Web3: What does it mean for the travel industry?
Have you ever asked yourself where you left your encyclopedia the last time you used it?
Probably it has been a while since you wondered about that: after all, you were already closer to the world wide web to help you answer your original inquiry within a few clicks before you could ask yourself that other question.
The internet — we take it for granted, almost forgetting that it has come a long way.
The next station of the internet is called Web3. With technology advancing rapidly in recent years, the transition to Web3 could completely transform how we use the web.
First, we must know what’s there already on board the internet train. What exactly does the term ‘Web3’ mean and what is this development all about? And how will Web3 impact the travel industry?
Let’s go and make that journey to find out.
The development of Web3: the empowered user edition
Simply said, Web3 is set to be the third generation of web technologies. It’s the vision of a future generation of web technology, evolving from our current Web2.
That journey started with Web1 in the 1990s and early 2000s in a mostly read-only format before our current Web2 technology began with the emergence of social media.
The term ‘Web3’ was coined in 2014 by Ethereum co-founder Gavin Wood, and according to the company, “Web3 uses blockchains, cryptocurrencies, and Non-Fungible Tokens (NFTs) to give power back to the users in the form of ownership." [1]
Web2 evolved to allow for engagement and user-generated content.
However, despite the possibility for internet users to create, post, and share their own content, critics of our current web technology explain that most online activity is controlled and monetized by only a few top tech companies.
For example, Google currently controls 85% [2] of the global search market.
The rapidly increasing volume of data is also a concern for web users, and one of the core features of the high-velocity train of Web3 is its aim to empower users by ensuring data security, removing centralized ownership, and allowing users to have control over their own data.
Decentralized ownership with Web3
Web3 is not a regular advancement in technology — it’s forecasted to be a revolutionary shift in the entire way we experience and use the internet.
In fact, to empower users via decentralized ownership, Web3 applications run on blockchains, decentralized networks, or a combination of both, rather than running on a single server.
Blockchain is an essential element in explaining the decentralized function of Web3. It’s a system of recording information in a way that makes it difficult or impossible to change, hack, or manipulate the system.
It facilitates the process of recording transactions and tracking assets in a business network. Think of assets being tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding).
Some of the core values of Web3 that point directly at user benefits are:[1]
Decentralization: Ownership is distributed equally amongst web builders and users.
Permissionless access: Everyone has access to participate in Web3, there is no governing body.
Security: Web data is encrypted, protecting personal and sensitive data from being harvested and monetized without consent from the user.
Trustless: Uses incentives and economic mechanisms and doesn’t rely on the support of trusted intermediaries.
Verifiable: All identities are verifiable by secure third-party authentication without the need to provide or expose sensitive details.
Some examples of Web3 technology as the next-level internet experience include machine learning and AI as well as the metaverse.
Web3 in travel
The emergence of Web3 is set to disrupt several industries, and travel is no exception.
The way consumers plan, book, and enjoy travel has changed drastically over the past 10-20 years, and this will transform even further with the introduction of Web3.
And travel giants such as Airbnb are already investing in Web3. The company is currently looking into enabling cryptocurrency payments — a feature highly requested by its customers.
Web3 will offer many opportunities to travel companies, such as:
- improved reconciliation processes,
- more personalized traveler rewards and loyalty programs,
- increased security,
- more efficient processes,
- and better payment and settlement solutions.
The tourism industry relies heavily on the exchange of information and financial transactions between companies and customers.
Web3 technologies could allow the travel industry to expand, not only in market size but also in terms of use cases and benefits for travelers.
To illustrate the expansion in size: in 1990, there were 1,2 billion airline passengers, and the industry’s market size was valued at $250 billion. Thanks to internet adoption, between 1990 and 2007, the industry grew to 2,5 billion passengers and a $510 billion market size.
Another increase took place in 2008. When it became mandatory for International Air Transport Association (IATA) members to use e-ticketing services, this use case made the number of travelers grow to 4,5 billion yearly and reach an industry market size of $870 billion.[3]
The use of blockchain technology could help to make these transactions more secure and traceable, in turn making business models more efficient and streamlined, saving costs, and increasing competitive advantage, as well as benefiting travelers themselves by allowing for more seamless and autonomous travel experiences.
Decentralized travel
The decentralization factor comes into play too: decentralized computing brings improved reconciliation processes involving blockchain and decentralized applications. This will help reduce costs and increase competitive advantage.
Web3 will also bring a new level of transparency to companies and intermediaries within the travel industry.
We can think of the following scenarios:[4]
Hotels: Decentralization can bring faster settlement and commission tracking for accommodation providers.
Corporate travel: Greater transparency, accurate rate usage, and simpler, faster settlement.
Ground transportation: Fleets could connect directly with customers.
Tours & Activities: Decentralization can empower smaller providers.
Web3 blockchain benefits travel companies
Although decentralized computing minimizes the role of intermediaries, the aim of Web3 is to keep them on board while ensuring they do not act as gatekeepers of information and add extra costs that do not give value to the consumer.[1]
Let’s look at how Web3 can further impact the travel industry. The offering and exchange of information can be simplified when information is available on a blockchain. This is particularly relevant for those travel companies using API integrations with multiple partner companies.
Furthermore, improved trackability due to its fundamental unchangeability and transparency characteristics offers possibilities way beyond just baggage tracking for example.
Blockchain technology also helps with the monitoring and reporting of emission reduction trading. For example, the effective tracking of carbon credit's complete journey and its connected offset projects are possible with Web3, giving both businesses and consumers a detailed audit record.[5]
NFTs in travel
Further benefits of Web3 for travel are the personalized loyalty programs: Using NFTs for better traveler rewards and loyalty programs could be among the lowest-hanging fruit for travel brands considering Web3 innovations.
Consider automated bonuses for travelers who book sustainable travel and accommodation or small gifts for delayed flights or difficulties for reasonable rates. The possibilities for more personalized loyalty programs and closer ties between providers and customers are endless.
NFTs are digital assets that are bought, sold, and traded online, usually with cryptocurrency, and are stored using blockchain technology. They can come in the form of art, music, in-game items, videos, and more. They have been around since 2014, but their popularity has hugely increased over the past few years; the market size of NFTs reached a value of $41 billion in 2021.[1]
NFTs could be used to improve the travel experience, drive engagement rates, be more engaging, and build stronger customer relationships.
Some examples of NFTs in the travel industry include:
- NFT airline tickets
- Customer rewards & loyalty programs
- Promoting social good
- Hotel membership programs
- Exclusive experiences
Travel companies such as Marriott and AirBaltic have already begun to use NFTs, and other businesses within the sector will likely follow suit.[1]
NFT airline tickets could be beneficial to travelers, because it would allow flyers to auction, sell, trade, and transfer tickets from wallet to wallet, giving them full control over managing and disposing of their travel assets freely and seamlessly, for example being able to sell your ticket if you cannot travel or sending it by text message as a gift to your family member or friend whenever you want.[3]
Outlook
As we are on board and traveling on the route of Web3 it’s key — to understand Web3 — that we detach ourselves from the image we currently associate with the internet we know today. The transition to Web3 offers even greater possibilities, even more innovation, and even further change than the leap from Web1 to Web2.
Another feature on which Web3 builds is that of ownership. Through NFTs and smart contracts, digital assets are truly and legally attributed to users of the internet and made tradable through proof of ownership and transferability. As such, Web3 could potentially be more disruptive, and an even bigger paradigm shift than Web2.
To be more specific, using artificial intelligence, machine learning, and blockchain technology, Web3 aims to create open, more connected, intelligent decentralized applications where users can manage their own data.
According to recent TravelTech Show data, 74% of business experts in the sector plan to use Web3 as a marketing tool.[5]
As the industry begins to embrace ‘Travel 3.0’ through the third wave of innovation built on the always-connected perspective provided by consumer mobile technology, it can be anticipated that bigger changes are on the way.
Web3 will bring a completely new structure and technology to the travel industry and, consequently, infinite opportunities for new products and business offerings on board that journey.
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Banner photo by Pixabay on Pexels.com
[1] The Future of Web3 Travel | Nezasa Blog
[2] Online search usage - Statistics & Facts | Statista
[3] Web3 technologies could be a game changer for the travel industry | cointelegraph.com
[4] The decentralized computing future of travel | Phocuswright
[5] The emergence of web3 in the travel industry | PhocusWire
