Travel-hospitality synergy to grow economies - Part 2

Travel-hospitality synergy to grow economies - Part 2

In the first part Gamification: Travel Hospitality Synergies to Grow Economies of this two part series, I had written about how hotels can take control of gamification in travel, using an effective partnership network. In this blog post, let's explore how the other parts of the ecosystem will function, and how technology can be used to enable the synergies.  

Gamification for hotel guests: A summary

The hotel initiates a "game" for their guest to "play", the objective of which is to ensure that the guest has a comprehensive thematic experience, as well as ensuring better share of wallet for the hotel through its strategic partners. In the course of this game, the guest has to traverse all the checkpoints which have been charted out for them, in return for which they gain reward points that can be redeemed either at the hotel, or at their partners. Of course, this draws inspiration from the Treasure Hunter app which was unveiled at the IATA NDC hackathon.  

Sustaining the partnership network 

From a customer perspective, the advantages are very clear. But now let's look at how the ecosystem is managed at the back end; this is not only essential to prevent revenue leakages, but it also determines how sustainable the business model turns out to be in the long run. In a small community – such as a small town which considers tourism its bread and butter, there is likely to be a strong network of relationships to manage the business synergy. Contracts may be enforced and honoured based on mutual trust and agreements. Alternatively, the system may function through on the spot settlements as and when revenue generation activity happens.

But what happens when the ecosystem is too large to be managed on the basis of relationships and simple mutual trust? One cannot assume that the entire partnership network will carry out their contractual obligations without some system to effectively manage the various aspects. 

Complexities in the network and how to solve them 

Clearly, there are a lot of moving parts in such a system and solid pillars of technology are essential to its sustenance. Partnering with external vendors who are outside the direct control of the hotel involves significant efforts for tracking each transaction, accounting for the revenues, calculating rewards and ensuring these are credited into the right heads. There is high likelihood of misreporting the transaction values and concealing revenues, perhaps to fraudulently reduce the share of revenue payable to the hotel for initiating the game in the first place.

It is inconceivable that small vendors who are part of the partnership network would have invested in high end systems to match the hotel's IT facilities. Yet, it is in the best interest of the hotel to implement an integrated technology platform to manage the whole "game" and avoid the heavy dependence on individual systems that don't necessarily communicate with each other. These systems must offer complete transparency (within the network), have secure data storage, and must be protected from any unauthorized modifications to the data and the rules by malicious parties. 

Are blockchains part of the solution?

Storing each and every transaction on a blockchain not only protects the data, but also facilitates implementation of smart contract systems to enforce the agreements which are formed within the partnership network. When a vendor receives a certain critical mass of business from guests sent by the hotel, the smart contract can get activated to disburse the commissions due to the hotel. Penalties can be programmed into the contract rules for failures like lack of volume, under-spending, etc.

Also, the hotel can detect leakages in the stream of business it is directing towards the vendors, without elaborate procedures to ensure complete compliance and transparency across the network. By nature, potential for mismatches in accounting are eliminated in a blockchain based system. 

Conclusion: Technology strengthens relationships

It is evident from the above example that technology has the potential to be an enabler for destinations that are seeking to grow their tourism industry. It is also foreseeable that the local government may want to tap into the said blockchain and monitor the transactions with a view to ensure comprehensive and accurate taxation. The information may then be utilized to provide tax credits to hotels which are able to produce significant volumes, in return for their contribution towards pushing the accelerator on the tourism potential of a locality. However, at the base of the who system is a strong relationship between the partners, governed through the right kind of technology to ensure effectiveness.  

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Wednesday, 25 April 2018

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