What is blockchain and what can it do for hospitality? - Code ...

What is blockchain and what can it do
                        for hospitality?
                                      Hotel, motel, blockchain inn

Blockchain is a technology that connects companies directly to
consumers, by passing intermediaries who are costly and slow
data transfer time down. Blockchain creates a shared network
of information which streamlines business processes allowing
for better efficiency and productivity. According to Gartner’s
predictions from 2017, Blockchain businesses will be worth
US$10 billion by 2022. Current systems simply cannot keep up
with a demand for better data, faster service and more security.
Companies such as Webjet, TUI Group, and the Australian
Security Exchange have already begun their blockchain
integrations, looking to completely transform the travel and
hospitality industry.

What is blockchain?

Blockchain is often only explained in difficult techy terms that no one
really understands. We’re here to tell you what it is in plain english.

Blockchain is a technology that allows for transactions of
records, information or money safely and securely while being
more cost effective than traditional methods.

For example, information is uploaded to the blockchain stating
that the sky is blue, where several people will confirm that the
data is true. The more people that confirm this, the harder it is
for someone to prove it is not true. Traditionally, only one entity
would state what is true and may be included to say the sky is
red if it suits their interests. This system prevents fraud through
the power of the community, not the claims of the one person.

How it works

Send information
Let’s say you want to transfer sensitive data across your
company without fear of hackers or leaks. You have a blockchain
system. You need to send a record to Dan from finance. You send
your record into the blockchain system.

Verification
Within the system, it checks that you are who you say you are
and the record is what you say it is. It also checks that Dan, the
receiver, is actually Dan. This prevents hackers pretending to be
Dan from gaining access during transmission.

Recorded immediately
When this is verified, this transaction is recorded permanently
and prevents the original record from being tampered with or
fraud being committed.

Information received
Finally, Dan receives the record as intended. If Dan changes the
record after the transaction, the changes are linked to him and
are not linked to the original record making it traceable to who,
where and when the changes were made.

How is it different to current systems?
One network for multiple users
Blockchain works with multiple databases and combines the information together over one network. This might
be data from the suppliers, from the customers, and from any partners. This allows for consistent data, updating
simultaneously, from multiple sources to lessen the chance of outdated or duplicate data.

Decentralised data
Traditional systems have an intermediary who filters communication between a company and customers. Blockchain
works by connecting stores directly to customers, partner companies, and others within the network. This allows for
faster and more accurate transfer or information while saving money with no third party needed. It also allows for
better management of supply and demand when customers can communicate quickly and directly what their demand
is, so farm produce can be optimised.

Why is it so reliable?
Validation
Instead of one computer (or even a person) running
the algorithms to check whether data is correct, the
system works by using the computational power of
every computer on the network. This means that
potentially thousands of computers are checking
the data on the blockchain and verifying it multiple
times before it goes on the blockchain forever. This
system is incredibly difficult to crack or perform
fraud on because it require 51% of computers on the
network to be compromised which takes up too much
computational power and time to be viable. The data
uploaded to this system is therefore trustworthy as it
is immune to fraud.

Why is blockchain so secure?
Data storage
Once the data is verified to be true and correct, it is uploaded to the blockchain as a “block” which contains this data
as well as others. This “block” of data is combined with previous “blocks” of data which are all connected in a “chain”,
so data in one block could not be changed without changing all other blocks in the blockchain too. Hence, when a new
block is added to the blockchain the dependancies between this block and the previous effectively make it immutable,
that is, it can never be altered, so we can be certain that all the history of the data is untampered.

What is blockchain in hospitality?

88% of customers prefer booking online, often using
intermediaries such as Booking.com. For local hotels, this
means paying a commission fee in order to attain customers
via the 3rd party website. Blockchain technology allows for a
more seamless process in hospitality connecting a hospitality
business directly to a customer. This allows for data transfer
in near real time which saves time and money for both sides.
For a business, this could mean better managing your supply
and demand with near real time results so you have stock on
hand at the right time to meet customer orders.

A key weakness of current systems is they don’t allow
for shared data. Usually a third party owns this data and
therefore only they benefit from it. Blockchain as a system
allows two or more companies or users to connect directly
in a secure and trusted way (thanks to cryptography and
immutability). This allows all partners within the network to
gain access to multiple data sources and share data which
benefits everyone. For example, airlines will know different
data than hotels who know different data than tour groups.
Sharing this data amongst non-competitors in a collaborative
way means finding better and more insights about your
customers.

Like anything, a system incorporating Blockchain has upfront
and ongoing costs, but this investment will earns its keep
in the long-term by providing access to near real time data
resulting in reduced costs, a trusted source of data allowing
for smarter business decisions, and much higher levels of
security as the technology takes too much computational
power making it near impossible to crack.

Blockchain benefits

Provenance
Blockchain increases transparency and traceability; once information
is recorded in the Blockchain it is unchangeable, making problems
like fraud a thing of the past. Customers can see what is available in
near real time, so your company can better manage it’s inventory to
suit demand.

                                                     Security
                                                     The method through which the data is stored has ensured that
                                                     blockchain is computationally too expensive to crack. In theory, a
                                                     hacker would have to take control of at least 51% of the network
                                                     to control the system. With tens of thousands of computers on the
                                                     network this is practically impossible and incredibly unlikely to
                                                     happen. This creates a completely secure environment without taking
                                                     away any control over the data from you. Blockchain technology
                                                     allows companies to securely make transactions, with every
                                                     transaction recorded on the blockchain for better and faster auditing.

Immutability
Once data is recorded to the Blockchain it cannot be altered, this
immutability allows you to trust in the data and helps to prevent
fraud. Trusting the data on the Blockchain increases efficiency
in business processes, specifically solving problems where data
is in conflict or is inconsistent, this simple does not happen with
blockchain technologies, as data is recorded sequentially and is
permanently written. On top of this, data is always available for audit
and stored correctly, increasing reliability of the data.

                                                     Reduce costs
                                                     Three major costs blockchain addresses is system management,
                                                     transaction cost, and customer acquisition costs. Yes there are
                                                     upfront and ongoing costs however blockchain will quickly earn it’s
                                                     keep by reducing these three pains. It does this through increasing
                                                     efficiency by reducing the need for manual labour, and requires no
                                                     costs for transactions.

Use cases: Hotels

Business problem
TUI was a tourism company that wanted to manage their supply and demand better to
optimise inventory use at different points of sale.

Blockchain solution
Blockchain technology was used to be able to move inventories in real time between these
points of sales to allow customers to be able to ‘bed-swap’. This allowed TUI to be able to
flex selling margins based on demand.

The blockchain starts with identifying the customer requesting a room, and confirms they
have the funds to make the booking. The blockchain system manages all rooms within
hotels supply chain to identify, tracking room availability in near real time, resulting in
improved hotel capacity management. This mitigates problems such as losing customers
who try to book a room to see it has sold out even though another customer just cancelled
a room minutes ago.

Uses for hotels or BnBs
•   Secure payments: Blockchain’s major benefits ensure secure and transparent payments
    between parties either with cryptocurrencies or facilitating safer payment of normal
    currencies.

•   Improved business processes: Blockchain can facilitate a system where when the
    customer checks out, immediately the cleaning service can be notified that room is
    free. This can allow them to prioritise rooms to clean by which rooms have a customer
    coming later that day and which rooms have already been check out of. This increases
    customer satisfaction by decreasing the number of rooms that are not ready for the
    customer yet once they arrive.

•   Loyalty: Blockchain decreases the chance of loyalty scheme fraud, with accurate
    tracking of the points on the system and prevention of duplication/mistakes.

Mythbusting

                    Myth                                                  Myth
If bitcoin crashes so does blockchain                  Blockchain is only for tech gurus

                    Truth                                                Truth
  Blockchain is not any kind of crypto currency,        Blockchain can be used in almost any industry
 including bitcoin. It’s the platform that crypto is       including: retail, hospitality, health and
 built upon. If a website fails you don’t blame the    education, and can be understood at a strategic
 internet. If a story fails you don’t blame books.     level to help you achieve goals better and faster.

                    Myth                                                  Myth
     Blockchain is uncontrollable                                 Blockchain is slow

                    Truth                                                Truth
 Blockchain isn’t always public and unrestricted          Many blockchains aim at close to real time
 in growth. If you developed a unique blockchain        speed in transactions of information. Private
   for your business, it could be created to be          blockchains for your organisation are often
         controlled by your organisation.               faster than the public ones you hear about on
                                                                           the news.

Does blockchain fit into
                             your business?

Tracking                                                                       Fraud protection
Blockchain enables tracking for organisations that would like to               If your organisation needs protection
track what goes on int he business more closely and with more                  against fraud, blockchain prevents
accuracy For example, you could track where your product is in the             misleading information from being
distribution cycle. You can also allow your customers to track their           stored in your database as it ensures
parcel’s progression, building trust and transparency.                         accuracy and information stored is
                                                                               unalterable.

Control                                            Security
Blockchain gives you another level of              Organisations with a high
control over transactions. For instance,           emphasis on security can
consumers in loyalty programs often                benefit from blockchain. This
have unused points that are low low to             includes industries that handle
be redeemable for anything. This leaves            everything from medical
the company with millions of dollars               records, market exchanges,
worth in points floating around unused.            real estate, and maintaining of
Blockchain enables micro transactions              customer data. The computing
without a transaction cost from third              power required to break into
parties, allowing consumers to use up              a blockchain network is so
their points, and therefore interact with          immense that it is essentially
your company more often, increasing                impossible to do.
frequency of exposure.

When should you NOT use
          blockchain?

Simply jumping on the blockchain bandwagon? Your app probably doesn’t
need blockchain. Blockchain without a purpose (or created for the sake
of publicity) are not likely to succeed. Other times you should not use
blockchain:

•   Your use case does not involve a database

•   If numerous users are not going to be updating with the data base, a
    centralised database should be used

•   If the users do not need to trust each other then a multi-copy centralised
    database should be used

•   If transactions do not interact with each other or depend on each other

References
https://blockchainatberkeley.blog/building-it-better-a-simple-guide-to-blockchain-use-cases-de494a8f5b60

https://ripple.com/use-cases/banks/

https://www.revfine.com/blockchain-technology-hospitality-industry/

https://www2.deloitte.com/us/en/pages/financial-services/articles/making-blockchain-real-customer-
loyalty-rewards-programs.html

https://hackernoon.com/wtf-is-the-blockchain-1da89ba19348

https://hackernoon.com/how-will-blockchain-make-you-save-big-money-on-shopping-a199d47d8db2

https://blockgeeks.com/guides/what-is-blockchain-technology/