How Web3 could completely transform the travel industry
by Freddie Hickman, CEO and co-founder of Hyper SQ
Since the birth of aviation to the advent of online ticketing, the travel industry has enjoyed significant technological progress over the past century.
While large swathes of its evolution have been incremental; some instances witnessed more pivotal, radical leaps that fundamentally forced us to rethink aspects of an industry that contributes nearly $6 trillion to the global GDP.
Despite the remarkable progress, the industry remains burdened with inefficiencies and fragilities. Its reliance on intermediaries and the overall opaqueness across the ‘travel value chain’ continues to drive inflexibility, with higher costs ultimately passed on to travellers and businesses alike.
And though the industry appears highly distributed and regionalised on the surface, it’s a fundamentally centralised category with a small set of entities controlling the bulk of the ecosystem.
Expedia Group, Booking Holdings, and AirBnB dominate the sheer majority of the online booking market, which is predicted to top $691 billion by 2026. Meanwhile, for decades Amadeus, Sabre, and Travelport have controlled Global Distribution Systems (GDS) that enable transactions between service providers such as airlines, hotels, and travel agencies. These largely unchallenged gatekeepers continue to profit from significant fees and information control.
That said, we’re possibly in the early innings of a new S-Curve pattern of innovation. The wider propagation of blockchain-enabled technologies could help spur another burst of progress that might reinvigorate travel. As a particularly ledger-heavy industry with its intricate network of moving parts and information exchange, the direct use cases are incredibly compelling and abundant.
Think about your luggage when you last travelled for a moment. Since it changes hands several times during its journey, a decentralised open-sourced database could make tracking between companies and entities far more transparent, instead of the black-boxed network with data silos today.
But direct blockchain-enabled applications such as this are not necessarily new. For instance, Accenture developed the Known Traveler Digital Identity System to enable a freer flow of data between travellers and customs agents to ease the clearance process.
Things get exceptionally interesting when we expand our thinking beyond the underlying blockchain technology and consider the broader possibilities of Web3.
Consider a relatively simple use case around ownership: ticketing. Travel is one of the largest industries that doesn’t have a secondary market, severely limiting the flexibility of a traveller. NFT tickets could be programmed to give travellers complete control of managing and disposing of their tickets and enable the airline to collect some percentage of the upside defined in the smart contract. Again, this is one of many relatively simple and skeuomorphic concepts possible with Web3.
Now let’s consider a more hypothetical use case. You’ve probably read some reviews the last time you planned a holiday. How did you know these reviews were genuine? Were there any hidden financial incentives? Instead of relying on blind trust, a ‘proof-of-travel’ protocol that links on-chain credentials with physical places could help build a network of unquestionable authenticity.
Contributions such as reviews could be attached to a composable identity that creates a lasting reputation, becoming a valuable asset. These contributions could be financially rewarded in proportion to their value in growing the network (rather than merely likes and thumbs up on existing review platforms).
But, as mentioned, a few incumbents currently dominate large swathes of this intricate industry. These entities are unlikely to welcome innovations with open arms that might disrupt their existence. Moreover, the spectacular downfall of FTX, which caused severe shockwaves across the entire Web3 industry, reminded us of the steep challenges ahead of this young and rapidly evolving ecosystem.
We are potentially in the midst of a new phase of radical innovation, but we’ll likely see several false starts and criticism until the actual value of Web3 becomes fully realised.