11. April 2018 · Comments Off on What is blockchain? by Marisa Garcia · Categories: Uncategorized

In its 2018 Emerging Tech in Travel report, Sabre unravels the mysteries of blockchain, explains how it works, what it means for society, and how it may be relevant to travel. Sabre explains blockchain in a nutshell:  “At its core, a blockchain is a concept for a particular kind of database. Going back a step further, a database is just a means for storing a collection of digital information, usually in away it can be easily be updated and searched. Information within a database can be any kind of value—birthdates, property records, biometric information, taxes, healthcare records, etc.—anything.

“There are many different ways to set up a database, each optimized for different use cases. Some databases are set up for search efficiency, some for extreme data privacy, some for redundancy, and on and on. Functionally, a database is a kind of tool, and not every tool is right for every job.

A blockchain is a new kind of database—effectively a whole new kind of tool to put in the toolbox of information storage solutions. In a world that previously held just hammers and screwdrivers, a blockchain is a wrench. It has functionality that no other database tool can offer, making new kinds of jobs possible.”

“Just because blockchain is a new and buzzworthy technology doesn’t mean its utility is universal. For certain kinds of information storage, blockchain may be superior to traditional databases, but in many cases, blockchain may not be the best tool for the job.”

Cryptocurrency

Blockchain is not cryptocurrency. It enables cryptocurrency transactions. But the rise and fall and rise and fall of cryptocurrencies, like Bitcoin, Ripple and others, has been a big headline grabber in 2018. This new currency is still confounding many and attracting scrutiny from regulators.

Here are some highlights from Sabre on the state of cryptocurrency (with a caveat from Sabre that they are only highlights and not a complete picture of this changing landscape):

  • Most—but not all—countries will require registration to use cryptocurrencies (no anonymity allowed).
  • Cryptocurrency exchanges will become increasingly regulated and will likely require insurance and backing of funds held by investors, becoming more similar to traditional banks.
  • Most countries will forbid using credit cards to purchase cryptocurrencies as a way of protecting consumers who might go into severe debt if cryptocurrencies crashed in value.
  • Most countries will tax cryptocurrency gains in ways similar to other investments.
  • Virtually all countries will allow participation in blockchain networks and the resultant cryptocurrency mining assets that may accrue (even if those assets can’t be spent for now).

Scarcity is good

In an effort to explain why blockchain matters and avoid the hype and buzziness surrounding it, Sabre picks on the concept of scarcity versus ubiquity of data. While most data management systems offer no valuation on the data stored in various fields—until it all becomes a muddy tangle of increasingly dense information—blockchain helps select the relevance of data and marks the datapoint that have the greatest credibility, distributing these reliable data points to fill and strengthen gaps and weak points in the chain of information. It identifies a single source of truth, and disperses that.

“Over the last several decades, we’ve increasingly come to think of digital information as cheap and infinitely replicable. Once something is digitized into 1s and 0s the cost to copy it has come close to zero: documents, songs, images. It costs a user nothing to send an email or to CC: an email to a hundred people. If a million people want a copy of the same song or image, the asset never runs out. This replicability places digital objects in contrast to physical objects, as each physical object takes up space and has a cost.

“The most exciting feature of blockchain is the true scarcity it brings to the digital world. Values stored on a blockchain cannot be copied, they can only be transferred from one owner to another. A value on the blockchain can be any asset that can be represented digitally: a monetary unit, a deed, a vote, an image, an airline ticket, a hotel room, a biometric identity, etc.”

Building trust

Along with scarcity, blockchain offers shared oversight and permanence of data transactions, which supports the creditability of the information distributed between systems. Some key excerpts from the Sabre report explain why this matters:

“The fact that anyone can see the full record of transactions helps provide oversight and transparency around data use. Even in private applications of blockchain, where participation is limited, the fact that a group of peers have full access to the data means fraud is reduced. The shared oversight provided by blockchain is usually referred to as a distributed ledger or distributed database. Regardless of the term, it means many different parties in difference places have copies of the entire blockchain record.

“Anytime a value is transferred, there is a permanent record made of the transaction. It is very difficult to undo a transaction.

“In tech parlance, the permanence of blockchain is referred to as “immutability.” Immutability simply means that a transaction cannot be reversed, an edit cannot happen unless it is recorded officially in the blockchain. Blockchain achieves this immutability by using previous blocks as the mathematical basis for creating each successive block—a process called hashing.”

The scarcity, oversight and permanence of record make blockchain useful for sensitive travel transactions of information which could benefit from a reliably encrypted form of information exchange. It’s trust. That’s why we’re all talking about it.

“Biometric identity is one of the most powerful proposed use cases for blockchain. Using a blockchain to store encrypted records of a person’s various biometric identifiers—their voice, fingerprints, hand geometry, iris pattern, facial model, gait, etc. Having an unforgeable, permanent source for matching biometric data would be incredibly powerful. It could eliminate the need for passports, driver’s licenses and other forms of identification, finally giving rise to true trusted presence—that someone is who they say they are and can prove it.”

Pants on fire

It’s exciting stuff, but as SITA also determined following its trial of blockchain exchange for flight data (another useful application in travel) there are risks involved which still need to be addressed. For one, manipulation of the base data feeding the chain—not entirely impossible—could lead to the dispersal of fraudulent information. If a trusted server which supplies information is compromised, then the single source of truth could quickly become the genesis of a lie.

There are other risks, as Sabre points out:

“A comprehensive biometric record would need to be completely secure—completely trusted—to gain broad adoption. The liability issues around protecting that much personal data are significant, and gaining consumer trust to opt-in to a central source for biometric data could be challenging because of fears over privacy.”

And here’s one to pin to the corkboard:

“Blockchains don’t eliminate the need for trust. Instead, they shift where the trust is placed and how it’s distributed.”

The benefits of the possible applications for blockchain make studying ways to minimize the risks worthwhile. The key point is that blockchain is not something to be adopted blindly, and requires a firm strategy for implementation. Also, enlist expert help when doing so.

“Sabre Labs is one of many groups at Sabre experimenting with and considering the broader impacts blockchain may have on every aspect of the travel ecosystem. Today’s keyword is ‘experiment.’ The functionality supported by platforms like Sabre’s Global Distribution System (GDS) is essential to global travel; its efficacy, reliability and security are the result of decades of work and development. Looking at ways to augment GDS content with blockchain solutions is an area of current exploration.

“Blockchain has the potential to change existing business models, but it’s too early to say how much maturity and exploration is necessary in the blockchain ecosystem to assure an effective, reliable and—most importantly—secure system for sensitive information.”

Let’s face it, Blockchain is complicated. It’s a big concept to wrap your head around. It can support new and more secure transactions. It can lead to a massive strain on the world’s electrical grid as too many people speculate in a new form of money. It can ensure a single source of truth on data. It can be manipulated into a mass dissemination of lies. It’s a technology to watch. It will change the future, but we should not trust the future blindly or rush into it.

Article by Marisa Garcia, tnooz

16. September 2014 · Comments Off on Dream Merchants: the future of hotels · Categories: Uncategorized

Bianca VillaEvery Saturday night, no matter where they are in the world, Baz Luhrmann and Catherine Martin check into a hotel for a weekend escape, as you can do when you’re among Hollywood’s richest couples. Forget the mini-bar and thread-count sheets, though. To judge the hotel’s quality, they ask themselves questions such as: “Is this place evocative for us?”; “Do we feel transported from our own reality?”

That might sound like a rather self-indulgent, Luhrmann-esque take on TripAdvisor, where hotels are usually judged by more pedestrian criteria such as “sleep quality” and “location”.

But, believe or not, Luhrmann and Martin, in their own way, are on to something here. When it comes to recreational accommodation, visitor expectations are rapidly changing.

In the 1980s and ’90s, with the rise of “boutique hotels”, travellers learned to appreciate style and design as part of the package.

Read More at the Sydney Morning Herald:

http://www.traveller.com.au/dream-merchants-the-future-of-hotels-has-arrived-3c0iu

07. March 2014 · Comments Off on Chain hotels, versus Independent hotels: pros and cons examined · Categories: Uncategorized

By Alex Cabanas

comosamuiIn recent years, the topic of “brand versus independent” has become increasingly popular. Every industry conference has a panel titled the same, numerous articles – and blogs – are being written on the topic by every publication, HotelNewsNow recently launched a newsletter dedicated to independent hotels, the inaugural Independent Lodging Congress took place in Philadelphia in late 2013 focused on gathering the owners and operators of independent hotels, and if that were not enough, numerous high profile “de-flagging” lawsuits have certainly highlighted the topic.

While it is hard to attribute the peaking interest on this topic to only a few things, clearly owners are questioning the cost/benefit of a chain affiliation, internet distribution and marketing have dramatically leveled the playing field over the past 10 years, customer loyalty is not what it used to be and consumer preferences are certainly evolving.

Despite all of the hype and attention, very little has been written on this topic from the perspective of an independent operator. Clearly, independent operators are a little biased on the topic, but they are also overly discounted by many because of years of bias in the financing community and media in favor of chains. So, here’s some perspective to consider through the eyes of an operator of independent hotels.

First, a few points of clarity to set the right mind frame:

  1. Let’s focus on upper-upscale and luxury segments. Based solely on the prevalence of independent brands in the two upper chain scales, it makes sense to think mostly about these types of properties.
  2. Let’s use the word “chain” not “brand”, when describing the major hotel brands such as Marriott, Hyatt, Hilton, Starwood, Wyndham, Intercontinental, Ritz-Carlton and Four Seasons. These are the major “chains” that are of a size and scale to warrant a term of their own. The reality is that every hotel name is a “brand”. Benchmark is also a brand – we just don’t put our name on the hotel like many other larger independent operators like Destination Hotels & Resorts and Noble House. And smaller name brands such as Kimpton, Loews and Omni with a few dozen hotels and resorts don’t really qualify as a “chain” based on size, compared to the major hotel chains.
  3. Let’s understand that the word “independent” is not really a fair representation in all cases. Because most publications use the word “independent” and seem to conjure up images of a single General Manager and his or her team trying to run a property all alone with no management company support. While that still happens in our industry the fact is that there are a number of very well established independently branded management companies. Therefore, generic comparisons between “chain” and “independent” don’t really do justice to the capabilities offered by third party managers specializing in smaller brands and independents.

Now that we are of right mind, some thoughts to share on various topics that are typically included in the “chain versus independent” debate – again, from the independent operators perspective.

Larger third-party operators have support systems and “standards” too, but we are willing and able to customize by property

Independent operators should not be discounted by a generic assumption that we don’t have support systems and standards. Now, do we all have specific product and design standards like a chain – no. But that can also be a liberating fact. We do have support systems, best practices and policies and procedures across all disciplines. In fact, the flexibility and customized approach of an independent or smaller brand, with a system of procedures and policies is arguably more effective versus the chains that run everything by a manual and don’t customize by property. Especially given today’s growing consumer preference towards unique experiences and products where authenticity trumps “standardization”.

Location, product, service, experience, distribution and then “brand”, in that order!

In any hotel market, a hotel is either stealing demand from the competition or inducing new demand – a simple way to look at it. So a hotel’s location, product, service, experience, distribution (sales & marketing) capabilities are all valuable in positioning the property for success. If you think of these factors agnostic to the hotel name, you get a true sense of the property’s inherent ability to succeed – regardless of the brand name on the building. At that point the appropriate question becomes what is the incremental benefit of the name compared to the incremental cost of that name. Since most chain affiliations are more expensive than independent, the hurdle of incremental performance is higher. That is not to suggest the benefits of a chain are not worth it sometimes – but the value add is not always worth it.

It’s not the size of your pipeline that matters, it’s how you use it

So many articles and comments are made about the “distribution” and “reservation systems” of the chains, and there is no question they have large distribution networks. Unfortunately the question of distribution efficacy and incremental contribution is rarely asked. For example, Marriott may have very strong demand sources in the Atlanta market, but is that demand driven specifically by the Marriott family of brands enough to fill the myriad of supply Marriott has in the Atlanta market. A hard question to answer and one that is usually never asked. The generic assumption is big pipeline must mean big impact. And what happens when Marriott introduces a new brand like Autograph or AC – does the demand for Marriott product grow enough to support it?

Now, independent operators clearly can’t claim broader distribution compared to the chains – but we don’t really care or try to match them. We only care about the distribution we need to fill our one, may two or at most a handful of hotels in a given market. So do we need millions of loyalty program members – no! We only need and only market to what is needed for that hotel – and we only spend the owner’s money for that hotel. An independent hotel marketing budget is targeted and focused at impacting that one hotel, compared to a chain environment where substantial dollars are focused on promoting the chain.

Lastly, in today’s world of electronic distribution, what do the words “reservation system” mean these days – surely not many are calling the 1-800 number for a room.

The value of loyalty and points is not what it used to be

The most influential part of the chain is the loyalty program and there is no denying its presence and influence. But the question that should be asked is..how much demand is truly driven by the consumer’s desire for points and/or chain loyalty? And is that incremental demand enough to justify the incremental cost of a flag? These are not easy questions to answer but here are some relevant quotes about the condition of loyalty programs today:

  • “At least five major lodging groups have announced a devaluation of their respective frequent guest programs in January or February [2012]. And the cuts aren’t trivial. The value of many of our hotel points stashes have taken a significant blow”
  • “The best-case scenario is that hotel loyalty programs as they are constituted today have either little or no impact on travelers’ purchase decisions, and, worst case, these programs drive undesirable brand-switching behavior.”
  • “Hotel brands and owners that choose to instead build differentiated loyalty programs and a customer experience that anticipates and integrates priority customers’ personalized needs have the potential to capture incremental market share, as indicated by these facts:
    • Roughly 30 percent, on average, of hotel loyalty members are “at risk” of switching their preferred brand
    • Nearly 50 percent, on average, of hotel loyalty members’ annual hotel spend is not with their preferred brand

The above certainly brings into question just how much demand is truly driven by loyalty programs – especially as the very proprietors of those programs are devaluing them. And to the extent that they do drive incremental demand, independent operators now have several plug and play options such as Stash Hotel Rewards and iPrefer to evaluate at a lower cost.

Don’t be a lazy underwriter – give the independent brand model an equal chance

The fact is that many lenders and investors simply prefer chains. The old adage of “nobody gets fired for hiring IBM” drives a lot of decisions. For those willing to dig in a little deeper, the value proposition is worth it – lower management fees, more flexible contract terms, more nimble operations, typically unencumbered upon sale and more flexible sale options. So for you lenders out there reading this blog post, give us a chance and give us the audience. You won’t be disappointed.

After all of this, you can easily assume that this blog post is an anti-chain rant. That is not the goal. The goal is to level the underwriting playing field and dissipate the clear bias towards chains based on generic statements about “distribution” and “loyalty programs” and “standards”, rather than digging into how the industry has evolved, how consumer preferences have dramatically changed, and how independent third party operators have grown and been able to compete – proof positive competition, not dreaming.

Every professional independent operator can show numerous case studies that prove our ability to perform equal to or better than the chains. And at the end of the day, performance speaks for itself in all cases – “chain” and “independent”. And equally important is for any operator or brand or chain to act in the best interest of each owner every step of the way.

About the author

Alex Cabañas is President and Chief Executive Officer of Benchmark Hospitality International. Heleads the company’s global growth initiatives, including the continued expansion of its portfolio of award-winning hotels, resorts, and conference centers. Alex was previously president of business development and finance for Benchmark. During his tenure in this role, the company added 20 properties to its management portfolio and expanded into the Caribbean. The company also acquired MTM Luxury Lodging, which led to the launch of the hospitality industry’s newest luxury brand, Personal Luxury Resorts & Hotels.

Alex Cabañas joined Benchmark Hospitality International in January 2006. Prior to joining Benchmark, he worked for The Boston Consulting Group from 2000 through 2005. Alex earned his MBA at Harvard Business School and holds a BBA and MS in Finance from Texas A&M University.

Benchmark Hospitality International is a leader in the management and marketing of independent resorts, conference centers, hotels The independent company, launched in 1980, is a founding member of the International Association of Conference Centers. Benchmark Hospitality is a worldwide organization operating properties in major metropolitan and resort destinations. Benchmark’s international headquarters is located in The Woodlands, Texas, near Houston. The company’s northeast regional office is in New Jersey, with international offices in Tokyo, Japan. For the location of Benchmark’s properties and additional information, visit www.benchmarkhospitality.com.

This article was first published by Jim Butler of the Global Hospitality Group Hotel Lawyers, authors of the Hotel Law Blog.

 

13. February 2013 · Comments Off on The challenges of Sustainable Tourism · Categories: Uncategorized

Can tourism can be sustainable and profitable as well? While some destinations have established long-term strategies to protect the environment and local living standards, others have increased tourist arrivals for financial gain, but to the detriment of medium and long-term sustainability.

Read More