LockChain: Disrupting the global online travel agency industry

This post was inspired by a section of a recent podcast from the philosopher / neuroscientist Sam Harris, who chatted to decision theorist / computer scientist Eliezer Yudkowsky about why or how good people work within evil systems, citing societal problems as examples in point. For instance, we might ask why there are food or water shortages in some regions of the world when the planet is still resourced enough to prevent starvation, or why we continue to vote none-of-the-above, best-worst “nincompoop” politicians into power. There is what Yudkowsky calls (in the podcast) a coordination problem:

“Everything [people] could locally do on their own initiative is not going to fix the system and it’s going to make things worse for them.”

Rather than tolerating the status quo, people need to move to new marketplaces or vote in new politicians en masse. Many industry-disrupting platforms can be found operating in the cryptocurrency environment. Lockchain is a blockchain-based commissionless platform operating in the online travel agency (OTA) and accommodation provider space. Harnessing secure Ethereum Virtual Machine and Microsoft.NET server technologies, the app and platform has the potential to be used in the same way as big OTAs and other accommodation aggregators like Expedia, AirBnB, Kayak, Trivago, and Booking.com.

Compared to the OTAs (about 45%), hotels spend a fraction of their budgets on advertising (c. 7%). In effect, the online travel agent maintains its servers and shopping carts, and is market-focused. A hotel maintains its rooms and grounds, provides meals, security, a friendly face at reception, a twenty-four-hour bar, the newspaper at your door, and more.

Many of these bigname OTA services command huge commissions from their listed hotels when we make our bookings through them.

And hotels can be rewarded with more prominence on a hotel aggregator website if they get great reviews, for instance. But perversely, these hotels are often asked to pay more in commission for that prominence (sometimes 40% per booking). How can a travel agent highly recommmend a hotel and its great service, while undermining its ability to maintain that great service by taking more commission?

Startups using blockchain-based technologies aim to disrupt such insanity, breaking vicious cycles and mutual – often parasitic – dependence.

The “Coordination Problem”

The monolithic Amazon has undermined author earnings through its lack of monitoring of clickfarms that “fake” reads, while it clamps down on genuine reviews from colleagues, friends and families.

What of Apple and Windows? Apple has its critics today, but its Mac OS was historically superior to Windows, less likely to crash, less susceptible to viruses. Windows and Microsoft’s practices – on pricing and making certain applications like Internet Explorer freely available to undermine competition – prevented Apple (and other, superior operating systems) from gaining market dominance.

The blockchain environment challenges convention in various ways, offering people the opportunity to migrate to more cost-effective and secure services and platforms. Perhaps on a related note, in his podcast, Harris cites what he calls “the power of incentives”.

So how are regular travelers incentivised on LockChain?

Through lower hotel and accommodation rates, with zero commission to the online platform. If the agent charged 20% commission, the hotel, using the blockchain-based platform, can now instead split the difference with the hotel guest, or reduce the price to the guest of the hotel room by 20%. Guests enjoy better services from the hotel itself, which can perhaps take five or ten percent of that 20% commission it would have lost in a hotel booking, and spend it on chocolate mints on your pillows, or a complimentary pina colada on your arrival. Yummers.

On LockChain‘s app, hoteliers don’t artificially inflate their prices because of guarantees that they make to the online travel agents, who insist on offering the “best advertised price” (or similar) to their site users (while charging the hotels 20% of that best available deal). In keeping with the peer-centered, democratic, decentralised nature of blockchain technology, LockChain doesn’t hold accommodation providers to such guarantees.

Its CEO Nikola Alexandrov and CFO Hristo Tenchev have experience (both good and bad) in the cryptocurrency field. They got burned after establishing one of the first cryptocurrency exchanges (many of which operate at a loss, according to Alexandrov, as they’re under frequent attack from hackers), they’ve learned from their mistakes.

According to its Medium channel, at the end of last year, the blockchain startup could count 100,000 hotels in its listings thanks to partnership deals. Compare that to Trivago (“The world’s top hotel price comparison site”), which currently boasts (in its adverts in the UK and Ireland) a million hotels. Many in Europe (at least) have heard of Trivago. And who has yet heard of LockChain, already with a tenth the number of Trivago’s hotels on its books?

Find out more about LockChain on its site. Follow them on Twitter and Facebook.

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