New booking systems signal next step for blockchain

Efforts to create decentralized, blockchain-based travel booking platforms have been in development for several years but now two new systems are debuting – one for hotels and the other for short-term rentals. 

The creation of these new direct-to-consumer channels, for hotels by Winding Tree and rentals by Dtravel, marks a new stage in the evolution of blockchain for travel distribution – and evidence that what may have initially been viewed as a fad is now gaining much broader acceptance and adoption. 

And while these two new offerings are launching with different strategies, both are focused on putting more control and more revenue into the hands of hoteliers and rental hosts. 

WIN from Winding Tree

Since going live last Wednesday, Winding Tree says it has had more than 80 rooms nights booked through its new WIN tool at three Amsterdam hotels that are participating in the pilot - DoubleTree by Hilton Amsterdam Centraal Station, Hotel Herbergh and Zoku Amsterdam. 

This is the first – and for now only – city where the system is operational, as part of Winding Tree’s new strategy to launch WIN in conjunction with blockchain-industry events. In this case the event is Devconnect, an Ethereum conference that began yesterday and ends on April 25. Future launches are timed to coincide with Ethereum-focused events in the coming months, including ones in Paris, Prague and Bogota.

For this first use case, Winding Tree promoted the opportunity through its social media channels, and in the future says it hopes to partner with conference organizers to share the booking link tied to their events.

“Winding Tree, since the beginning, we are trying to fix the travel industry from the inside - trying to change the plumbing for companies. It’s been all about distribution from the beginning,” says Maksim Izmaylov, Winding Tree co-founder and CEO.

“We’ve been talking to hotels and airlines and there’s always all these barriers – ‘This is so hard, we have to talk to corporate...’ We cannot and we will not limit ourselves anymore by these guys limitations... so we said how about we go B2C.”

For now the system is not set up to connect directly to hotels to capture live availability and rates. Instead the three hotels participating in this test in Amsterdam have provided a fixed number of rooms to list on WIN, at prices the operators say sit somewhere between their direct booking rate and those offered on online travel agencies such as Booking.com and Expedia. 

“We get about 30% of our business directly and then about 25% through a couple of the main online travel agents. And that business is of course commissionable and depending on the type of placement you want to have you can end up paying anywhere between 12- to 25%,” says Floris Licht, manager of the DoubleTree.

“So for us as a hotel it’s always interesting to explore different distribution channels and different ways of booking.... And we are happy to split that saving between us and the guest, so something like 10% cheaper is not unachievable.”

A sample booking inquiry found rates discounted substantially more than 10% compared to the OTAs. For a queen, single occupancy room for three nights, April 25 to 28, at the DoubleTree (not including city tax or tourism fee) WIN offered a rate of $627 while it was $949 on Booking.com and $953 on Expedia.

Izmaylov says for the pilot the system is not taking any commission on the bookings, but when it is fully functioning as a decentralized organization (DAO), participating properties will make a contribution of between .5 and 1% per booking that will go into its treasury – with governance of those funds, including any changes to those rates and to the smart contract that controls the system, decided by platform users (hotels, travelers, etc.). 

Travelers must connect a crypto wallet to WIN in order to make a booking, which is paid with xDAI, a stablecoin running on Ethereum that is pegged to the U.S. dollar (value at publication $0.997). A hotel that has a crypto wallet can receive the payment in that form; if not the hotel pays a conversion fee to receive payment in fiat currency.

Once the booking is made, the smart contract sends the traveler the confirmation in the form of an NFT, which can be generated as a QR code that can be scanned by the hotel at check-in. 

“I only see upsides. If you are at the forefront of this and there is a group of early adopters who are enthusiastic to use crypto and booking via blockchain, you have a choice as a hotel to be there on that platform or not to be there at all,” Licht says.

“It’s definitely something positive for us to be part of this pilot, and I am very much looking forward to taking this to the next step.”

Anke Wynia, who owns and operates Hotel Herbergh, learned of the WIN opportunity through her son Vincent Somsen who works for Winding Tree. Wynia says in the more than 20 years she has owned the 24-room property she has paid more than two million euros in commissions to online travel agencies, with about 80% of that going to Booking.com.

“I like Booking.com and also Expedia – they do a very, very good job... but the online travel agents it is a big, big business,” she says.

“We also work with Airbnb. The commission used to be only 3% but then they raised it to 15% for the professional hosts... and if you do breakfast included, they get a percentage of the breakfast too.”

Wynia says along with a lower fee, she also likes that a blockchain-based system such as WIN provides more control and privacy for the traveler.

“I think in the new economy people will be more hesitant to give their personal details. Now the OTAs or Amazon or whatever – they know everything, and they use it for marketing,” she says.

If you are at the forefront of this and there is a group of early adopters who are enthusiastic to use crypto and booking via blockchain, you have a choice as a hotel to be there on that platform or not to be there at all.

Floris Licht - DoubleTree Amsterdam Centraal Station

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“With Winding Tree I don’t get that information, but at check in I can request it directly from the guest.”

Izmaylov acknowledges that in addition to enabling blockchain-based bookings with benefits for hoteliers and travelers, these early efforts are also about educating people on this new form of distribution.

“We are selling hotels on the vision here. If you own the wallet, if you own the keys, if you operate independently, this is completely a peer-to peer-relationship, a direct relationship with your customer. There is no intermediary,” he says.

“I don’t know of any other company who really truly, without inserting themselves as middleman, has done this. There are companies that take crypto for booking hotels, and yes that is a valid business opportunity, but it’s not decentralization. It’s not the ethos of Web3. It’s not the ethos of blockchain. We have to get rid of intermediaries. It’s a journey.” 

Dtravel’s pivot

Dtravel launched last June as a marketplace for blockchain-based bookings of private accommodations.

Now the company is changing its model. After meeting with hosts over the last several months to learn more about their needs, it will launch a direct booking product that is set to go live in May.

“There’s a real desire [from hosts] to drive more bookings back to their direct sites,” says Melanie Amos, head of operations at Dtravel.

“OTAs bring a lot of demand and there are some benefits that come with it. But for a lot of hospitality entrepreneurs, vacation rental property managers, they are getting repeat bookings and repeat guests, so being able to drive them to a direct booking product was something that was going to add real value to their business.”

Dtravel is starting with a minimum viable product launching in partnership with Hostaway. Through an API integration to its property management system, Hostaway customers have the option to “turn on” Dtravel as a distribution channel, enabling on-chain bookings without a big learning curve or change in operations for hosts. 

“But the booking is facilitated through a smart contract. That’s where the transparency, the control comes back to the host in the settings that they’ve indicated for cancellations, pricing – that smart contract, once the booking is executed, effectively takes care of when the payment goes out, when cancellation is available or not,” Amos says.

“From the front end as a guest or as a host it’s a very familiar booking experience, but it’s the transparency and control on the back end through the smart contracts and blockchain that is really the differentiating factor.”

By enabling Dtravel as a distribution channel, hosts get a “listing page” for their properties that can be shared directly with guests to complete a booking. 

Payment can be made in cryptocurrency, with no fee to the guest, or with a fiat currency, in which case the guest would pay a conversion fee. 

Hosts must create a cryptocurrency wallet – Dtravel provides assistance if needed – and connect that to the system to access their revenue. 

For each booking hosts pay a 5% fee that goes into Dtravel’s community treasury, which is used to run the platform. Like Winding Tree’s WIN, Dtravel is a decentralized autonomous organization, giving all members ownership and the ability to participate in governance, including decisions on how funds are spent. 

“They don’t need to worry about the smart contract space, because we do all of that  for them,” says Cynthia Huang, head of growth at Dtravel.

“But eventually the vision, as we move to true decentralization, is that all aspects of the smart contract could be controlled by a host. We recognize that not all hosts will want this responsibility but for the ones that do... they could deploy their own smart contract and manage it and make changes to it as well. That’s the vision we’re building toward.”

Hostaway founder and CEO Marcus Rader says he believes systems such as Dtravel will continue to gain traction in part because “there are a lot of people who are not fans of big, centrally-controlled systems.”

“Dtravel’s cutting-edge approach to community and its mission around empowering hosts to not only know but personally realize the benefits of Web3 is inspiring and will surely change the way this business is conducted well into the future,” he says.

Rader says about 2,000 property managers with 40,000 properties currently use Hostaway and some have started to ask questions about blockchain-based distribution. While he will not predict how many will choose to enable bookings through Dtravel, he expects it will attract interest.

“Usually, property managers want to minimize the amount of time that they spend, because time is money and it eats into their profit margin... so most focus on the channels that work really well for them,” Rader says.

“But I think for Dtravel they are bit different because there will be a lot of passion-driven decisions – people will choose to go live with this whether it brings them bookings or not. And having a simple reservation process actually makes it easier for the property manager compared to some of the new OTAs that have come out in recent years.”