r/windingtree • u/Stevenab87 • Feb 18 '18
Why I believe in Winding Tree
First, a little bit about myself… I am a thirty-something year old professional who has spent the entirety of his career in the travel biz. I have previously worked for one of the world’s largest airlines in various roles around fare distribution and have since moved on to one of the largest OTAs working on the hotel side of things. I first heard about WT last fall when talking to one of my former airline co-workers and immediately became quite intrigued with this project. Why do I believe in this project?
Airlines
The current systems are old as $#@*:
The first system for uploading and selling inventory in the airline industry, the Semi-Automated Business Research Environment (SABRE), was launched by American Airlines in 1963 (NINTEY SIXTY THREE!!!). This basically acted as a phone-based reservation system until terminals were created in 1976 to allow travel agents to easily search and shop available flight inventory for their clients. Since it was costly and redundant for each airline to be running their own system, a Global Distribution System (GDS) was implemented that created a single system serving multiple airlines.
Fast forward to 2018, and we still have the SAME FREAKING THING. Three GDSs (Sabre, Amadeus, and Travelport) essentially control 99% of non-direct airline industry. Airlines, already working on razor-thin margins, are essentially forced to pay extortion fees in order to have access to the global network of travel agents to get their products to their end customers. Sabre even went as far as threating to cut-off airlines if they tried to offer lower fares on their on direct channels (to hopefully entice customers to book with them directly, avoiding GDS fees) and Sabre was found liable for anti-trust practices. (https://www.tnooz.com/article/sabre-us-airways-american-airlines-gds-antitrust-lawsuit/)
The opportunity for WT:
First off, GDSs aren’t going anywhere. And that’s totes fine. They just need to lose their monopolistic and extortive stranglehold on the airlines. The ability for an airline to upload their inventory to the WT platform will allow the airlines to get their inventory in front of their customers on their own terms, not the GDSs. This will spur innovation allowing startups and travel agencies to access supplier inventory without having to negotiate costly content deals with GDSs that sometimes make it all but impossible to even get their company off the ground. And because we are dealing with a decentralized blockchain, anyone, even a tech-savy end user, can purchase Lif and buy directly from the WT platform. All of this requires the buy-in and participation from the airlines themselves, and they are chomping at the bit to remove the GDS dildos from their ass. I don’t think it will be too difficult.
Hotels
The big boys in the room, Priceline and Expedia, have about 95% of the OTA market (That’s a lot). Hotels.com, Hotwire, Orbitz, Travelocity, Trivago, Booking.com, Agoda, Kayak, HomeAway, VRBO, are ALL owned by those 2 brands. Hoteliers are finding themselves paying upwards of 25% commission to these guys to sell their rooms.
Nearly one-third of all available rooms in the US are part of independently owned hotels and are the ones paying the highest commissions to the large OTAs. Unless they want to invest significantly in their own direct channel, which is generally not fiscally feasible, they begrudgingly pay the exorbitant commission to be part of the Expedia/Priceline portfolio of properties. In many instances, hotels are sometimes forced to offer “rack rates” on these platforms just to be able to afford the commission, which in turn just increases the price of the room to the customer.
A blockchain platform such as WT will, similar to the airlines, allow hoteliers to provide inventory to smaller resellers at a much more affordable commission, likely passing off some of the savings to the end customer. One concern on the hotel side, however, is the amount of marketing competition. The big OTAs spend billions on marketing across many different channels, so a startup or a young company will have to have a fairly fleshed-out customer acquisition strategy. The opportunity is there though.
The travel distribution industry kind of reminds me of going to my grandma’s house, a shrine to the decades that once were. Rotary phone, big box tv with a turn dial, wood paneling. The rest of the world has evolved and advanced; the time has come to finally get grandma that iPhone and introduce her to the potential of today’s technology.
Disclaimer: Zero affiliation with WT or anyone on the team. Participated in the ICO and plan to HODL for as long as I believe in the team and their ability to acquire partners and move this project forward.
