Blockchain-secured cryptocurrencies have the potential to revolutionise cross-border transactions in the travel and tourism industry, according to a new report by GlobalData.
With the promise of seamless and fast international transactions, a growing body of booking platforms and hotels are now accepting crypto payments – from the Palazzo Versace in Dubai and the Soneva hotels in the Maldives and Thailand through to the global boutique chain The Pavilions Hotels & Resorts.
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GlobalData’s Thematic Intelligence: Cryptocurrencies in Travel and Tourism report says that factors driving adoption include payment efficiency and speed, decentralisation, enhanced loyalty programmes and fraud prevention and security.
Cryptocurrencies enable instant cross-border transactions, eliminating exchange rate fluctuations, delays and intermediaries such as banks, payment processors and clearing houses. Lower transaction fees and blockchain-enabled peer-to-peer transactions also reduce overhead costs for hotels and confer financial savings for customers.
Crypto’s blockchain ledger technology also makes it near impossible for a single point of failure to compromise the entire system, unlike traditional systems in which data is stored in a central repository, blockchain distributes data across a network of nodes. This is particularly important in an era of increasing cybercrime, with recent high-profile attacks on the Marriott hotel chain and Shangri-La hotel group.
Successful use cases cited in the report include the travel booking platform Travala, which has used cryptocurrency and blockchain to incentivise and reward travellers for their engagement and loyalty, and Berkeley Travel, which has integrated crypto payment options to cater to its tech-savvy clientele.
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By GlobalDataCryptocurrency uptake amongst hotels nevertheless remains limited, the report adds.
Major barriers to adoption, GlobalData says, include cryptocurrency’s volatility (as compared to traditional fiat currencies), the relative immaturity of the underlying blockchain technology, regulatory uncertainty, limited acceptance and security concerns.
Swiss luxury hotel The Chedi Andermatt, which began accepting Bitcoin and Ethereum payments in 2021, reportedly held off on integrating crypto options due to worries about security and price fluctuation.
Crypto’s uneven regulatory environment also presents a particular challenge for businesses operating across multiple jurisdictions.
Countries with some of the world’s largest hotel chains such as China and Qatar have implemented official bans on cryptocurrencies, while others like the United Arab Emirates, the Maldives, Turkey, and large swathes of MENA have implicit bans in place.
