A blockchain way to reconcile hotel commissions

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Travelport -- working with IBM, BCD Travel and three hotel chains -- has created a minimum viable product (MVP) solution that uses blockchain to reconcile the commissions hotels pay travel management companies.

"MVP" describes solutions developed to a level sufficient for early adopters to begin testing.

Travelport and its partners aim to give agencies and hotels an accurate, shared view of the status of their bookings and commissions. This requires a solution that communicates relevant and necessary information, reconciles records, resolves missing and disputed payments, measures performance and supports timely payments.

"Blockchain technology applied to commission reconciliation has the potential to deliver real ROI to both a travel agency and the hotel," said Travelport senior product director Ross Vinograd. "Traveler modifications at property, no-shows and complimentary room nights are just a few examples that drive commission discrepancies, which in turn generate escalations, cost and revenue loss. Our aim is to put the life cycle of a booking on the blockchain, and we believe doing so will drive transparency, trust and ultimately booking volume."

Hotels pay commissions to travel management companies (TMC) for the bookings made through those TMCs. A commission is a percentage of the room rate for the entire booking, and that percentage can vary depending on the agreements between the TMC and the hotel or the hotel brand. It can be difficult to reconcile which bookings get which commission and then have them verified and paid to the TMCs.

Blockchain technology behaves like an online ledger; it collects data, builds upon that data in real time and independently and securely reports information to any number of parties based on permissions.

Travelport unveiled the solution this month at the Global Business Travel Association conference, where Vinograd noted that 34% of travel agents say commission reconciliation is a major pain point.

BCD Travel vide president of supplier relations and global hotel strategy Marwan Batrouni, who participated on a GBTA panel about the solution, said, "When a booking is made, either through an online booking tool or an agent, it should be seamless. [That traveler] will check in and check out, and the commission should be paid -- whether it is 5, 10 or 15% -- but the reality is different. 

"The traveler might add a night, check out early, not show up, have a schedule change. From that point forward, there are so many downstream breakpoints that take place. When we get payment for that commission, it could be spot on, or higher or lower. We have no idea what we will be receiving. It could be one, two or five months late. We have no idea when we will be getting paid. And we have no idea if the data is 100% or 80% accurate. The area is ripe for taking complexity and putting it into a clear way for all to see."

The key is to standardize the data. 

"If we are not all looking at the same set of data, it's hard to get the answers Marwan is after," said Hyatt regional process owner and shared services director Dan Stephenson. Hyatt is one of the three hotel companies working on the solution. The other two have not been named. "I have two goals when it comes to our payment process: that we pay accurately and that we pay as quickly as we can. The less time spent thinking about getting to the right answer, the better off we all are."

The partners plan to take the solution to the active pilot stage. "We expect to continue development through the summer," Vinograd said at GBTA. "As we roll through the MVP, we will be staging this out and will invite more folks into the solution."

Source: Business Travel News

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