The most dangerous thing for any business is to be commoditized. When a product becomes commoditized, brand loyalty is lost, and quality of experience, differentiation, and good business practice are lost in the cacophony of bids.
Perhaps no industry has seen a rise in commoditization in recent years as much as the travel industry. Where travel agents used to be a key component to planning any vacation, online retail ports and peer to peer solutions like Airbnb and VRBO have changed the way that consumers think about business.
And in each of these, the consumer’s goal is to squeeze out the cheapest possible price regardless of the source of the reservation. This has left the travel industry scraping for ways to regain the consumer loyalty that once characterized the industry.
And what’s more, each transaction must be processed by a middleman – a credit card company – responsible for securely transferring funds internationally. This has taken a massive cut out of the profit margins for agents and suppliers alike, as well as increased consumer pricing.
In fact, recent estimates of the travel industry growth ($1,091billion by 2022) indicate that nearly $32 billion per year will be spent just on merchant fees for processing transactions. With all that money going to waste in such a tight industry, a solution must be found.
Blockchain to the Rescue?
The answer may come through a new technology known as blockchain – the programming that undergirds Bitcoin, Ethereum, and other cryptocurrencies. With recent public awareness growing, the technology is offering some solutions to the travel industry that have never been available before.
Blockchain technology is important because it makes it possible for participants on the chain – agents, suppliers, and consumers – to transact business without the need of third-party trust agencies (think, Visa). The technology does this by offering an immutable ledger – a database that can never be changed and records all transactions – meaning that fraud is next to impossible.
Further, because payments can be transacted within the chain itself, the technology allows participants to make international payments without any of the hassles of time and finance constraints from credit card providers like Visa.
Bringing Blockchain to Travel in Real Time
Interestingly, one company is doing just that. SBC – Swiss Capital Ag (Swiss Capital) has created a blockchain-based payment ecosystem where payments can be made between all three parties – travel agents, suppliers (hotels and airlines, etc), and consumers – without the complexity and cost of third-party merchants.
Swiss Capital has made this possible by using a cryptocurrency – a digital token – that works within the SBC ecosystem. This token is called the Global Travel token, or GTX for short. Users exchange fiat currency for GTX that are then used within the blockchain system to make and receive payments. Because the currency is used within the blockchain system, there is no need for third party trust companies, and transactions can be settled in seconds rather than in days or even weeks.
Because the GTX allows for internally secure transactions, all parties on the network are able to purchase and be paid with confidence, knowing that their funds are safe and the transactions are secure. Further, the GTX tokens can then be exchanged for fiat currency (USD, GBP, etc) with ease on external exchanges. Parties will be able to save the costs associated with third-party vendors – savings that will lower prices for consumers and increase profit for agents and suppliers.
Side Benefits, Plans
There is also a side benefit to the Swiss Capital plan. Most travel rewards systems are confusing and frustrating for consumers because they involve multiple brands and countless systems. Consumers often find themselves with miles and rewards points with many different suppliers, none of which is enough to redeem for anything of value. This drives down consumer loyalty.
However, because the SBC ecosystem allows a variety of suppliers to be used by consumers, it allows for a single, global, rewards system where consumers receive loyalty rewards internally. Paid in GTX, consumers, and agents are then able to use their rewards for other travel without having to cobble together various points cards over a wide swath of platforms.
By uniting the brands together, and offering a single customer and agent loyalty program, Swiss Capital provides value for consumers and agents, as well as keeping brand loyalty alive for suppliers that participate in the system.
Finally, Swiss Capital plans to open an exchange in the future for trading digital currencies in order to make the conversion from and to fiat currencies easy and seamless.
Companies like Swiss Capital are bringing technology solutions to the problems facing the travel industry. By connecting consumers, agents and suppliers together through blockchain technology, the company provides a win-win situation for an industry in desperate need.