More than ever, Maine lodging need to look for innovation in the industry
Blockchain technology, the technology behind cryptocurrency, is being tested in many different industries. The use of blockchain technology in the travel industry is exciting. The travel industry has been stunted by a lack of innovation and suffocating because of high fees. Blockchain technology is changing that. A lack of innovation in the industry has forced lodging owners to accept high commissions and fees due to many middlemen in the reservation process. The middlemen are the Online Travel Agents (OTA’s), the credit card companies and the property management systems. At the end of the day, roughly 20% of the lodging reservation profit is taken by middlemen expenses. The exciting thing about blockchain technology is that if a company uses it correctly, the middlemen disappear and the company can instantly have 20% back in its pocket. What Maine lodging wouldn’t want an additional 20% to spend on improvements or soften the bumpy ride of a seasonal business? I recently wrote a blog post about surviving the labor shortage in Maine. The gist of the post is about revenue management and having a revenue plan. In that post, I was trying to present new ways of structuring your business in times of labor shortage. Maine struggles with an aging population and a loss of youth. These are realities that will not be solved overnight. There have been many articles written about things the State needs to do in order to combat the labor shortage. One of those articles, Maine Voices: Maine workforce challenges call for bold public strategies by Joseph McDonnell, gives suggestions such as ramping up internships, attracting out of state youth and initiating college debt forgiveness. All of these things are wonderful and should be part of a plan for the State of Maine. Another part should be teaching Maine companies how to innovate and adjust to changing economic conditions. Maine lodging companies should be realistic about their challenges and seek out new technology. This is where blockchain technology comes in.
Simply put, blockchain technology is the process of storing and distributing information in secured blocks. The blocks make up networks with many different users. The blockchain network is configured to make it safe and impossible for hackers to break into. The network is not stored in one location but in many locations and it is continually reconciled. One of the assets of this technology is that anyone will be able to access inventory directly from suppliers. This direct connect to the supplier will allow a lower overhead for both the consumer and the supplier. A travel industry blockchain network would allow properties to be on an open sourced network – eliminating OTA’s, accept the travel cryptocurrency – eliminating the credit card companies and creating a space to negotiate with property management systems. This system, blockchain technology, is new to the travel industry and takes a while to get your head around. Once you start to understand that there can be a world without middlemen and a chance to put 20% back in your pocket, you could get very excited. Winding Tree is a not for profit company that has aims to stir innovation in the travel market. Winding Tree is creating a decentralized travel distribution network. Distribution of rooms on networks are important to the success of a property. The ability to distribute your rooms on different channels is key to getting your product in front of many travelers’ eyes. If that channel is cheap to distribute on, that is a benefit of that channel. If Winding Tree is successful in their mission to make travel cheaper and more profitable for suppliers, we could have a game changer for Maine businesses. More profit means the ability to be more flexible with your property. If a revenue goal is met sooner than later, then the lodging can slow down and function productively with the staff it has. The key here is to help Maine seasonal businesses capture more profit to be flexible. More profit could allow a lodging to close some rooms so that staff is not stretched, or it could mean having more money to reward employees with. Both options could help businesses make it through another season. Unfortunately, the blockchain technology network of Winding Tree is not solid right now, but it is definitely something to watch for in the future. For now, learn about the new innovation of Blockchain in the travel industry and focus on revenue management. In the end, it is about making hay while the sun shines. There is limited time and resources to make money in the Maine tourism summer/spring/fall season. There are more and more ideas and concepts coming to the travel stage. Be open to testing these new innovations. These innovations may open doors that allow your Maine business to live through another Maine Winter.