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3 Ways Blockchain Is Changing the Hospitality Industry

Posted by Thai Pham on

Blockchain technology has disrupted the way organisations view innovations in business. A blockchain is essentially a permanent and incorruptible ledger, providing visibility and audit-ability of all the transaction data, securing both digital assets and their value. For the hospitality industry, blockchain opens up new potentials and applications that are not only propitious but also inevitable in the future. 

3 Ways Blockchain Are Changing the Hospitality Industry

Read more: 5 Digital Transformation Trends in the Hotel Industry

3 substantial applications of Blockchain in Hospitality

Hospitality operations typically involve multiple parties participating in a typical transaction, creating complex procedures and problems. Since Blockchain is an encrypted, distributed-ledger system, it removes the middleman in transactions, ensures the validity of inputted data. Hence, empowering Hotel services to elevate customer experience, improve operations and benefit directly from customer’s purchases. There are three main applications of Blockchain in Hospitality: Loyalty Management Programs, Customer Insights and Supply Chain Management. 

Read more: Should Hoteliers Consider Implementing Cloud Applications?

Loyalty Management Programs

For the hospitality industry, it is far more economical to retain an existing customer than to acquire a new one. Therefore, any hospitality organisation aiming to elevate their customer experience must be able to provide a seamless experience across the journey, especially the loyalty programs that come after. Multiple studies have concluded that companies that greatly emphasise loyalty programs have surpassed those that don’t.

However, in today’s hospitality industry, the loyalty programs tend to be limited to the particular business only, therefore fail to provide long-term value. Sizable hospitality businesses can partner with their alliances to expand customer’s channels of earning and redeeming points. Yet, it remains challenging for users to turn the loyalty points into actual benefits.

Read more: OLAP Technology: Handling Big Data in the Hospitality Industry

Blockchain can solve the independent loyalty program problem by creating a multi-brand coalition loyalty partnership platform. A blockchain eco-system provides an instant and real-time view of customer purchases and activities. Meanwhile, it also helps shorten and simplify the establishment of partnerships between businesses and the deployment of point brokerage and rules system.

Imagine a system where customers can collect and spend points at multiple providers in real-time. The rewards for loyal customers are now more beneficial and applicable to a broader network of partners, including benefits just to the hospitality provider with whom they engage on a regular basis. Blockchain supports unified ledger technologies and smart contracts that ensure the transparency and enhance the flexibility to redeem their loyalty points with any partner/merchant that is participating in the platform. Blockchain can also make gifting loyalty points to friends and family members come true, enable a flexible, seamless and highly customer- friendly loyalty program.

Read more: How Data Analytics is changing hotel revenue management

Guest Insights and Digital IDs

In the hospitality industry, one of the best ways to attract customers is by providing excellent customer experiences and services.  A superb customer experience is a personalised one, in which the business understands the needs and wants of the customer at every step of the journey and develops a strategy across multiple channels.

With the integration and functionality of IoT and blockchain technology, hospitality organisations can elevate the customer experience and hence make them the centre of the business. Innovative technologies like big data and analytics help organisation dig deep into customer behaviour, and provide insights for crucial decisions like targeted marketing, sense-and-respond messaging.

Read more: Why hotel chains are investing in Business Intelligence

Practically, blockchain can be the future of Hotel Digital Key technology. When a customer arrives at the hotel, they can check-in with the hotel’s kiosk. The digital kiosk can check the advance reservation, sync with the user’s smartphone through an OTP connecting the customer’s device with the hotel’s system. The check-in process is completed with assistance from the underlying blockchain platform: the customer can choose the room based on their preferences, then activate a smart key through the hotel’s app - Lock/Unlock room door with a tap of the smartphone.

The applications with blockchain’s database aren’t limited to the hotel tasks only. For example, thanks to Blockchain’s security, organisations can record and combine data from loyalty programs and customer buying behaviour and create a personal identity map, improve customised marketing and services.

Read more: Winning the guest in the age of Hospitality Personalisation

 What can Hospitality leverage from Blockchain technologies?

Supply Chain Management

Supply chain management includes multiple, fragmented features that operate and impact each other. In Supply Chain Management (SCM) for hospitality, blockchain can be applied to three main areas: Vendor Management, Inventory Management, and Payment Management.

An efficient Vendor management requires constant tracking of the information of all the vendors/suppliers in the market. Specifically, the supplier onboarding data, the background check data and the quality control data about their previous order fulfilments are the crucial details that differentiate the vendors and help pick out the most suitable ones for the business. A blockchain-based solution can ensure a coherent, secured database across a distributed system so that the purchase decisions are made based on reliable, audited data throughout the organisation.

Read more: 5 Technology Inventions that Changed the Hospitality Industry

A blockchain-based solution also supports the Inventory management for hotel chains with its ability to manage the complexity of replicating data across multiple nodes to be processed by down-stream systems in real time. If all parties of the supply chain participate in the blockchain system, the supplies cycle - from the production stage to the shipping process, is visible and accessible for tracking and auditing. An integrated supply chain management will include all the transactions at every stage, along with the transparency of all the product details.

Read more: Blockchain Business Applications: Far Beyond Bitcoin

Finally, Smart contracts on blockchain can automate the verification of relevant business rules of both of the order and payment cycles for each purchase order. As for the order cycle, a smart contract helps the business ensure the lowest price for a specific item in the order from all the participating vendors/suppliers. Within the payment cycle, smart contract ensures the payments are made appropriately and automatically after the order arrived and is checked properly.

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Topics: Hospitality solutions, Technology trends

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