Could an open-source blockchain-based distribution system stimulate innovative solutions from startups, provide more choices to travelers, and drive revenue to suppliers?

Those are some of the questions behind Nordic Choice Hotels’ decision to test the emerging technology. The company, a franchise of Choice Hotels, operates 195 properties with 40,000 rooms in Scandinavia and the Baltics.

In mid-December, Nordic Choice Hotels announced a partnership with Winding Tree, a blockchain-based travel distribution network, to test the system at its Hobo Hotel in Stockholm.

PhocusWire spoke to Christian Lundén, director of future business at Nordic Choice Hotels, about the pilot and what he sees as the benefits of blockchain.

When and why did you decide to explore blockchain?

My role is to find new business models and new technologies. Last summer we were looking at blockchain and what we could do with it beside what everyone is doing - the Bitcoin thing. We saw the opportunity was much bigger than just currency. And we realized it could be something interesting for us to look at.

First of all, the most obvious thing is, of course, can we have a cheaper distribution channel. That is the money part of it. How can we get channels that don’t cost us quite a lot of money for each and every reservation?

Does that mean it could replace online travel agencies for Nordic Choice?

We still of course like to have good relationships with the OTAs and strategic relationships with the OTAs, but still we’d like to limit that channel a bit. If it’s a returning guest, they shouldn’t go through OTAs because they know about us and like to stay with us. But maybe just by being lazy or just having a link on their desktop, they’re going through Expedia without knowing it costs us a lot of money. And they don’t get the benefits they should have if they book directly.

For us the OTAs are fantastic at finding new customers and for guests that don’t know where to stay. But for returning guests they don’t realize there are a lot of fees to these companies. And someone needs to pay that in the end and that probably will be the guests.

What other potential benefits do you see in blockchain?

The main reason as I see it is to see how we can create new services for guests. We see startups and other companies could have a very easy way to sell our rooms. There would be one API to all hotels. It would be very easy access with an open platform to create new types of services for our guests. They can package things in different ways. That is from my view the most important part.

For example, a fancy restaurant in Stockholm could say visit us and we can package it with a hotel night - on their own website. They would have easy access to the inventory instead of going to each and every hotel brand and trying to get their interfaces or contracts. It’s creating opportunities for others to sell our rooms in new ways.

And why do you think a public blockchain platform is best suited to facilitate this?

No one owns the blockchain. It’s very decentralized way of putting your inventory somewhere that anyone can reach it. I mean we could have started our own blockchain like TUI [Group] does and put all of our inventory there and hope that someone else would put inventory there as well. But as long as a big player or a hotel company or someone else is owning that platform then it’s not that interesting for anyone else or competitors to work with it. So the main thing is it’s not owned by anyone.

It’s important for it to be open and to have all our competitors on the same platform. Otherwise we will just have an empty platform just with our inventory and that’s not the goal. For us it’s let’s put everyone’s inventory in one place and then have a competition about who is doing it the best in hotels. And then the guest can have everything in one place. That’s why sites like Expedia are successful - they gather everything in a nice package.

Tell us about what you are doing with this test?

We have manually put out inventory from one of our hotels, Hobo Hotel in Stockholm. It’s not live so you can’t do it as a guest or any company right now. But we are testing the technology. We’ll probably start testing it a little more live around the end of February after they [Winding Tree] have sold their LIFs for a while. It will be a very slow process.

This is a starting phase. I’m not rushing into anything, but we’re very interested in the technology in general. There will be a lot of hiccups along the way. I’m getting questions all the time internally and externally about how the revenue will work and how we’ll have two-way interfaces and how we can do this or that. For me right now that’s not important. At the moment it’s about testing if it’s doable.

So what would this type of blockchain-based distribution system look like to travelers?

It will always still be B2B. That’s one thing that’s important. Our guest doesn’t need to know about the technology behind it. They will still pay with a credit card on the website or in the hotel. This will not really affect guests except maybe they will get better services and packages and prices.

You will find more solutions that give you possibilities to make a reservation. You won’t need to just go to Expedia or Booking, you’ll have totally new services and companies with other types of business models, which you might find more interesting or maybe there is more personalization. It’s about giving more options for the guests. They won’t know how or why it’s built up, but hopefully someone will come up with great ideas. That is what we are opening up - those possibilities. But we don’t know exactly what kind of services will be created.

What are your next steps?

The next step will be to go live with inventory and to see if there will be more companies on the chain as well. And then if companies are contacting Winding Tree to create new services on this platform. There are a lot of travel startups companies that try to pull inventory from each and every hotel to show their new cool services, but it’s hard for them to get that inventory. So this could make it easer for them to participate.

My job is to do a lot of tests and try to get some knowledge around it, finding out how can we use this technology in the future. It may be we are too early. But we’ll find it out pretty fast and decide if we scale it up this year or next year or never. But we will never go live with 100% of our inventory in one channel. That would never happen.