Founder of Tratok says blockchain can ease the way in travel
▶ The company offers a digital token that can cut booking costs, reports Deepthi Nair
One of the selling points of travel booking websites when they were first established was to remove some of the overheads customers paid to traditional agencies, with their high street stores and the agents manning desks.
But the online travel agents themselves have become powerful middlemen in their own right, consuming a growing share of revenues earned by hotels, according to the founder of UAE start-up Tratok Portal.
The company is using blockchain technology in an attempt to disrupt the $7.6 trillion global travel and tourism industry, which contributes almost 12 per cent of global gross domestic product. However, it has suffered greatly owing to Covid-19, according to the World Travel & Tourism Council.
“The global travel industry got too complacent and stopped thinking outside the box,” says Mohammed Altajir, founder and project custodian of Tratok. “Increased dependence on online travel agents and aggregators have resulted in diminished revenues.
“Stakeholders stopped looking at new revenue streams and ultimately paid the price. The onset of Covid-19 has necessitated disruption and increased the industry’s willingness to experiment with new booking models.”
One of the problems Tratok is attempting to solve is a lack of transparency in pricing, Mr Altajir says, with the total cost of a trip not usually displayed until the payment stage.
And because of fluctuations in currencies, purchases in a non-local currency can make a big difference in the amount a consumer pays. Tratok is promoting the use of a token that cuts out the need to pay conversion fees and minimises the risk of exposure to currency fluctuations.
“By leveraging a blockchain ecosystem, you can cut out middlemen and reduce the cost of bookings, while at the same time allowing service providers to realise superior profits,” Mr Altajir says.
Online travel agencies currently take up to 30 per cent of hotel revenues and can charge “outlandish” membership fees, he adds.
“They will seize a fixed amount of your inventory, force rate parity and delay your trade receivables by 90 to 180 days,” Mr Altajir says.
“All of this is not sustainable for an industry that has gone through challenges and needs to rebound. This is not only hurting service providers but also their employees, who are being asked to take a salary cut, unpaid leave or are being laid off.”
The Tratok token can be used to make bookings for travel and tourism services such as flights, travel, accommodation, car rentals and activities, Mr Altajir says. Customers can also purchase cruise liner packages from the portal in the first quarter of 2021, he adds.
In October, the company carried out pilot tests for booking UAE hotels with tourist groups from Europe. The tourists reported average cost savings of 5.2 per cent on their booking, while the hotels increased their margins by 28.2 per cent and received the payments made by customers instantly.
The marketplace ranks a user with a service provider based on their requirements and interests using machine learning algorithms. It levies a 1.5 per cent commission for every successful transaction. Tratok has nearly 2 million verified users and is currently adding 1.2 million rooms in 153 countries. About 60 per cent of its nearly 2 million users are from Europe, while others are from markets in South-East Asia.
“Our original plan was to have 50,000 keys in the UAE by June 2021 and a further 200,000 in the eurozone and then expand from there,” Mr Altajir says. “By the end of September, we already had 1.2 million rooms. So we have already smashed our targets. We have around 11,000 hotels in the ecosystem.”
The possibility for customer fraud is minimal on Tratok because everything is verified by blockchain, according to Mr Altajir.
The company, which is in the process of opening at the Abu Dhabi Global Market, employs 36 people, both directly and indirectly, and plans to hire more employees this year.
“With blockchain, you can perform tasks with far less resources,” Mr Altajir says. “Our team will concentrate on marketing. Initially, we want to target blockchain enthusiasts. There are currently 105 million such people in the world and they have access to more than $800 billion worth of liquid resources.”
So far, the company has been privately funded by its founders, who have spent $2.9m on the concept, development, penetration testing and enhancing security features.
“A lot of people capitalised on the cryptocurrency mania to exploit the public,” Mr Altajir said. “Several blockchain startups raised money from the public through token sales, which are often illegal.”
The tokens they have issued have benefited from the surge in value that many cryptocurrencies have experienced, increasing in value by almost 500 per cent last year, giving the amount of tokens in issue a nominal value of $2.8bn.