TUI Group was one of the first travel brands to make
headlines for its adoption of blockchain.
Based in Germany, it's one of the largest travel and
tourism companies in the world, with a portfolio of 1,600 travel agencies and
online portals, more than 300 hotels, five cruise lines, five airlines and transfer,
excursion and tour services in 115 destinations serving more than 20 million
customers.
It's currently running its
property management systems on an internal blockchain and developing public
blockchain solutions for additional use cases.
PhocusWire spoke to Dr. Lukas Schack, TUI Group’s head of blockchain
engineering, to find out why he believes this emerging technology is a viable solution.
When did you begin
exploring blockchain?
We started in autumn 2016 on a conceptual level. At the time
it was having impact on financial applications and we thought what could we do
with it, maybe something besides payments.
We wanted to test it in an agile
approach. We started with a proof of concept testing a very specific small
problem. The basic idea was to carry hotel allotment from one source market to
the other.
It’s obvious that inside the TUI Group of course we trust
each other, and blockchain is well-suited for business interactions between partners
that don’t trust.
But we said, let’s do it in our known environment and learn
from it. Learning which technologies to use - we decided on Ethereum because it
comes with the smart contract capabilities. We also want to learn which people
are capable of doing it. How to build our own internal capacities and so on.
Tell us about this
first blockchain solution you created.
Before that we didn’t have any of this transparency
throughout the group - we didn’t know which hotel’s capacities were available
at which source market.
And then if we had different rates in different source
markets ,it was our problem to solve that. Now with this tool we have the opportunity
to shift capacity from one source market to another and maybe get better rates for
it or are able to fulfill our guarantees in the first place.
It’s live and in production system, and we use it nearly
every day. We learned it’s a really good single source of truth. Even though
internally we trust each other, from time to time we had some times when it
wasn’t clear what was inferred from one source market to the another – it was
very manual process with a lot of emails and telephone calls.
Information can
get lost. Now we have this one source of truth. It makes the everyday traders’
lives easier. We also learned which capabilities we need to have the solution running
in terms of technology and people and so on.
And now will you
expand your adoption of blockchain?
We will definitely continue on, but with other use cases.
From our learnings with the first project it got clear that we need some type
of blockchain core or platform where on top of that we can build any use case. We
started building this platform, and it’s still under development right now.
We
have some upcoming use cases in mind, and we are in the process of agreeing on
one, all relying on the same blockchain stack. It’s Ethererum plus smart
contracts plus all the applications around it and the APIs to communicate
between the nodes.
Can you give us an
example of a use case you are exploring?
One idea is to use blockchain for making contracts with third-party
suppliers. What differentiates us from many other travel companies is we have our
people in place in the destination and also offer tours and products there like
excursions.
And we want to do this with small suppliers - maybe a single person
- because we think smart contracts offer a great possibly to make contracts with
those individual persons with a very high grade of automation. So those individual
suppliers don’t have to go with an army of lawyers to make those contracts.
It’s
a very easy onboarding of external suppliers for travel. We are also thinking
about a solution for peer-to-peer selling of those excursion products, for
example. You could think of it as a marketplace for touristic products - excursions,
tours, and so on.
Why is blockchain a
good solution for this?
All of it boils down to this trust aspect with individual
small suppliers in the destination services space. TUI stands for some kind of
quality. So if a customer books a trip with TUI, he does that because he trusts
TUI.
If we want to sell excursions in the destination, we also want that customer
to know he can trust this person. And the other way around as well. In new
markets – Asia – why should those suppliers trust TUI? This trust come directly
from the technology stack.
If you agree on the smart contract, which is
transparent for all participants, then you can be sure this contract is valid
and cannot be changed afterward.
How could blockchain
change the experience for the traveler?
The purchasing itself will be the same, but it’s more about
the convenience coming with it afterward. This comes from the fact that in the
blockchain world you need a unique ID of the customer and the unique ID of the
product.
It could be the hotel room. You have the right to use this hotel room
for a specific amount of time. When there is a purchase in this blockchain
world it means you combine the identity of the customer with the product - the
hotel room - and you have it in a digital format and then you can do many functions around it like keyless entry to the room, personalization.
What’s next for your
blockchain development?
For the bed-swapping project - on the backend side everything
is on our private blockchain. We see for all upcoming solutions a public
blockchain.
It has some more challenges coming with it in terms of all the information
stored in smart contracts may not be visible to all participants in a public
blockchain network so we are still working on a solution for that.
The concrete next steps are to continue developing this
platform and then the use case with ancillary suppliers in destination, to create
easy onboarding of new suppliers, making it easy bookable for TUI and non-TUI
customers.
I think we started quite early, which puts us two steps
ahead of some of our competitors which is an advantage. Blockchain still is in its
infancy. The technology will develop quickly this year and with that new use
cases will emerge in all industries.
We are open for all collaborations. But we
also want to still increase our in-house capabilities, since we think it’s a
very important part and it will become more important for the future. So it will
be important to have in-house abilities.
But of course strong alliances with
other parties into this space are also welcomed. We do have a cooperation with Plug and Play,
the Silicon Valley incubator, and with those we have a lot of contacts to
startups and many in the space of blockchain.
And we have a lot of good proofs of
concept with them and we are exchanging some ideas and doing things together.