together hotels, airlines, OTAs and startups
with software companies and independent developers to work on both technical applications
and business proposals.
Some time after the hackathon but before the end of the
year, Anderson says the Winding Tree platform will officially go live, and he has already received
interest from a few hundred startups and OTAs awaiting that.
Meanwhile, Lundén says he has been busy fielding questions about
blockchain from other hotel chains, OTAs, PMS vendors and technology firms.
“It’s a FOMO moment - there is fear of missing out, but they
are unsure about going into it,” he says.
“It’s more or less what we saw in the early ‘90s with the
internet.”
And like the internet, he says it will take time, patience
and trial and error to develop.
“This will take years. It’s a very, very new technology. It
would be nice if it moved faster, but I don’t rush into this. We may not be
seeing big benefits yet, but we will learn a lot. And we will make sure we are
on it when it starts to grow.”