How can blockchain make travel booking safer and less costly?
Sofia, Bulgaria ~
Have you ever wondered how many parties are actually involved in the process of arranging your self-organized vacation trip? From online agencies, through airline companies, and hotels, the chain can get quite long, depending on your preferences. What are the chances of something getting wrong and is this actually the cheapest option? When it comes to international travel, trip-arrangement agents frequently rely on Global distribution systems (GDS), online platforms that are based on real-time inventory data, used by the service providers to communicate availability to clients. In its essence, the arrangement process is connected to exchanging vast amounts of information, thus allowing for easier data leakage, and is usually costly.
Since recently, blockchain systems are entering the hospitality industry, offering a decentralized, encrypted data recording that is harder to hack, as each new transaction is simultaneously registered in the records of all involved parties. Through this type of technology, customer data can be stored globally, on multiple servers, while allowing for anyone in the chain to see real-time information changes, made by other participants. The even distribution of data is the key to protecting the distribution network from malware attacks and data leakage, partly because of the fact that it is much harder to gain control over the information flow. In the near future, blockchain might as well become a safer alternative to traditional booking and can also offer a reduction in the associated transaction costs.
Travel blockchain in Bulgaria
On March 18, 2021, blockchain travel startup LockTrip announced the closure of a $4.1M investment from Webjet, a Melbourne-based travel industry company known as the second biggest accommodation provider on a global scale. After the deal, Webjet acquired 25% of LockTrip’s stake, as well as the intellectual rights over the startup blockchain solution, with the two companies announcing the opportunity for additional funding, amounting to $4.2M that would be associated with the Australian company acquiring another 26% of the startup, on condition that Webjet integrates the LockTrip solution with all of its online travel agency websites.
Back in 2016, Webjet became the first big company to integrate a private Ethereum blockchain platform — Rezchain — into its systems. Since 2019, the potential migration of Rezchain to LockTrip’s HYDRA chain has been on the cards. Having in mind the client base of the Australian company that amounts to over 44K people and its total flights/booking travel transaction volume of AU$3B for 2020, this scenario could, in return, open the doors to the startup for mass distribution of its blockchain solution, while enabling Webjet to solve many of the problems that halt the adoption of Rezchain as a commercial platform. With that being said, LockTrip is in the process of organizing its first inflationary blockchain distribution event in what it states to be an effort towards solving one of the biggest economic challenges of the modern blockchain economies. So, how can the startup facilitate easier and less costly traveling and why does it claim to have been rejecting VC offers since the announcement of the Webjet deal?
Eliminating the third wheel in travel servicing
Established in 2017 by Bulgarians Nikola Alexandrov and Hristo Tenchev, who is also Co-founder of XS Software and SoftUni, LockTrip aims to eliminate third-party agents such as Booking.com from the travel arrangement chain by gathering tourist operator travel offers on its platform that can be purchased by clients using the LOC currency of the company. The personalized offer suggestions appear based on their discount score in comparison to other travel suggestions, thus pushing upward in the search results the most discounted offers, which are, according to company claims, around 20% cheaper on average, compared to Booking offers, with some of the offers displayed at up to 60% lower cost. At present, the LockTrip platform covers over 2.1 million properties and 1000 airlines in 190 countries.
To cover its functional expenses, the startup relies on a freemium subscription model and charges a transaction cost of between 1 and 3% for card payments only. The business model of the company does not rely on charging service providers. Instead, LockTrip profits come from the exchange of LOC tokens each time a trip is arranged through the platform. Like in a basic economic model, using LOC tokens (whose value amounts to around $6.88 per token) to make a travel purchase decreases the number of tokens at the market, thus increasing the value of the remaining currency. According to Etherscan, currently, there maximum total supply of LOC tokens amounts to a little over 18.5 million.
The startup has managed to raise $4M through an Initial Coin Offering (ICO), while its market capitalization today is $75.6M, with a growth rate of 2000% for 2020.
What is next for LockTrip?
The deal is accompanied by changes in the board of directors of LockTrip, as John Guscic, Managing Director of Webjet Ltd., and Lynne Oldfield, Director Corporate Development of Webjet Ltd. are stepping in as members. In a blogpost, LockTrip shared the importance of their relationship with the Australian company, describing it as “more of a marriage than an investment”, underlying this, as well as the stable financial positioning of the company as the reasons for declining VC partnership offers.
As of now, LockTrip is invested in organizing the distribution event of its blockchain platform — HYDRA. The first distribution is supposed to happen around April 1 2021, with the company stating that it will share the block number of the first snapshot a few days prior. One of the most important outcomes from implementing blockchain systems and tokenizing travel inventory is that this can ultimately connect service suppliers and marketplaces all over the world in a centralized travel database that can be securely accessed from anywhere, thus making a major global industry more efficient.
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