Did internet fulfill its promise of a decentralized world where sellers and buyers can interact without depending of intermediaries?
For almost 15 years, the reality has been very different, with the emergence and henceforth the global domination of large platforms, particularly in the field of hotel booking.
The sale of overnights on the internet has known a remarkable boom during the last decade. Today, the quasi totality of the hotel clientele uses internet to look for a hotel and uses the services of hotel booking platforms, to compare prices in particular.
At first, this evolution had some positive effects: booking platforms offered consumers efficient search and compare services, reinforced the competition between hotels and allowed to the latters to be visible in the entire world, breaking free of touristic guides and traditional traveling agencies.
The booking platform supremacy
Hoteliers are witnessing an almost duopolistic increase of power of Booking.com and Expedia (Hotels.com). It is frequent that a lambda hotel makes more than 50% of its turnover through these intermediaries, which debit a fee oscillating between 17 and 25% on each booking.
To catch web users, the booking platforms pay each year billions in key words (adwords) to Google. These key words are signs and brands of establishments. Thus when the web user do a research on the hotel name or a destination, the booking platform websites appear first.
As a result, consumers practically don’t have any direct contact with hoteliers, which are obliged to pay their (heavy) toll to the platforms…
To establish their domination even more, some online booking platforms imposed until recently “parity” clauses in their contracts entered with hotels, which restrained the commercial and price freedom of the latters, in particular by forbidding them to sell overnights cheaper than the prices displayed on the platforms websites.
Following the investigations led by the European Commission and many national competition authorities in 2016 and 2017, the concerned platforms have modified their clauses. Some States (as Germany or Austria) have even legislated, forbidding purely and simply this practice.
Since then, the European Commission and the national competition authorities have decided of a common and coordinated orientation consisting in the maintenance of the surveillance of the sector.
Loyalty of the platforms
The last two years, the loyalty and transparence of the platforms were much discussed (booking platforms, but also other comparators, online market places and search engines). The European Commission has started a legal discussion and started some proceedings against platforms. Some countries have also started to enact on the subject, such as France, by constraining in particular (from January 1st, 2018) platforms to precise the criteria used for their referencing and ranking.
Next step: decentralization and blockchain
The actual situation, where an intermediary not only earns some outrageous fees but also weakens and jeopardizes its own clients, is a fertile ground for the blockchain, as it might allow to offer the same decentralized services at a lesser cost, if even by rewarding the hoteliers.
Projects already started to be launched. Among them, let’s mention the BTU protocol (Booking Token Unit) which offers a normalized booking system through the blockchain for any decentralized application (dApp) or web site.
Bookings are made via the blockchain by an open source protocol, which considerably lowers the entrance barrier. A token (cryptographic token which serve as “money” within the system) is used to encourage participants to behave rationally according to aligned economic interests. Thus, a booker would have an interest to cancel its booking in time in order not to lose the guarantee deposit it had to do in “tokens”. On the contrary, s/he will win tokens for every booking s/he will have finalised.
The hotelier will also be rewarded by the booker who could share with him/her his/her tokens in order to retain him/her, thus creating a virtuous circle instead of an unhealthy servitude.
The BTU protocol is not limited to the hotelier sector and also brings the interoperability between applications which incorporate it, which could ease the reciprocal cross sales between different industries (website of office, car, restaurant booking etc..)