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ENTX Co-founder: A Room With A Blockchain View

In any business, unsold inventory is a problem. Also, in any business, middlemen eat into profits.

In the hospitality industry, it is no different. Rooms unrented mean top line lost. Online travel agencies match vacationers, business travelers and hoteliers, but at a price. That price hits hotel owners’ margins.

And as always: When booking a stay, and entering card data, security remains (or should remain) top of mind. Data breached is reputation shattered.

ENTX Co-founder and Brillembourg Group CEO, David Brillembourg, tells PYMNTS that blockchain tech promises to do more than just facilitate digital currency transactions. It is also a way to get data shuttled safely, per agreement between multiple parties. For hotel firms, blockchain can help smooth the process of satisfying supply and demand.

Brillembourg says that the firm spent the last year “looking into the trenches about how blockchain and cryptocurrencies effect several markets.”

Examination centered on the gaming and hotel industries, but he said, “The market where we could have an immediate and big impact … and a community that would be viable because of the scale was in the hotel space.”

The hospitality industry represents a highly-fragmented market of hotel owners, where hotel operators take 100 percent of the risk of capital deployed. There are about 156,000 hotels worldwide, with 14.5 million rooms in total.    The travel industry is as much as 10.4 percent of GDP, Brillembourg said, and is growing faster than the global economy as a whole.

There also exists an oligopoly in the mix, via online travel agencies that control the pipeline to the world, along the continuum of buyers (or guests) and sellers (the hotels themselves). Brillembourg said these OTAs drive high costs of distribution for the hotel owners and incidentally, the OTA margins are relatively high at about 25 percent.

STEP, short for Simple Travel Ecosystem Protocol, is what Brillembourg Group is now bringing to market. Through blockchain and with tokens, STEP introduces what is, in effect, a digital paper trail that ties into the distribution channel used by the hotels across the brand and conduits, including direct sellers, group sales and the like.

“The problem that is seeking to be solved is one that provides the owner or the traveler a way to talk directly, in a defined way at a cheaper cost, without using the OTA,” Brillembourg told PYMNTS.

He noted that the owner of a room owns that inventory and the future right of usage. The question at hand, as defined by Brillembourg: “How do we create a stable system that allows that hotel owner to issue that right and then be matched to a buyer who wants to use that room?”

The answer: Through the deployment of algorithms across a system that matches inventory available to match demand.

“The system balances itself out into the future and adjusts,” he said. Technology connects to the blockchain and is smart-contract driven. Scalability can reach into the millions of transactions.

The STEP platform is in the early stages of being rolled out and can apply to any type of hotel, said Brillembourg. They can choose how much inventory is listed and when. And due to the tokenized nature of the data conveyed, consumer data is protected.

There’s a demographic shift afoot here too, one that the company believes will be beneficial to adopting the STEP platform. Perhaps, to no surprise: Millennials are the ones who have grown up with Facebook and Instagram, Brillembourg said, who are at ease in an online world. They will also inherit trillions of dollars in wealth over the next decade.

“They are going to have a big say in how they consume,” said Brillembourg. “I do not think it’s going to be a technology issue I think it is behavioral.”  They understand using currency within gaming – “so they are already being trained to use currency.”