Travelport turns to blockchain to settle hotel commissions

The system will validate the commission payments owed by hotel chains to booking agencies for services bought by travellers

Travelport is developing a blockchain-powered platform that will reconcile the commissions that hotels pay when travellers buy services through booking agencies.               

The Langley, UK-headquartered company is responsible for the Travel Commerce Platform that processes over $83 billion of spending per annum across airlines, car rentals, tour operators, hotels and booking agencies including Easyjet, Hyatt and eDreams.

When hotels receive a booking through a travel agency on the platform, that agency receives a commission from the hotel, but the precise fee can cause confusion when travellers make modifications to their booking.

Extended stays, room upgrades, no-shows, early check-outs and complimentary nights often create inaccurate payments for both the agency and the hotels, while also making it harder for them to budget and produce financial forecasts. This commission reconciliation process is a major pain point for 34 percent of travel agents, according to research by Travelport.

“If you get to the larger corporates, if the settlement process and the friction of doing business with say Marriott is better than doing business with Hilton, then the corporates may move their travel business,” Travelport chief architect Mike Croucher told Computerworld.

The blockchain platform aims to ensure that payments are made more accurately and quickly by tracking the lifecycle of a booking through a distributed ledger, which offers a single source of truth about its progress and the amount of the payment.

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Croucher believes that it provides transparency and trust into the distributed data accumulated from the range of records used by all the companies on the platform. It would also spare them having to pay a third party to chase down the reconciliation.

“There's a large cost to both sides of the equation in that, and it takes time for that reconciliation,” he said.

“We as a company have never been in this role before. This is a new business model for us to build a capability that's a lot more automated, transparent and trusted between the partners that would take that cost out between our customer base.”

Developing the Travelport blockchain platform

Travelport designed the system through the IBM Garage, a consultancy service that helps customers experiment with new digital ideas. Travelport picked IBM because the vendor provides much of the travel commerce platform’s existing IT base, and also offered the chance to design the system through a blockchain studio in the IBM Garage.

It then worked with IBM Services and travel management company BCD Travel to understand the interface, information, workflow, reporting and integration they needed from the system that would satisfy all its users.

Just four weeks after leaving the IBM Garage, Travelport had created a minimum viable product that uses blockchain to streamline the commission reconciliation between BCD and three hotel chains, including Hyatt.

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Croucher now wants to roll out beta versions of the platform early next year. He believes that Travelport’s strategy of building it as an ecosystem rather than a standalone product will help it quickly attract new customers.

“It allows us to put a product on the shelf that's a lot more efficient for our customers, takes cost out of all sides of their supply chain, and at the same time delivers it at speed,” he said.

Copyright © 2019 IDG Communications, Inc.

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