When Microsoft announced in November 2016 that it was working
with Australia-based online travel agency Webjet to build a blockchain proof-of-concept
solution, the term “blockchain” was still relatively unknown.
Fast-forward less than 18 months, and now blockchain has become
one of the hottest topic across not just travel but also finance, healthcare and
many other industries.
For Webjet, the company has focused its blockchain work on the B2B side
of its business, WebBeds, which offers more than 250,000 hotels in Europe, the Middle
East, Africa, North and South America and Asia through its brands Lots of
Hotels, Sunhotels, FIT Ruums and JacTravel.
PhocusWire spoke to Graham Anderson, Webjet’s head of information technology, about what the company has learned by embracing blockchain to add
efficiencies and alleviate friction in the hotel booking process.
When did Webjet begin exploring blockchain?
Our focus around blockchain came up around April 2016. There
was a fair amount of news in Australia at the time. The Australian Securities Exchange
was talking about blockchain, there were other financial institutions talking
about blockchain. That piqued our interest.
And specifically what issues did you want to solve?
We started looking at opportunities we saw with the hotel part
of our business. In hotel distribution there are many players from the hotel
through to the client, whether they are wholesalers or other OTAs or local
distributors.
What we noted from our experience is when we come to reconcile
payments downstream, there are challenges. We thought, what if there is a distributed
network that is fully audited and a source of truth between how these systems
talk to each other?
Then we could build some level of workflow which would
highlight errors and problems earlier, so we could push the workflow to deal
with those problems much closer to the time of booking versus the time of
checkout.
The blockchain tech does provide as single source of truth
for buyers and sellers in a marketplace for hotel rooms. That’s the premise
behind it.
The attributes of the blockchain are that it is decentralized and
distributed, meaning that effectively there is no single owner, but a there is a single
source of truth. And it is indisputable, nobody can tamper with it, and at the
end of the day, it becomes a trusted network.
Once you decided to explore blockchain technology, what was
your next step?
This was April 2016, and the skillset around the world was
limited. We called one of our partners, Microsoft. They decided our idea was a good
enough use case for them to partner up with us to explore further and learn
together.
We put our people into it, they put their people into it and we came
up with a rudimentary version of the blockchain which would take feeds from the
two systems we had at the time - our Lots of Hotels system and our Sunhotels systems.
We built a smart contract that would match the bookings and throw up any discrepancies
and any disputes. For instance, if one side thinks it’s canceled and one side
thinks it’s booked in their system, that would throw up an alert.
We’re still
engaged with Microsoft, but we are more standing on our own two feet now. We
have a bigger team working on this, and we have our own skill sets.
Tell us about the solution you’ve created.
What we are trying to do is to provide a marketplace that a buyer
and seller can come into, they can subscribe onto the blockchain solution, and
then they can choose who they are doing business with and basically map, this is
what my reservation file looks like, this is what your reservation file looks
like, this is how we’ll agree to do business.
So it will map on certain fields
and certain selling thresholds. We’ll only flag things up if they have a
certain cost difference, or we’ll only flag them up if they are canceled in one
system and not another.
In the event there’s a problem, the smart contract notifies
back to the reservations teams of those businesses, so they can contact each
other and sort out the bookings then.
Your blockchain system has been in operation for about a
year now. Have you been able to track any cost savings?
Yes, there are a couple of areas. There is the labor costs
to address disputes. We’ve pulled out various disputed bookings, and we’ve
looked at what it has taken us to resolve some of those issues, to measure the
inefficiencies caused by having to dale with those disputes. We came to an
average of 15 minutes for mismatched booking in the back office.
We also looked at what’s the general approach to dealing
with these disputes, and quite often there is some out-of-pocket expense to
settle these disputes with both parties.
The booking has effectively happened
so it comes down to the finance people from one company working with finance
people from another company and coming to some agreement about how to settle
that potential dispute.
We saw around 70% of those bookings have a hard loss,
out-of-pocket funds. And about 90% of those could have been avoided if we dealt
with them further up the chain rather than waiting for them to hit the back
office with an invoice you don’t recognize. So those are the kind of metrics we
were looking at – the labor cost and the expense.
What’s next for Webjet regarding blockchain?
We are pretty comfortable with our smart contract and our
blockchain ecosystem, how the nodes work together, how it’s running in production
for our businesses. It can scale. It’s robust enough to be production-ready.
The key areas we are working on now are the change management side of things, because
it’s not just about the tech, it’s about how you introduce the tech into the
workflows.
Reservation staff who typically don’t get involved in these disputes
because it was a finance problem downstream are now starting to see more timely
notifications coming in where there is a potential problem they have to deal
with. So there’s the whole training aspect of what to do and how to work with
the information that comes from the smart contract.
The other part we are building up is the actual marketplace.
We are anticipating there will be others like us who want to take advantage of
the efficiencies we see from this tech and will want to subscribe into this
marketplace. It will be a distributed infrastructure, and we will be providing
nodes into that.
What are you views of blockchain’s potential impact on the
travel industry?
I’ve got no doubt it will be disruptive. From talking to other
partners in this community, because we often will participate in conference circuits
and talk about the what we’ve done and the lessons we’ve learned, and through
that we meet other parties who are looking at blockchain whether in travel or
real estate or banking.
We’re seeing there’s so much interest out here. I think
some of the thinking is the tech isn’t quite where it needs to be to meet some
of the ideas that are out there. I don’t think you could run a high transactional
system just yet. You couldn’t shift all of your marketplace onto a blockchain
and transact directly from that. I think there are steps into that process.
I
think we are a couple of years before we start to see the true disruption in
the travel industry, but I think there is some really great thinking going on.
It’s an exciting space for us. We’ve been persevering on it for
a number of months now. We’re seeing the fruits of the work and looking forward
to our future working with it.