Benefits of blockchain technology in the hotel industry

Guest Contributor

Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly

Blockchain has been one of the latest technologies that have brought a revolution in most industries. There have been several attempts of creating a digital currency in the past, but they failed because of a single party or an individual having centralized control. However, Bitcoin became one of the most successful digital cryptocurrencies because of the use of a P2P decentralized network known as Blockchain. No single party is the sole owner of the network or transactions made, making blockchain a reliable and secure network. Blockchain technology can bring potential benefits to the hotel industry by facilitating increased hotel inventory booking, safe transactions, eliminating middlemen and preventing fraud. Here we highlight the benefits of blockchain technology in the hospitality industry.



Blockchain is the latest digital technology in which the information of transactions gets stored on a decentralized distributed ledger across a peer-to-peer network of nodes or computer systems. Information gets stored on records known as blocks where each block is connected to its preceding and succeeding block forming a chain and hence the name, blockchain. A decentralized database system means the information is neither controlled nor stored at a central location, but it gets duplicated and distributed all across the network making it highly impossible to tamper with the information or hack the system. This distributed decentralized system is also termed Distributed Ledger Technology (DLT).

Every information gets stored with a time-stamp making it easy to trace back the transactions. Every block of information is encrypted with a hash function and provides secure direct payment to the sellers eliminating the middlemen.



The most advantageous aspects of blockchain technology are:

  • Transparency: Blockchain is a peer-to-peer network that makes it highly transparent, and anyone can trace back the transactions made.
  • Immutability of Records: The transactions recorded in the blocks cannot be changed or tampered with as duplicate records are available at every node, and these are encrypted. If you have to change a piece of information, you must do it on the entire chain that is nearly impossible.
  • Highly Secure: Chances for hacking and tampering of information get eliminated, and hence the network boasts of its high security and fraud prevention abilities.

With the above advantages, blockchain technology can bring significant benefits to the hospitality industry as follows:



Hotels these days rely on OTAs for maximum visibility and booking of their inventory. The Global Distribution Systems (GDSs) hold the maximum of inventory data that is inaccessible. The OTA network boasts of the exclusive hotel inventory it has a hold on that makes it impossible for new players to enter the market, in a way, monopolizing the hotel industry. Small properties do not find space in the exclusive inventory list, remaining untapped and unbooked by the travellers are tourists from worldwide.

Blockchain, as already said, is a decentralized distributed transparent network, and hence people can directly look for the best inventory available without relying on OTAs. There will not be any OTA exclusive inventory, and the commission costs are eliminated both for the buyer and the seller side. Even the smaller hotel properties that remained out of the OTA network and the visibility zone of the travellers will have the chances of getting booked by the travellers worldwide. Thus Blockchain technology will open up new destinations for travel, thereby globalizing the local hotel properties.

Webjet, Australia and New Zealand’s top online travel agency are some of the best modern-day examples of expanding hotel room inventory via blockchain. You can find hotels that are untapped from the most remote locations around the globe.



Whether it’s MakeMyTrip, ClearTrip, Expedia or other Online Travel Agencies, all of them charge commission fees from the hotel when their inventory gets booked. Though the commission rates are high, hoteliers partner with these online hotel booking sites because OTAs account for maximum market share and provide exclusive inventory. The booking engine of these OTAs is highly user-friendly, thus people prefer booking hotel rooms or travel booking from these sites rather than the hotel’s website. Additionally, there are a few flaws in the distribution system capitalized by these OTAs and metasearch engines that charge commission fees from both the seller and the buyer.

But as mentioned earlier, blockchain adds new properties to its hotel inventory, making even the smallest of hotels be listed. This eliminates the dependency on OTAs or meta-search engines and removes the middlemen costs, in terms of commission fees for both the hoteliers and the hotel room reservation makers.



The payments made via blockchain technology eliminate the need for intermediary financial institutions like banks and the transaction charges posed by them. Also, every transaction is transparent and encrypted which makes it highly immune to frauds. Passenger identification, baggage tracking are other areas where blockchain technology can benefit the travel industry.



Whenever you book a hotel room, you receive reward points via the loyalty programs of the hotel. But the condition is that reward points could only get redeemed against the booking of rooms at their hotel. Assume you booked a hotel room for Rs.5000 and earned loyalty points worth Rs.500. You will not be able to book a room at such a low cost, and these reward points get wasted. It is also surveyed that a maximum of the reward points via loyalty programs get wasted because of the inefficient usage policies.

However, with blockchain, the particular hotel can form a network with a restaurant chain, a spa and other such chains. When there is a transparent network of these brands on the blockchain, the user can redeem his/her loyalty points to buy services from any partner brands. If we consider the previous example, you can now conveniently use your loyalty points worth Rs.500 for buying a pizza or other food at the partner restaurant chain. Thus the loyalty programs begin to benefit the users who will return to you every time in future.

You can also reward loyalty points to customers who write genuine reviews about their experiences at your hotel property. Customer reviews are one of the rewarding factors to boost search rankings on Google and get more reservations. You can also reward points for bringing referrals that again boost your inventory bookings, facilitating brand awareness.



Smart contracts are another popular aspect of blockchain technology. Smart contracts are signed by two parties involved in a particular transaction on the blockchain. The advantage of a smart contract is automatic transaction is facilitated between a buyer and the seller as soon as the intended service gets completed. This again simplifies and secures the transactions while saving time.


Blockchain technology benefits both the public and the hoteliers in ways like expanding the hotel inventory, eliminating middlemen costs, getting the inventories of even the smaller hotel properties booked, fraud prevention, passenger identification, loyalty programs rewarding frequent customers and writing reviews, and bringing referrals, etc.

You might also like

Comments are closed.

Subscribe to our newsletter
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.
You can unsubscribe at any time