"We want to give the distribution power back to the individual hotels and give them the power of deciding over commission rates and how to market and sell their supply." - Maksim Izmaylov, CEO Winding Tree
Report OverviewThe core question we address in this report is whether blockchain technology could disrupt or complement the current online hotel distribution space. Numerous reports and articles have now summarized the disruptive potential of blockchain in travel. However, most lightly touch on the various areas where blockchain could permeate into the online travel ecosystem. We believe that the discussion now deserves more focus. In this report, we dive deeper into the hotel distribution value chain, particularly for hotels, to get a better read on the implications of this technology that promises so much. We offer detailed data on hotel distribution mix by channel, current and forward-looking adoption rates of blockchain adoption by the travel industry, advertising spend by channel, how this will likely change over time, and more. We highlight current blockchain initiatives and offer our expert opinion on how travel distribution could get impacted over time.
What You'll Learn From This Report
- The basics of blockchain and how this nascent technology applies to the current travel distribution landscape
- Learn about the more promising pilot programs and applications of blockchain in travel distribution
- Gain a detailed understanding of the current hotel distribution landscape including the friction points that blockchain could resolve
- Learn how the industry is thinking about blockchain in terms of timeline for adoption
- Learn which hotel distribution channel cost breakout and why hotels choose one or the other
List of Figures
- Blockchain Timeline for Adoption Real And Perceived
- Hotel Distribution Share Breakout Across Channels
- Direct vs. Indirect Customer Acquisition Breakout Among Branded and Independent Hotel Properties
- Effective Commission Take by Distribution Channel
- Hotelier Perceptions on What Would be Considered Fair Third-Party Commission Rates
- Hotelier Satisfaction Rates on Third-Party Data Sharing
This report is for those interested in the topic of travel distribution more generally and about Blockchain, the promising technology that could impact how travel sellers connect with travel buyers. Our analysis is intended for both sides: Those operating within the travel industry but also proponents of blockchain aiming to add unique value in the space of online distribution.
Numerous reports and articles have now summarized the disruptive potential of blockchain in travel. These are typically broad and touch on all or many of the various areas where blockchain could permeate into the online travel ecosystem. We believe that the discussion now needs to get more granular. In this report, we dive deeper into the online travel distribution value chain, particularly for hotels, to get a better read on the implications of this technology that promises so much. We offer data on distribution mix by channel, cost of acquisition by channel, current and forward-looking adoption rates of blockchain by the travel industry, hotel advertising spend by distribution channel, how this will likely change over time, and more. We also highlight current blockchain initiatives in travel and offer our expert opinion on how travel distribution could get impacted over time.
Challenges with the Status Quo
Blockchain technology is new to travel. This makes it difficult to pinpoint exactly how and to what degree it might impact the industry longer term. One area currently being addressed by the blockchain community is online distribution. The argument goes, that suppliers i.e. hotels and airlines overpay on commissions when advertising on third-party platforms such as OTAs and travel management companies. Blockchain, as a ‘decentralized’ platform for information and value exchange, could become the base layer for a more democratic and cheaper distribution landscape. Here, we stress that just because cheaper and better alternatives exist, does not always mean that adoption is certain. Much of this will depend on proactive willingness to break away from traditional digital frameworks. There are some clear and intriguing use cases and pilot programs for blockchain, however. This includes distribution, payments, data security and data infrastructure across airlines, hotels, car hire, alternative accommodations, and others.
Rather than focusing on the full spectrum of applications and verticals, we channel our analysis on distribution specifically. Travel is a highly intermediated industry with hotels, airlines and other supplier segments depending heavily on aggregators for customer acquisition. While this will not likely change anytime soon, given the nature of the product i.e. big and infrequent purchases – the industry continues to bump heads on the direct and indirect costs associated with third-party platforms.
Here, blockchain has potential to – at the very least – shape the narrative around partnerships and the cost of doing business as a travel provider. The technology’s attributes as a secure and decentralized network (of sorts) could feasibly be used to build a distribution alternative to traditional online travel agencies (OTAs) and the Global Distribution Systems (GDSs) that currently dominate the travel intermediary landscape.
Accommodations is the most fragmented vertical in travel. Hotel owners operate as independent and chain brands across numerous property and class categories. Yet, distribution is said to be heavily consolidated among a handful of intermediaries. This includes the big online travel agencies (OTAs) Priceline and Expedia Inc., Airbnb for alternative accommodations, and the branded hotel chain networks that have steadily moved away from hotel ownership and operations, and more toward property branding, marketing and distribution functions.
These platforms allow hotels to tap into a global marketplace of potential buyers. This service, however, comes at a cost. Hotel owners and managers often argue that these costs – i.e. the commissions and advertising costs paid to acquire customers, are too high. They also lament over the indirect costs of doing business with these platforms, particularly in the case of airlines that worry about their inability to merchandise effectively, as they move towards an unbundled business model where fares and ancillary services are sold as separate products.
Hotels also capture a large share of their travel through ‘direct’ channels. That includes brand.com websites and corporate contracts. Here, we break out channel share across channels to give readers a better sense of the marketing and advertising costs associated with running a hotel. Blockchain developers and travel suppliers should have a better understanding of the full spectrum of customer acquisition strategies that account for the total revenue pie.
To emphasize, we are not blockchain technologists hence cannot fully assess whether blockchain can actually deliver on the benefits that proponents claim that it can. Here, we assume that the foundations of blockchain technology are sound. For example, experts claim that distributed ledgers (the conceptual base for blockchain) are immutable by definition. We can only assume that the data encryption methods used in decentralized apps (DAPPs) are as advertised i.e. secure. Likewise, we can only assume that blockchain applications can manage the same scale of transactions processed through traditional “centralized” distribution channels.
Rather than arguing for or against the effectiveness of blockchain as a technology platform, we highlight some of its assumed capabilities and competitive positioning as an alternative or compliment to the existing distribution landscape. Here, we lay out a framework for understanding hotel distribution, its various connection points, the costs associated with the spectrum of channels available to hotel managers, the friction points between hotel owners and their distribution partners and the various entry points that blockchain experts should consider when entering the space.
1. To further the conversation on travel distribution more generally. Blockchain is a good proxy for this conversation because of its disruptive potential as a decentralized distribution platform.
2. To give the travel industry a clearer sense of how blockchain could fold into the ecosystem.
3. To give blockchain startups and investors a better sense of the travel distribution landscape when it comes to channel share and costs associated with direct and indirect channels.
Summary of Key Findings
– The fate of any new technology ultimately depends on adoption. Our data and channel checks show that hotel suppliers are looking for alternatives to traditional distribution systems. Alternatives would need to bring cost and user experience benefits. Intuitively, it makes sense that businesses would want to reduce distribution costs. The question here is how aggressively they want to go after those reductions. From our discussions and surveys, we believe that blockchain is well positioned to capitalize on general discontent in the market. In other words, suppliers will be open to experimenting with the technology. Only time will tell whether blockchain will live up to its promises.
– The blockchain community will need to add real value to the existing business landscape in order for blockchain to catch on. That means better, faster and cheaper applications for travel businesses and consumers. Some big players are willing to give it a shot, at least proactively work with blockchain startups and applications to test capabilities.
– Travel suppliers want cheaper more flexible marketplaces that allow for greater control when it comes to inventory bundling. Blockchain as a base layer for digital distribution opens up that discussion. The technology will need to mature before it catches up with current alternatives. With that said, travel distribution is a moving target. Traditional ‘centralized’ platforms continue to innovate around mobile, targeted marketing, merchandising capabilities and other asks from their supplier base.
– Competition in the market among traditional players will likely drive the cost of doing business down over time. Nevertheless, if blockchain can deliver a more effective base layer for distribution and custom app development, then existing centralized data infrastructure models could get disrupted. Some OTAs have hinted at the possibility of connecting to blockchain-powered platforms from which they can pull inventory.
– Blockchain technology has started to permeate into the travel ecosystem. Companies like German tour operator TUI have reportedly taken bold steps to migrate at least part of the company’s data infrastructure onto a private blockchain.
– At least one startup is gaining traction with their vision to build a decentralized distribution platform for travel. Certain supplier partners including Lufthansa have committed to publishing their inventory on the platform. Winding Tree is set to initiate its coin funding round in February.
– Blockchain technology is a far departure away from today’s existing travel data and technology infrastructure. Adoption will not happen overnight. Short of replacing them, decentralized distribution platforms will likely live side-by-side with existing distribution channels, assuming that proponents can deliver on the various promises of blockchain tech.
– Development teams will need to retool with new coding skills to build and manage decentralized applications. This could prove challenging as blockchain tech competes for talent with established protocols.
– We see earlier disruptive potential in the corporate travel space. Much of what managed travel agencies do is collective bargaining and buying airline and hotel inventory in bulk, to reduce costs. Mainstream cryptocurrency adoption will take time. Corporate travel managers could become subject matter experts at the enterprise level, if that means significant savings on corporate travel spend.
– Hotel distribution is complex requiring strategic allocation and budgets for marketing channels and costs. Blockchain will likely add to this complexity in the shorter term, but could potentially simplify connectivity and transactions in the longer term.
Blockchain: What Is It
The fabric of modern society depends on the accurate and secure exchange of digital information across vast networks. At its core, blockchain is a distributed framework for storing, accessing and exchanging information. Most often associated with Bitcoin and cryptocurrencies, the nascent technology is essentially a programmable and decentralized database used as the base layer for information record keeping and exchange between two parties. In short, blockchain allows for individuals to engage with each other without an intermediary, removing the need for a trusted third party.
In Figure One, we observe a simplified model of a ‘centralized’ system for what we call ‘value exchange’. Value exchange can refer to monetary transactions but also information such as digital content. Here, a trusted third party operates between the buyer and the seller to ‘intermediate’ certain functions of that relationship. In the world of finance, banks act as the clearinghouse between two parties. Transaction requests are initiated and fulfilled via banks and other transaction-focused intermediaries.
Certain online travel aggregators including some OTAs also operate as ‘merchants of record’. These groups manage the payment process between traveler and hotel property, for instance. Beyond this simple model there can exist numerous layers of gatekeepers, depending on the properties of the transaction.
The same goes for content aggregation and distribution. Today’s travel marketplaces e.g. the OTAs and metasearch sites essentially pool hotel and airlines inventory as the core value-add of their product. Travel buyers then come to the aggregator site to ‘shop around’ for hotel, flight and other travel product options. This marketplace model is important in travel for a number of economic reasons. Travel is an infrequent purchase that varies based on traveler needs. Most travelers rarely go to the same place twice which means that they have limited information on product price and quality. Searching for a hotel in a new city, for example, means that consumers need some basis for comparison. Marketplaces allow travelers to find the category of product that fits their needs, and then going further to compare the most economical options for that particular trip. In short, Blockchain applications will need to work as marketplaces where price and product comparisons can be made.
In finance, banks facilitate transactions when making purchases at the grocery store, for example. The store sends a request for funds via the bank, the bank validates that funds are available and then fulfills the transaction on behalf of the merchant and customer. One core value proposition of blockchain over traditional ‘centralized’ configurations is that transactions are recorded across a distributed network of actors. Rather than the transaction running through a trusted third party, the request and fulfillment gets validate by consensus. Each node in the blockchain stores a record of all transactions. Value transfer requests get validated by numerous actors operating in the blockchain environment, obviating the need for a trusted third party to process the exchange, but also to keep record of value inventory.
Ethereum is more than just a cryptocurrency. It has become the environment in which blockchain applications are now being built. Bitcoin, as the original paper by Nakamoto says, was created for the purpose of being “A Peer-to-Peer Electronic Cash System.” However, some people interested in blockchain technology saw further potential in the platform which could be achieved by being able to execute and make code run on a decentralized network. In 2013 Vitalik Buterin, a cryptography researcher and programmer, released his idea of a decentralized platform which would allow users to execute code on it, Ethereum. To fund the development Buterin ran what is today known as an initial coin offering (ICO) and Ethereum was released in 2015. The main difference between Ethereum and Bitcoin is that the former introduced smart contracts to the blockchain world.
Smart contracts are account holding objects on the ethereum blockchain. They contain code functions and can interact with other contracts, make decisions, store data, and send ether to others. Contracts are defined by their creators, but their execution, and by extension the services they offer, is provided by the ethereum network itself. They will exist and be executable as long as the whole network exists, and will only disappear if they were programmed to self destruct.
These smart contracts can be used for programming automatic settlements, for example if OTA1 has a deal with Hotel1 for 10% commission and OTA2 had a deal for 15% commission, any time the OTA1 sends a payment to the Hotel via the smart contract it could automatically settle the commission with the 10% for OTA1 and 15% for OTA2. This can even be extended by enabling the smart contract to automatically settle tourism taxes and other charges.
Adoption timeline/ Current attitudes toward blockchain
Either all in, lukewarm, or uncertain. Glenn Fogel, the current CEO of the Priceline Group was asked about blockchain during the 2017 Skift Global Forum. He stated that his internal teams had evaluated the technology in detail, but that currently there were more pressing issues that were focusing on.
The supply side tends to be more inquisitive and even proactive in using the technology. Germany-based TUI, Europe’s largest tour operator is applying the technology to help manage their hotel inventory more efficiently. The company offers little more information about their initiatives other than that they are using it.
Certain other hotel providers are getting involved with certain blockchain applications as a hedge against future disruptions in digital technology more generally. Some have pointed to blockchain as the foundation for other nascent technologies such as artificial intelligence and voice search. Generally, the sentiment is that blockchain has valid applications in the industry, and that being proactive in exploring its potential is worth the investment.
A recent Skift Survey on the evolution of digital for the travel enterprise probed respondents on their position on blockchain. Close to 200 responses were collected from a wide array of travel suppliers and intermediaries. Perhaps not surprisingly, close to half of responds were not sure about blockchain and its significance for their enterprise going forward. Here it is worth noting that very few, i.e. 7% of respondents definitively said “never” about blockchain and its application for travel. Surprisingly to us, a quarter of respondents stated that blockchain is currently or will be part of their roadmap within the next two years.
The State of Hotel Distribution
Here we shift the conversation over to the current hotel distribution landscape. The accommodations vertical is the most fragmented segment of travel, hence a good proxy for discussion about the promise of blockchain and its potential validity as a decentralized alternative to the current landscape.
Currently, hotel distribution is complex and, realistically, boils down to cost rather than rivalry between the various actors. Beyond the industry media headlines pitching OTAs against hotels chains lays a complex strategic landscape focused on optimizing the costs associated with hotel marketing and distribution. The term “direct booking” comes up a lot and includes various paid and unpaid channels used by hotel operators to acquire customers. In certain cases, and if executed well, going direct can be more economical than indirect. Managing a distribution program also involves risk and investments and can end up costing more than going through a third party. What works well for some may not work so well for others. Hotel operators ultimately need to figure out what works for them.
Branded hotel properties typically have more direct bookings and lower cost of customer acquisition.
Hotel properties that are part of a bigger branded chain/network were already quite successful in getting people to book direct. We estimate that a typical large chain gets at least half of bookings directly via digital and non-digital channels. Meanwhile, on average, we believe that only 10 to 15 percent of bookings come through online travel agencies for the large brands. Larger hotel brands also generally pay lower commission rates than independent ones, meaning that OTAs do not need to replace all lost bookings to come out economically neutral.
OTAs tend to make more sense cost-wise for independent hotels relative to direct paid channels.
Independent hotels that lack the international brand recognition, advertising budgets, and technology of the mega-chains depend more heavily on OTAs. As much as 40 to 50 percent of their bookings get filled by publishing inventory on third-party platforms. While they prefer direct bookings, we emphasize that these hotels need to be realistic with their distribution mix.
Having a strong website that is visually appealing and converts well combined with a unique value proposition for the guest stay itself creates brand affinity to help drive true loyalty and more direct bookings, but as a whole, independent properties will not get anywhere near the direct booking numbers of the mega-chains that have vast inventory, meaningful ad budgets, apps for mobile, and teams of salespeople across the globe. This does not mean that profit per booking needs to be low. Small hotels will often have lower fixed operational costs where third-party distribution helps act as an outsourced marketing and technology partner.
There is no such thing as a free booking; hotels still incur costs without intermediaries.
While hotels often complain about the commission that OTAs charge is too high, the cost of metasearch or Google under cost-per-click CPC can wind up being higher due to the fact that CPC does not guarantee a booking for the cost, whereas OTA commissions are only paid on success. The better a hotel is at branding and conversion, the more likely CPC rates will be below OTA rates, but that is a difficult task. OTAs also use (and own) meta brands to increase their own bookings and can do so with effective CPC rates that are much lower than hotels could achieve, due to higher conversion and more advanced optimization technology for the ad campaigns themselves.
Holding cost and volume equal, the main reason that hotels often like meta- and search engine-driven bookings more than OTA-driven bookings is that the hotels own the customer and data in the former case. This makes it easier to convert that customer to the type of guest who will return to the brand and book truly direct in the future. This is also a reason that OTA commissions sometimes are viewed as lost revenue versus meta or Google being akin to advertising on television.
Metasearch channels can and should be part of an effective hotel marketing strategy. For bigger groups, metasearch advertising is a marketing team function. Those with high web conversions can use meta CPC campaigns as a source of cheap traffic compared to AdWords, for instance. Keeping communication channels with distribution teams is key to balancing meta spend with commission-based distribution costs. For smaller chains and individual properties, managing the myriad of meta channels can also become an investment in time and money. No single meta channel will drive more than five percent of total inventory regardless of total investment. Working with channel managers such as Siteminder is an option to pool click cost efficiencies across the different sites. Those with smaller budgets and weaker website conversions should go for CPA options to limit ad burn.
Recognized brands tend to convert better on metasearch because they are closer to the customer at time of search. Companies like Sojern specialize in performance marketing and help hotels reign in ad spend costs. Meta players like trivago also like to offer advice to hotel partners. Both would much prefer working with hotels that have their digital wheelhouse in order. This makes it easier to convert shoppers and ultimately leads to happier clients who spend more. Hotels of any size tend to prioritize efficiency, simplicity and flexibility in their technology stack to help convert ‘lookers into bookers’. CPA platforms like TripAdvisor get integrated since they cost model is a cost-per-acquisition model, and there is no risk.
Current booking breakdown by channel
In the chart below, we show our estimates for current distribution channels. The Mega Brand. com example is meant to portray the likely distribution of a typical large chain with international operations. The Indendent.com example would be the distribution pattern for an independent hotel. For a pure U.S. independent hotel, the OTA number could be a bit lower while a European counterpart could see OTA business around 50 percent.
Source: Skift Research Estimates
Bookings originating from organic search, email marketing, content marketing, influencer marketing and social media marketing are all part of the unpaid-direct toolset. Here, costs typically remain in-house and fixed in the form of staffing, digital infrastructure, software-as-a-service fees, and others. Paid direct channels including search engine marketing, in this case Google AdWords and Hotel Ads, can offer more regularity when it comes to return-on-marketing spend. CPC and CPA campaigns on travel meta marketplaces – Trivago or TripAdvisor for instance – also fall into the paid-direct bucket.
Arguably, all of these are effective channels; hotel operators ultimately need to balance expertise in digital marketing and distribution, with the unique value proposition of their properties (customer base, location, rate, etc.) to optimize the paid and unpaid mix.
A significant portion of hotel bookings come from offline channels such as group bookings and walk-ins.
Other channels beyond OTA and digital-direct can amount to a significant portion of total bookings. Here we look at the GDSs, travel management companies, traditional travel agencies, as well as non-digital direct bookings including group and conventions bookings, walk-ins and room reservations. Combined, these channels can account for 40 to 60 percent of total bookings.
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Both branded and independent hotels want to reduce their dependence on third parties.
The ideal of 14% of bookings from OTAs is actually already where the typical large brand as a whole sits. For digital direct, the brands look to move up to 40% versus 30% now on average. Traditional travel agents are targeted at 5% vs around 8% now. Paid click is on par with where we see things now with an 11% goal and 10% currently.
Hotels look for a GDS share of 12% versus 10% now. Phone is viewed as in decline where it is 15% now, but chains are looking to push this down to 10% of bookings.
Managed travel is 9% now with a goal to bring this down to 7%.
Hotels want to bring OTA share down to 25% from the 40% range. For digital direct, most independents are only at 15% and want to be like the big brands and target close to 40%. Traditional travel agents are targeted at 2% vs 8% now. Paid click is a growth avenue where they target 11% vs 7%. They look to lower GDS bookings from 12% to 7%. Phone is already at the 10% goal level. Managed travel is also near its goal level of 5%.
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Customer loyalty programs remain an important part of hotel marketing strategy – more so for branded properties.
Branded hotel chains have steadily moved away from an owner-operator model and more toward an asset-light model where core functions become branding, marketing and technology as the value-add they bring to their hotel property guests. As this evolution takes place, companies like Marriott and IHG increasingly bump heads as the preferred distribution channel for the property partners. While they recognize the importance of OTAs and other third-party channels, their strategy for the foreseeable future will focus on going direct to consumer.
As a reminder, OTA fees are commission-based where the payment only occurs on a successful booking. That cost certainty differs from metasearch where the fees are click-based. Experienced operators recognize the value of OTAs as an acquisition channel, particularly for new guest acquisition. The overall consensus when it comes to strategy is that OTAs get customers through the door and it’s up to the hotel to build the relationship with the guest once on-property. Here, loyalty programs are standard protocol for capturing guest data. For the bigger chains, loyalty program members can account for more than 50 percent of bookings. Adequately rewarding direct booking behavior is clearly part of it. For smaller chains and individual properties, loyalty programs make less sense. Strong branding and differentiation with unique guest experiences targeted toward a niche clientele base is the strategy.
Hotels would still need to incur marketing and advertising costs on a blockchain-enabled platform. Marketplaces are by definition competitive. Platforms like Winding Tree will need to offer vendors the opportunity to invest in ‘bigger fruit stand’ so to speak. If those costs outweigh the cost of doing business direct, then hotels will opt to promote direct channels.
Source: Skift Research, State of Direct Booking Survey 2017
The bigger opportunity for blockchain platforms could be with the independent pool of global hotel properties. On the whole, this segment is much more dependent on third-parties for distribution and also tends to pay a commission premium, due to a lack of bargaining power. On the high end, independent properties pay as much as 25% commission on an OTA booking.
Source: Skift Research calculations
Hotel operators feel like they’re paying too much on OTAs commissions
The consensus among hoteliers is that OTA commissions are too high. Clearly, it is in the supplier’s best interest to pay as little as possible on commissions. We note that the overwhelming majority of survey respondents thought that a fair commission rate fell between the 6 and 15% range. We use this as a proxy to compare the true cost of acquisition via direct channels. Direct bookings are not free. Hoteliers still must invest in the technology and personnel to manage effective native marketing programs. Nevertheless, these data and common business sense confirm that if, given the option, hoteliers would willing get involved in alternatives if they promise to reduce distribution and marketing costs.
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Independent properties tend to be more satisfied with the data that their OTA partners provide them.
High commissions and access to customer data are the two core objections that hoteliers express when it comes to their relationships with OTAs. Hoteliers want to build more direct relationships with the customer, in order to market bookings more effectively but also add-ons and up-sells. OTAs often obscure key customer data including emails from their partners. Understandably, OTAs want to own the customer relationship as do the hotels. OTAs incur enormous marketing costs to acquire customers. Ad spend on platforms like Google account for the majority of costs for these platforms. Hotels clearly feel entitled to customer data, given the commissions that they pay to the OTAs.
Decentralized platforms promise total transparency when it comes to customer data. Here, we note that a small majority of hotels are dissatisfied with the amount of data that they collect from their OTA partners. Interestingly, independent properties tend to be more satisfied than branded properties. Here, we can only assume that OTAs are more willing to share their data with independents. Intuitively, this makes good business sense for OTAs since loyalty programs are less relevant to independent properties. Once obtained, hotel chains can market their brand and properties across their entire network of hotel inventory.
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Going forward, hotels expect to spend more on direct channels over indirect.
When asked about investments and channel shift over the next 24 months, digital direct i.e. web, social, mobile investments came up as top priority for both branded and independent properties. The majority of branded properties expressed that they would likely either spend more or the same amount with OTAs. This can be interpreted in two ways: They either see OTAs as an effective acquisition channel, or they anticipate OTAs owning a larger share of the consumer market relative to other third-party channels including GDS, and managed travel companies.
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Source: Skift’s 2017 Outlook on Hotel Direct Booking
Blockchain is compelling because it offers a potential solution to some of the more burning issues in online travel distribution. Assuming that blockchain can deliver on superior speed, cost, and user experience for both the supplier and customer, then we conclude that hoteliers would gradually make the transition. This conclusion is based on current sentiment in the market about existing channels and general attitudes and frustrations with existing third-party relationships. We also note that blockchain technology is still new, and that it will take time for these platforms to develop the necessary standards needed to make a meaningful impact on the market. We also note that online travel distribution is a moving target. Existing players recognize the various friction points and are proactively working to build sustainable businesses. Travel is also a highly competitive market. Big technology companies including Google and various China-based players are steadily grabbing share of the total addressable global consumer market. Hotel chains and increasingly airlines with their direct-to-consumer campaigns also offer compelling and customer-friendly platforms. In this environment, we could see a future where the overall cost of doing business as a travel supplier gradually edges downward. Nevertheless, we note that direct and indirect digital advertising costs continue to increase, as travel brands compete for customer attention with their industry peers and with other verticals. As a supporting argument for the broader adoption of blockchain in the industry, distribution is just one piece of the puzzle. Other use cases including supply chain and inventory tracking means that travel enterprises have added incentive to start adopting the technology. Whether distribution is the start or end point is open to debate.