Beyond Crypto: Blockchain Technology in Hospitality
Written by: Dominika Duziak
Editor’s Note: This blog post will feature podcast episodes from the HospitalityVerse Podcast, a new series that discusses the latest trends in hospitality technology, including discussions on the Metaverse, blockchain, NFTS and more.
During my time with the MBA in International Hospitality Management program at the Emirates Academy of Hospitality Management in Dubai, UAE, I decided to focus my academic research on blockchain and hospitality managers’ perceptions of this technology.
Blockchain is a distributed ledger that stores records of transactions in blocks connected to each other and secured with cryptography. Originally designed to facilitate financial transactions, the blockchain evolved and became a more universal tool that can not only transfer but also create value.
Experts claim that blockchain can disrupt many industries, increase the accuracy, security and speed of transactions and data exchange in general, help build more efficient processes and ultimately transform organizations. PWC, for example, estimates blockchain will add $1.76 trillion USD to the global GDP and expects that by 2025, most businesses around the world will be using various applications of this technology[1]. In fact, when you look at the list of the top 100 global companies, over 80 percent have already done[2]. You’ll find big banks and telecoms, retail, insurance, tech, media and big industrials leveraging blockchain platforms in supply chain management, provenance tracking, etc. Self-executing blockchain-based smart contracts are being used in the music industry, real estate and clinical trials.
Blockchain is often described as a foundational technology that can enable other capabilities, including the Internet of Things (IOT) and artificial intelligence (AI)[3]. We often don’t realize that the latest developments, including NFTs, are also based on blockchain. In fact, in most cases, blockchain is perceived mainly through the lenses of cryptocurrencies.
How can hospitality benefit from this technology? When asked about use cases in hospitality, interviewees typically viewed blockchain as a tool used to facilitate financial transactions and focus on cryptocurrency acceptance.
The MENA region is one of the fastest-growing crypto markets[4], so this sentiment among the study participants is understandable. The first hotels in Dubai, namely JA Manor and Palazzo Versace, started accepting virtual currencies not long ago. We see more announcements coming from F&B and travel companies. In countries like the UAE, the US or UK, where digital currencies are quite popular, it seems like a natural move. Hospitality managers recognize the trend but rarely share the enthusiasm around enabling crypto payments in their properties. Current market volatility, the “crypto winter” is in full swing, and the controversy around big exchanges and “altcoins” makes the headlines — it all doesn’t inspire confidence.
Lack of trust is unfortunately one of the biggest hurdles to blockchain adoption in the hospitality industry. Furthermore, hospitality professionals see it as complex technology, not mature enough, expensive and difficult to implement. Few of my interviewees understand the benefits and use cases for blockchain beyond crypto payments. However, when we dig a little deeper and discuss how blockchain can, for example, be used in a complete redesign of loyalty and rewards programs, facilitating secure real-time settlement of points, or how smart contracts can automate procurement and increase back-of -the-house processes, they tend to change their minds.
In the “Blockchain and Hospitality” episode of the HospitalityVerse Podcast, we examine different applications of this new technology, including disintermediation of OTAs, identity management and guest preferences, loyalty and rewards, reviews, supply chain management, automation and back-of-the -house enhancements. It’s not an exhaustive list, but merely a starting point. New use cases will follow as the technology evolves. With the Blockchain 4.0 phase, we’ll see more interoperability and more Blockchain-as-a-Service (BaaS) solutions supporting different use cases. Vendors focusing on the hospitality sector will lead to wider adoption of blockchain technology. Based on my research, it’s an unexplored market today, and the potential is big. The diffusion of innovation in hospitality can be difficult and, in this case, will be heavily reliant on external vendors. BaaS companies will have to overcome a couple of challenges: lose the blockchain jargon, raise awareness about blockchain benefits and — what’s probably the most important aspect — be able to show a clear ROI of their solutions, in order to convince hoteliers to jump on the bandwagon blockchain.
Will blockchain disrupt hospitality? When I asked my research participants whether they thought blockchain would disrupt the hospitality industry, most of them were skeptical. I tend to agree — if you understand disruption as drastic, sudden, or radical change, then it probably won’t have that effect. Like my interviewees, I see it as a gradual process, where more and more internal applications and systems are placed on blockchain platforms. Ultimately, blockchain’s features, such as immutability, security, traceability and transparency, will translate into hotel tech, opening up a new world of opportunities that goes way beyond crypto payments.
Dominika Duziak is a host of the HospitalityVerse podcast. She combines product development and product management skills acquired in banking with a passion for new tech to uncover innovation opportunities. During her MBA program in International Hospitality Management at the Emirates Academy of Hospitality Management in Dubai, UAE, Duziak focused on business applications of Blockchain technology in the hotel industry. This research led to the creation of the HospitalityVerse, where hospitality professionals can learn about the latest trends and developments in hospitality technology effortlessly. Head over to https://hospitalityverse.io/ or listen on Spotify or Apple Podcasts. Follow HospitalityVerse on LinkedIn for daily updates from the hospitality tech world.
[1] PwC (2020). Time for trust. The trillion-dollar reasons to rethink blockchain.
[2] https://www.blockdata.tech/blog/general/the-top-100-public-companies-using-blockchain-in-2022
[3] Akmeemana Ch. (2017) Blockchain Takes Off: How Distributed Ledger Technology Will Transform Airlines, Blockchain Research Institute. Retrieved from: https://www.blockchainresearchinstitute.org/project/blockchain-takes-off/
[4] https://www.thenationalnews.com/business/money/2022/10/05/mena-region-is-fastest-growing-crypto-market-in-the-world-report-says/