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Blockchain-powered marketplace Lockchain wants to build the place where hoteliers and property owners can rent their property globally, receive money and manage bookings without paying any commissions to middlemen.
As a young entrepreneur with diverse business interests spanning Eastern Europe to China, Nikola Alexandrov has spent his 20s globetrotting. Yet as the average hotel bill of the digital marketer tripled, he concluded the sharing economy is sharing too much. Middlemen in the accommodations market were taking too big a slice in commissions.
The price gouging by online travel agencies (OTA) was more than a hunch. BookingSpot, a hotel price comparison engine for 200,000 hotels, was one of Alexandrov’s many business ventures. His most recent venture, Lockchain, provides the solution. The award winning internet marketer has hooked up with blockchain expert Hristo Tenchev, another well-traveled young entrepreneur who founded Bulgaria’s leading online gaming software company, to launch a freemium hotel booking model.
The independent business paths of Alexandrov and Tenchev since they co-founded the now defunct Bitcoin7 exchange in 2011 have well prepared them for the online accomodations venture. Mr. Tenchev has acquired expertise in the decentralized ledger system that runs bitcoin exchanges, the blockchain. The ability of the blockchain to bring buyer and seller together through a secure smart contract without using middlemen allows Lockchain to use a freemium model with no booking fees or commissions.
Giving Marketing Power Back to Property Owners
Nikola Alexandrov, also owner of theSEO.com, knows how to market to hotels and their guests. Online hotel booking is still the most effective way for hotels to bring revenue through the door. When considering types of online advertising, hotel web direct is the least expensive whereas online travel agencies cost the most. The Hotel must pay commissions to OTAs whose fees can be as high as 25 percent. This on its end increases the price for the end customer.
These high fees explain why the average daily revenues of these hotel booking aggregators are growing at a faster rate than those of hotels. Hotels lose much more than the commission fee. OTAs also retain the customer emails, and thus marketing leads and future potential conversions, and not always pass them onto the hotel. The LockChain Marketplace gives the marketing power back to the hotels by directly connecting them with their customers.
A property accommodation aggregator service without the middleman fees is a win-win for property owners and their guests. LockChain estimates its booking system will reduce hotel costs by 20 percent on average. The LockChain Marketplace, the accommodation booking site, provides commission-free, secure and private accommodation booking. Transactions are processed by the LOC Ledger—the database that holds the hotel listings and all the transaction rules that govern the relationship between the clients and the hotels through the use of smart contracts. The Engine will be entirely on the Ethereum blockchain, and will be open source and free-to-use by any application that wishes to connect to it.
Reducing Hotel Booking Fraud
To tamper with a customer record on the LOC Ledger, the hacker would have to gain access to every computer that is linked to the chain. This security hosted on a super secure ethereum virtual machine (VM) would have made it difficult for the phishing scheme that affected 10,000 Booking.com customers in 2014 to be carried out. Hackers obtained customer information and then contacted the customers asking for early payment for their trip.
The transaction management system uses its own cryptocurrency called LOC tokens. By using tokens, customers do not have to worry about their credit card details being hacked, or passed directly to hotels, a complaint when using hotel booking websites providers. Being billed for cancelled reservations and hidden booking fees are some of the most common complaints a transparent transaction system could help eliminate.
Providing a Pricing Edge
The LOC Ledger is open source, allowing hotels and property owners to connect their own applications to provide value added services. The LockChain Marketplace has introduced several value added currency management features for the global traveler. Although the LOC Ledger only accepts LOC tokens, a built-in exchange algorithm will provide automatic currency conversion when other forms of payment are introduced (e.g., credit cards, PayPal, Bitcoin). Price spot bookings are guaranteed through the use of a fintech hedging model to reduce currency risk for hotel owners and guarantee them that they will receive their reservations in the fiat currency in which their clients pay.
The team has a strong software programming background and is already working on integrating the LOC Ledger into several property channel management systems with a total of 7000+ properties worldwide. Tenchev, a “Forbes 30 Under 30 Social Entrepreneur,” cofounded software university SoftUni in Sofia, Bulgaria, which has trained over 100,000 software developers—no doubt some of them are working on innovative applications (to plug into the LOC Ledger)/(for the blockchain).
The ICO of LOC Tokens
In the spirit of the sharing economy, the Lockchain team will take only 25 percent (see the whitepaper) of the ICO proceeds – 6.25 percent from total will go to the two founders and the rest for the team and advisors. The advisors include former Bulgarian president Rosen Plevneliev, European parliament member Eva Maydell and prominent online entrepreneur and blockchain expert Vince Meens.
The ICO will take place in two stages: a pre-sale at a discounted price on October 3rd and the main sale on October 29th. The raise targets are set to 25 million Euro. Investors can start spending their LOC tokens when the LockChain Marketplace, the world’s first decentralized accommodations booking platform, goes live in early 2018—or book in early with the alpha version of the market that is set to begin functioning as early as November 2017.