Hospitality-Based Blockchain Taps Into Millennials' Love Of Cryptocurrencies
Who would have thought that the idea of collecting tokens in video games would eventually inspire the hotel industry to do the same?
Millennials innately understand the backbone of cryptocurrency — and they are the next wave of consumers.
“They are the digital native,” Chairman and CEO of Brillembourg Holdings David Brillembourg said. “How they relate to brands and their brand loyalty is very different.”
Seeing this trend emerging, Brillembourg created STEP, a blockchain protocol designed to decentralize the coordination of travel goods and services, starting with hotel room nights.
Hotel owners and travelers are the major stakeholders in the new system, which allows for alternatives to online travel agencies. Hotel rooms become currencies, which can be exchanged by both hotels and patrons. This decentralizes information in the travel industry while still keeping patron information secure from data breaches.
Blockchain is trending across several industries, most notably the banking industry — where 90% of North American and European banks are exploring the idea, according to an article on the steemit.com website.
The blockchain market is expected to be worth $3 trillion by 2024, according to the article.
A year ago Microsoft entered into a partnership with R3, a consortium of more than 100 banks. The number of blockchain users grew from 10 million to 19 million between November 2016 and November 2017.
After researching demographics and studying the next wave of consumers, Brillembourg said millennials not only understand cryoptocurrencies that rely on blockchain technology, but also expect it. Blockchain is less susceptible to data breaches and makes information more secure. Participants can choose how much information to include in their profiles, much like they do in a gaming system.
As the name implies, blockchain transactions are recorded in blocks of information. Each block is connected to the block before. This makes hacking difficult since the hacker would need to change all the blocks to avoid detection. Each block is secured by its own cryptography, which means that each participant in the network creates an individual digital signature. Information is not contained in a single, centralized location. It is a peer network, making disruption very difficult.
“They can control their identity,” Brillembourg said of the users. “All these things being hacked, people losing their information. The blockchain allows you to protect your identity.”
The unique minting algorithm prices STEP room contracts through a separate STEP currency, called STEPcoins. Those are tied to the creation of travel-related goods, such as room nights.
Hotel rooms and other goods and services become the currency. Hotels can then set pricing, volume discounts and exchange restrictions all encoded on a public chain. Any user can select goods through a transparent shared-data layer. The major players are hotel owners and travelers, as well as “master travelers,” such as event planners, tour operators and travel club leaders, who are super-users of the system.
Reviewing goods and verifying providers are simple ways to gain tokens. It improves the reputation scores of service providers and builds community within the system, offering validations, curation, governance and loyalty-based bounties to the users of the system.
Users on Yahoo — and other review sites — take the time to give reviews of hotels in the service industry. Brillembourg said such reviewers would be rewarded in this new system through "work-in" credit. Reviewing goods and verifying providers are a few of the ways that consumers can gain credit in the first hotel-specific blockchain. Hotels view reviews as a valuable marketing tool, so those patrons who take the time to offer a review should be rewarded through the blockchain currency.
“The key word is participation,” Brillembourg said. “That’s how blockchain works. It’s community.”
Brillembourg hopes STEP’s protocol will provide a decentralized blockchain for both hotels and travelers.
“Cryptocurrencies are on everyone’s mind,” he said. “We have figured out a way to make it work in the travel industry, and we are very excited.”
Brillembourg will be one of the panelists at the Bisnow Lodging & Innovation Series, West, April 26 in Los Angeles.