Interviewed By The Asian Banker Live
Mohammed Altajir, co-founder of Tratok Project, a blockchain enabled global travel rewards programme discusses the pit-falls in the current business model and how the start-up will deliver greater transparency, interoperability and value to industry players, big and small
Here is the transcript:
Emmanuel Daniel(ED): As we see the development of blockchain technology, I’ve been talking to different people who’ve been creating new propositions in blockchain technology in different industries and different areas of usage.
I’m here speaking to Mohammed Altajir, one of the founders and the custodian of a new blockchain based aggregator in the travel industry. It’s very interesting how he constructs the issues that the travel industry is facing in the platform world and how it’s dominated by a few players who absorb a lot of the costs in the industry.
Maybe we should ask him, you know, his proposition and the problem that blockchain technology can be used to solve with the way in which travel and entertainment industry exist today.
Thank you for speaking with me today, Mohammed Altajir.
Mohammed Altajir (MA): Oh thank you, Manuel. You’re welcome.
ED: Yeah. So, tell us, what is the problem in the travel industry today as you construct it?
MA: Well, before I go directly into that, there are few words I like to say about the travel and tourism industry as a whole.
The industry in 2016 alone was directly and indirectly responsible for 7.6 trillion US dollars to GDP and employed more than 292 million people. This is already very important. In addition to that, it is forecasted to continue growing and by 2027 will not only contribute 11.4% of total global GDP, but will also employ one in nine people.
This is why this industry is not just very important, but a growth industry. However, it is as you say, riddled with lots of problems. The problem primarily comes to two stakeholders principally; the consumers and the service providers.
Let’s start by talking about how it affects the service providers and what some of these pains are. Technology traditionally has disrupted the industry at the cost of service providers in terms of their revenue streams are being eradicated. Whereas before, they would make revenue on phone calls from landlines, the advent and adoption of mobile phones has wiped this out. Whereas before they would make revenue from room service, delivery services have wiped this out. Whereas before they would also make income from on-demand television, streaming services have wiped this out. And of course, the movement or migration of people from booking traditionally off-line to online has allowed the middleman or OTA, which is online travel aggregator, to enter the industry and effectively take large portions of their profit, in many cases in excess of 30%, which is I believe extortionate.
ED: 30%. Is that what the aggregators are taking off a regular hotel room rate?
MA: Yes. And in some cases more. But you will have to bear in mind, this is 3% of revenue, not a profit. So course, margins are constantly being squeezed. And that with ever-growing competition comes at the expense of the service provider.
ED: Well, if an average aggregator takes 30%, that suggests that only a few aggregators and it’s almost like a cartel effect, because you know, you can’t be more than one aggregator to take money out of a hotel transaction.
MA: Yes. That is correct. And indeed, there have been many accusations in the European Court and various local courts in European countries where specifically these online travel aggregators have been accused of cartel behavior in those very, very words.
But we’re not here to focus on accusations against institutions. We’re here to talk about solutions. But you’ve asked about pain. This is the pain that the service providers are feeling. Let’s look at the pain that the consumers are feeling on the other end of the spectrum.
They have the issue of a lack of transparency in costs where the showed one price online. They go to a venue and they’re told actually there are all of these extras you have to pay, because there’s this tax, there’s this charge, there’s this municipality fee, this tourism fee, etc.
Given the size of travel and tourism and the value it’s worth, there shouldn’t be these hidden charges. Someone should be fully informed of what it is they’re agreeing to sign for.
ED: The customer should be fully informed.
MA: Of course, without a doubt.
ED: So, all of the charges should be transparent to the customer.
MA: Without a doubt. It’s inexcusable that there are hidden charges.
MA: Which when you get off your flight you’re told sign here, and it’s added on. You didn’t agree to it at the time of booking or you weren’t fully aware. That is the first thing.
The second thing is fraud. We had more than 55 million fraudulent bookings online in the United States alone in 2017. That is gargantuan and that shouldn’t exist, but it does, because of opportunists taking advantage of phishing scams and such policies.
At the same time, the client also will have excess fees put on them in terms of foreign-currency transfers at extortionate rates, which I believe is unforgivable given the fact that the technology exists which completely annihilates the requirement for that.
And then finally, which I believe is the most ultimate pain point for the client, is refund policies. The duration that refunds take to process and the amount which they are eventually refunded, assuming that they are allowed to obtain their refund, this is something which should not happen. It amounts to daylight robbery in my opinion.
Mohammed: Right. And actually, the refund policy is a, you know, is a legacy and that the travel industry was all about the credit flow, right. And the amount of float that the airline and the service providers, you know, give on to the agents and the agency network is now made online, right. So, they slow down the process in that way.
So, tell us a little bit about, you know, your organization and what you’re setting up to solve here.
ED: So, in short, the technology exists to address all of these problems, and it exists right now. And it ideally should be adopted, because given the importance and growth potential of the sector and given to the fact that it is to the benefit of service providers and consumers, it makes sense that it is the next logical evolutionary step.
However, there’s opposition to it, because the current entities that control online booking are resistant to it, because it hurts that profit potential, and that in my opinion is not fair.
Now, what Tratok Ltd, –
MA: And how do you spell that and what does it mean?
ED: Tratok stands for the travel token.
MA: Travel token.
ED: And it’s spelled T-R-A-T-O-K.
MA: Okay. Got it.
ED: And how it addresses these issues is effectively by decentralizing financial transactions. And that enables you to cut out as many chains as possible with financial institutions. So already, when you’re talking about processing fees already, it goes through instantly, with minimum fees, decentralized, blockchain, and effectively it is transparency for both sides.
MA: So, on the blockchain, you make that all the information – you make the transaction transparent to the customer.
ED: And to the service provider, so you can instantly see when something’s gone through.
ED: And because of the ease of use of it, and because there are no middle parties, by eliminating steps in the reaction or in a relationship, the fewer steps there are, the fewer costs and the fewer things that can go wrong. And with such technology, you know longer need something to go from one aggregator to another through a travel agent go to a, directly through the provider, then through a bank, then through another middleman.
All of the steps take time, all of these steps cost money, and all of them are now inefficient. Ideally, we are arguing for maintaining the status quo when people want to make things more expensive and take longer, which is nonsense. There is no justification for it.
With instantaneous transfers and one common currency of blockchain, you can effectively annihilate all of these steps. There’s no foreign-currency exposure, fraud is limited, refunds can be processed instantaneously, and rather than losing up to 80%, sometimes 95%, sometimes the entirety of your deposit, you’ll recover 99.9% of it and instantly. Again, no 30-day wait.
MA: So, you’re suspiciously telling me you’ve gotta a crypto that creates a common currency, a transacting currency network.
ED: I’m telling you that we have generated a token based on the theorems technology, and it has been effectively tested. We have tested it with smaller partners. We’ve tested it with a few larger partners, and it has consistently proven that without costing an extra penny or extra charges to the client, it can increase the profitability for the service provider by up to 35% in some cases, and that is consistently. That isn’t a one-off, you know, anomalous result.
This has been proven. And this is why, you know, don’t take our word for it. There’s a reason why people and institutions are talking about it. There is a reason why people are interested in adopting it, and why we have already in some stages of contract negotiations even the compliance departments of certain change looking at whether they can jump on board.
ED: Right. So, where are you in the development of your platform, and where are you in the development of the blockchain on interval ledger, and where you in the development of the cryptocurrency that you’re talking about?
MA: So, the token has been created successfully, and the smart contract has been deployed as of 155 days ago. It has been verified by small contract experts. It has been tested, and it also – one of the praises we got was for its efficiency in effectively how efficient it is to run in terms of costs for every single transfer with currency from one wallet to another one. In that regard, we are completely established.
With regards to business relationships, we are months ahead of schedule and talking to some very notable household names. The idea about something, when you want to disrupt an entire industry, you have to effectively have use. You cannot have a beautiful product which then will only be adopted by one bed-and-breakfast hotel in the middle of nowhere and then say look it’s sufficient. Everyone should adopt it.
No, people want not just something to be efficient, they wanted to be practical. They wanted to be useful. And so, that’s why we are forming partnerships with some very leading brands and household names that you will recognize when you see publicized
ED: Are you talking about hotel chains?
MA: I am talking about hotel chains. I’m talking about airlines. I am talking about cruise lines. We are covering everything across the board for travel and transport, and it is our intention eventually as well not just to implement rail travel but as well to include car rental and also effectively to include, at one point or another, the facility for travel agents to put together packages and offer them.
ED: You are aware that some airlines and even some hotel chains are starting off their own blockchains, their own cryptos basically from their loyalty program and so on.
Do you think that there will be a battlefield in this area that you have to, you know, you have to sort of pip everyone else to become the preferred crypto as opposed to, you know, creating connectivity with all kinds of different cryptos in the marketplace?
MA: Competition is always healthy, because competition comes at the benefit of service users. And of course it is logical that whoever provides the best end-user experience for their clients is the one who’s going to obtain the most market share under fair conditions.
Given the fact that we have considered many aspects in terms of we are relying on unmatched transparency, but also truly unmatched global inclusion in terms of what’s good is having one currency that works only for one specific airline or one specific hotel chain when you can have the same technology that will work universally and which is fully transparent and all-inclusive.
In terms of the facility exists that even if you, let’s say, one such user like let’s look at a B&B, for example. You have users there who have smaller opportunities to rent out space that they have or residential space. You could include them on things like this for them to sign up and make their offering and have feedback, etc. It’s a very simple stage for them to do.
When we go this all-inclusive way and you provide not just a truly transparent market that is fair where everyone has a voice, I believe that you effectively stand above the competition.
In addition to that, there is one other aspect which no one really talks about or everyone chooses to overlook. And that is rewards programs. Yes. Many rewards programs exist with many of the airlines and big hotel chains. However, how many of these are truly global in terms of wouldn’t you rather, as a consumer who travels a lot, wouldn’t you rather have a common reward-point scheme, which you can use whether you’re booking a flight, whether you’re booking a hotel, whatever that hotel is, whatever airline that is, is far more useful than let’s say, oh I've got this many points at Marriott. I’ve got this many Skywards points. I've got this many loyalty points from let’s say Star, etc.
ED: Right. Right. Interchangeably.
MA: Of course.
ED: And of course, by using a theorem, you’re actually also suggesting that the contracts and the ticketing and so on can be carried in the token basically. Is that how it works?
MA: Yes. And of course as technology evolves, you can deploy new contracts. You can replace coin for coin and constantly evolve. One of the things about the Tratok project is that we take our community very seriously, and we always listen to constructive feedback.
Originally, one of our primary objectives was to cut out the inefficient middleman across the board. By that of course originally, we meant online travel aggregators, merchant banks, and the sort of travel agents who basically will put a huge markup on a package or on a flight. There is no justification. These days, everyone can access the Internet. Everyone can go over the transparent search function and find what they need. You don’t need someone putting a large markup.
How we change that is a lot of our community members said basically but what if you want honest feedback from a travel expert who has been to these places and can show you things that you wouldn’t imagine. And we thought you know what you’re actually right. That does add value and we’ve added modules into the program to allow such things.
ED: Timelines? You know, when are you – proof of concept?
MA: So, proof of concept and feasibility studies and contingency studies under different stress circumstances have been done. In terms of timelines, originally we wanted to have a prototype ready by the end of this year. The prototype has actually started its testing two months ago. So, in that respect we are very much ahead of schedule.
We were expecting to have a beta launch for our early adopters by June of 2019. I think that if we are able to maintain the traction, and our team is very motivated on this, if we are able to maintain our current traction, we could see early beta stage adoption as early as January 2019.
So, it is honestly looking very, very promising. Don’t hold me to that timeline. For now, we’re sticking to our original timeline of June 2019, but we are doing our best to maintain the momentum going forward, because this is a long overdue service that the sector needs, and it is something that generally adds value and when it is launched and it is adopted, it will be a game changer.
ED: Thank you very much for sharing with us this new concept. You’re actually taking it to the next level in terms of aggregators, platforms, and carrying the contract on a blockchain transactions. Thank you very much.
MA: No. My pleasure. Thank you for your time, Manuel. Please enjoy Dubai.
ED: Yeah. Thank you.
MA: You’re welcome.