First, a little bit about the author…
He is a thirty-something year old professional who has spent the entirety of his career in the travel biz. Having previously worked for one of the world’s largest airlines in various roles around fare distribution and have since moved on to one of the largest OTA (Online Travel Agent) working on the hotel side of things. He first heard about Winding Tree last fall when talking to one of his former airline co-workers and immediately became quite intrigued with the project.
Now, a little bit about Winding Tree...
Winding Tree is a blockchain-based decentralized open-source travel distribution platform. They claim to make travel cheaper for the end user, while making it more profitable for suppliers.
No centralized control means no exorbitant transaction fees and no barriers for entry. Moreover, they allow small companies to compete with big players, finally bringing innovation back into the travel industry.
Read more here
Why do I believe in this project?
Airlines
The current systems are old as $#!7:
The first system for uploading and selling inventory in the airline industry, the Semi-Automated Business Research Environment (SABRE), was launched by American Airlines in 1963 (NINETEEN SIXTY-THREE!!!). This basically acted as a phone-based reservation system until terminals were created in 1976 to allow travel agents to easily search and shop available flight inventory for their clients. Since it was costly and redundant for each airline to be running their own system, a Global Distribution System (GDS) was implemented that created a single system serving multiple airlines.
Fast forward to 2018, and we still have the SAME FREAKING THING. Three GDSs (Sabre, Amadeus, and Travelport) essentially control 99% of the non-direct airline industry. Airlines, already working on razor-thin margins, are essentially forced to pay extortionate fees in order to have access to the global network of travel agents to get their products to their end customers. Sabre even went as far as threatening to cut off airlines if they tried to offer lower fares on their on-direct channels (to hopefully entice customers to book with them directly, avoiding GDS fees) and Sabre was found liable for anti-trust practices. Source here.
The opportunity for WT
First off, GDSs aren’t going anywhere. And that’s totally fine. They just need to lose their monopolistic and extortionate stranglehold on the airlines. The ability for an airline to upload their inventory to the WT platform will allow the airlines to get their inventory in front of their customers on their own terms, not the GDSs. This will spur innovation allowing start-ups and travel agencies to access supplier inventory without having to negotiate costly content deals with GDSs that sometimes make it all but impossible to even get their company off the ground. And because we are dealing with a decentralized blockchain, anyone, even a tech-savvy end user, can purchase LIF and buy directly from the WT platform. All of this requires the buy-in and participation from the airlines themselves, and they are chomping at the bit to remove the GDS carrots from their butts. I don’t think it will be too difficult.
Hotels
The big boys in the room, Priceline and Expedia, have about 95% of the OTA market (that’s a lot). Hotels.com, Hotwire, Orbitz, Travelocity, Trivago, Booking.com, Agoda, Kayak, HomeAway, VRBO, are ALL owned by those 2 brands. Hoteliers are finding themselves paying upwards of 25% commission to these guys to sell their rooms.
Nearly one-third of all available rooms in the US are part of independently owned hotels and are the ones paying the highest commissions to the large OTAs. Unless they want to invest significantly in their own direct channel, which is generally not fiscally feasible, they begrudgingly pay the exorbitant commission to be part of the Expedia/Priceline portfolio of properties. In many instances, hotels are sometimes forced to offer “rack rates” on these platforms just to be able to afford the commission, which in turn just increases the price of the room to the customer.
A blockchain platform such as WT will, similar to the airlines, allow hoteliers to provide inventory to smaller re-sellers at a much more affordable commission, likely passing off some of the savings to the end customer. One concern on the hotel side, however, is the amount of marketing competition. The big OTAs spend billions on marketing across many different channels, so a start-up or a young company will have to have a fairly fleshed-out customer acquisition strategy. The opportunity is there though.
The travel distribution industry kind of reminds me of going to my grandma’s house, a shrine to the decades that once were. Rotary phone, big box tv with a turn dial, wood paneling. The rest of the world has evolved and advanced; the time has come to finally get grandma that iPhone and introduce her to the potential of today’s technology.
Disclaimer: Zero affiliation with WT or anyone on the team. Participated in the ICO and plan to HODL for as long as I believe in the team and their ability to acquire partners and move this project forward.