Melbourne-based Webjet has stolen a march on the global travel industry by announcing it has partnered with Microsoft to introduce cutting-edge blockchain technology into its daily operations.
ASX-listed Webjet is perhaps best known for its B2C website providing cheap flights, car hire and other travel deals.
But it is Webjet's B2B hotel room wholesaling operation that has taken off recently, growing from A$0 to A$350 million revenue in just three years. Webjet estimates the market to be worth A$100 billion, so there is still plenty of room for further expansion.
Seeking an edge
Webjet managing director John Guscic says it was Webjet's quest for an advantage over the big, established players in the industry that led them to blockchain.
"The question was, how do we grow our business without growing our costs at anywhere near the volume growth we are expecting,'' says Guscic. "What advantages can we get over competitors by driving a lower-cost model?''
Dirty little secret
The hotel room distribution industry has what Guscic calls "a dirty little secret": it's very inefficient, as evidenced by a 4 per cent breakage rate (where a service is provided but never invoiced, mostly due to human error).
Webjet deals with 250,000 different hotels. There may be up to five companies involved in a single hotel room sale, and each manages their bookings on their own technology platform.
Image: Webjet Hotel Booking Solution
"It's a world where data is moving up and down the supply chain at a rapid rate … it's like The Matrix,'' says Guscic. "How do we make sure the data gets to the end point as accurately as possible?''
A blockchain system creates a shared, distributed digital ledger that shows every element of every transaction as part of a "smart contract". It provides a record trusted by everyone involved, as it is error-free and tamper-proof.
"We think that once this is fully implemented it will reduce the cost of operating our B2B wholesaling businesses by about 20 per cent,'' says Guscic.
While financial institutions have been experimenting with blockchain for some time, Webjet's system is a world first for the travel industry.
Graham Anderson, Webjet's CIO, says although planning only commenced in May, the system is already up and running.
"We got a lot of help from Microsoft,'' says Anderson. "It's still a minimally viable product at this stage, but it's already enough for us to use and see good results from.
"We've got hundreds of transactions a day going through, and we will ramp that up to thousands over the next month or so.''
Sky's the limit
Guscic believes there could be a huge international market for the company's technology.
"It's not where we started the journey, but it is one of the things that has become a possibility,'' he says.
"It opens up a vast array of opportunities for us well beyond just wholesaling hotels.
"The next step is to invite some of our hotel distribution partners to participate and then put more volumes though. Then we will look at what other commercial applications there are and how we can progress with it.''
Regardless of how the business develops, Guscic says Webjet will always be based in Melbourne, the world's most liveable city.
"We're a global business but a Melbourne company,'' he says. "We were born in Melbourne; we're headquartered in Melbourne. This is where we (the executive team) want to be.
"Melbourne is an outstanding place for us to recruit people to work on leading edge technologies such as our Blockchain initiative. Melbourne has excellent education and infrastructure, a strong music, sport and night-life culture, and a diverse and lively population. This highly enticing mix of characteristics ensures that we have little problem attracting the world's best talent to work at Webjet."