Travelport, a company serving the travel industry, has announced the development of a blockchain solution to enhance the hotel commission reconciliation process. Working with IBM Services and leading travel management company BCD Travel – as well as a number of high-profile hotel chains – their blockchain solution hopes to optimise hotel commission processing. By creating an accurate and shared view of booking status and commissions, they believe all participants parties stand to win.
Commenting on the technology, Travelport’s Senior Product Director, Ross Vinograd said: “Blockchain technology applied to commission reconciliation has the potential to deliver real ROI to both a travel agency and the hotel. Traveler modifications at property, no shows, and complimentary room nights are just a few examples that drive commission discrepancies which in turn generate escalations, cost, and revenue loss.
“Our aim is to put the lifecycle of a booking on the blockchain and we believe doing so will drive transparency, trust, and ultimately booking volume.”
The hotel commission processing problem
Reconciling and paying travel agent commissions is time consuming. Yet, paying agents on time is necessary if there is be loyalty and a continuing stream of business.
The challenge is that there are many different ‘moving parts and participants’ involved in hotel commission processing. Consolidating commissionable transaction information and making it available for all participants to update and review, has been a long-term travel industry objective.
This initiative will use a distributed ledger to manage:
for commission payments owed:
- owed by hotel chains
- for services purchased by travelers
- undertaken via booking agencies.
The blockchain dimension
Blockchain technology behaves like an online ledger. It has the ability to:
- collect data
- build upon that data in real-time
- independently and securely report information
- present this information to however many are involved and have access permission.
This initiative follows on from an IBM Garage engagement. Travelport and IBM Services, together with partner BCD Travel, developed an MVP solution. It uses distributed ledger technology to streamline commission reconciliation between BCD and three high profile hotel chains.
Hotel commission reconciliation processes include a range of challenges:
- from the operational lack of audit trails driving escalations and manual data mapping
- to the financial impairment of revenue forecasting
- to the impact on commission flexibility and duty of care.
Solving this current friction is necessary if all the stakeholders in a hotel transaction are to receive the appropriate compensation and customers to receive their selected ‘travel experience’.
Kurt Wedgwood, IBM Blockchain Leader – Travel added: “Global distribution companies and providers would benefit from this use of blockchain technology to remove their never-ending work of reconciliation to spend that time adding new experiences and insights for the traveler. Eliminating the hours spent addressing dollars in dispute or the timeliness and accuracy of information allows all participants to focus on what matters most: the traveler.”
Enterprise Times: what does this mean
Blockchain is an ideal solution for Travelport to address the hotel commission processing problem. There are many participants in a complex process (not unlike payment or supply chain processing) who are participating in what is a complex series of processes, from a customer making a reservation to everyone receiving their due rewards (commissions).
As Dan Stephenson, Regional Process Owner and Shared Services Director at Hyatt commented: “From my perspective, there are data standardization issues throughout the ecosystem from all parts. One of the things that has attracted me to this particular project, is I see this as a potential solution – one of the only ones that I am aware of that could actually work to solve for some of those standardization issues.
“Frankly, I have two goals when it comes to our payment process – that we pay accurately, and that we pay as quickly as we can. The less time we’re all spending thinking about getting to the right answer, the better off we all are.”
Travelport and IBM say they are currently working in partnership with other industry stakeholders. Their intention is to evolve this solution into an active pilot program.