Webjet completes behind doors blockchain test for hotel bookings
Webjet has completed a six-month project with Microsoft to create a blockchain hotel bookings platform that it claims is a world first in its sector. With one in 25 transactions globally failing to be properly enumerated, the platform will increase efficiency and reduce costly errors. "We believe blockchain will create a more seamless, less intrusive, more robust supply chain than currently exists," said Webjet's CEO, John Guscic. The blockchain is hosted in Microsoft's Azure cloud and used its Project Bletchley blockchain template.

Cutting out errors

Webjet managing director John Guscic told The Australian Financial Review its blockchain is focused on it business-to-business (b2b) wholesaling arm, which offers hotels to travel agents, and that it promised to cut out the expensive errors that occur in various stages of the travel booking supply chain.

"The dirty secret of the global hotel industry is that roughly one in 25 transactions globally end up with breakage where someone provides a service and doesn't get paid for it ... which is an enormous number," Mr Guscic said.

"The reason that happens is because you have a lot of intermediaries in this space who are passing information to each other sub optimally, and things get lost or not followed up. We believe blockchain will create a more seamless, less intrusive, more robust supply chain than currently exists across all those parties and ultimately a fairer outcome, because people will get paid the right amount for what service they've provided."

In its initial work, Webjet has only used the blockchain between its own divisions, but chief information officer Graham Anderson said there was a huge opportunity to expand it across the 250,000 hotels it deals with and the many third party suppliers.

Webjet is seeking big savings from its move to use blockchain technology.

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He explained that Webjet has created a smart contract to reflect a hotel booking between two parties, which would create an indisputable and permanent record and ensure any subsequent changes to a booking could be clearly logged.

"We have developed a way to match the booking and handshake on the blockchain itself, so that is in essence the decentralised trust platform that we are delivering into the environment," Mr Anderson said.

Building capabilities

Mr Guscic said Webjet had worked with long-term technology provider Microsoft to establish its blockchain, which is being hosted in its Azure cloud and was constructed with reference to its Project Bletchley blockchain template for establishing the system.

He said Microsoft was providing a good deal of its resources as it also looks to build out its blockchain capabilities, and had told Webjet it was the first travel industry blockchain in development globally.

Microsoft Azure chief technology officer Mark Russinovich said his company got great value from working with companies that were willing to be early adopters

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Microsoft Azure chief technology officer Mark Russinovich told The Australian Financial Review it got great value from working with companies that were willing to be early adopters, and that there was significant opportunity for Webjet to expand the initial work it has completed.

"With Webjet initially using this through their own subsidiaries and then going out broader through their supply chain, we can sit and learn a tremendous amount," he said.

"We're going to take this and feed back into these blockchain solutions that we'll have as turnkey solutions for others in the same space. We are focused on building a sandbox for developers, working with customers and partners to develop and test combinations of technologies, and ultimately, helping collections of customers select the right tools that solve specific business problems."

Scope for growth

Mr Guscic said Webjet investors should see a lot to like in its early move towards the blockchain. It has had a b2b division since 2012, which operates in the Middle East, North Africa and Europe and is just about to launch into North America.

He said the division was making sales of $350 million a year, but that it had enormous scope for growth having been a relatively late market entrant.

"The questions I constantly get asked [by investors] are about how fast can you grow the new division, and what it's going to cost to grow it, and then what sort of returns we expect to make on the investment," Mr Guscic said.

"We want to be a global player in the hotel stakes and to be a global player you need to get scale, and to get scale you need to be the low cost provider. This facilitates our strategic objective to be the low cost provider in the hotel wholesaling space."