The Travala.com business is driven by booking commissions generated from properties aggregated via strategic partnerships with world-leading travel suppliers such as Booking.com, Expedoa, Agoda, Tripadvisor, Priceline, Hotelbeds, Webbeds, Ctrip and many more. This is currently the largest source of revenue for Travala.com. Our commission fees currently average 10% of the booking value. As mentioned previously, this is on average 15% cheaper than mainstream travel booking platforms.
Direct Contracting Program
Starting in 2021, Travala.com will initiate a Direct Contracting Program (DCP). Through the DCP, properties will be added to Travala.com under contractual agreements that give Travala.com more control over room rates and availability. By having control, we can maximize booking margins by removing fees paid to third-party travel suppliers. Another benefit to the DCP model is that we are able to build direct relationships with property owners. These relationships are important for knowledge sharing and customer feedback which, in turn, can improve the Travala.com platform.
The pilot DCP will be first implemented in Vietnam with the intention to replicate it thereafter in several other countries. As we develop our decentralised technology, we will explore different incentivisation mechanisms that encourage properties to sign up directly to our DCP. We also envision the creation of a global Decentralised Salesforce assisting Travala.com with our DCP, as covered in more detail below.
Besides booking commissions, Travala.com has ancillary revenue models that presently account for a relatively small proportion of revenues, but show high growth potential. These are:
- Integration fees. Fees are taken from cryptocurrency projects and/or foundations who want their cryptocurrency made available as a payment option on Travala.com.
- Advertising (TravalAds). Direct marketing opportunities are available to travel suppliers and strategic partners. Costs depend on a number of factors such as ad placement, size, type, and more.
Travala.com will introduce rental cars, transfers and other travel services in 2021, as they are complementary to our existing offering and will put Travala.com on a level playing field with the product offerings of status quo booking platforms.
We envision a future where consumers can book their full suite of travel needs exclusively on Travala.com.
Travala.com is currently experimenting with booking optimization tools that will improve profit margins while enhancing customer experience. Examples of such mechanisms include:
- OptiSearch. Reduces unnecessary queries by calculating the likelihood of buyer conversion and only then querying the top suppliers, instead of querying all active suppliers. OptiSearch leads to significantly faster response times due to reduced server loads.
- SmartBook. Reduces sell-outs and failed bookings, boosting conversions and customer retention. SmartBook can intervene before a booking is lost by automatically booking the same product through an alternative supplier. SmartBook also searches for the best buy-rate across our hotel supplier network after customers have booked a room, thus maximizing profit margins.
- Dynamic Pricing. This feature allows us to dynamically markup our margins according to current market conditions, instead of relying on flat rates or fixed percentages.
- Rebooker. If the price of a booking falls after the initial reservation is made, Rebooker allows Travala.com to automatically cancel the original reservation and rebook it at the new lower cost.
Based on our performance since launching, the Travala.com team has proven its ability to execute on delivering market-accepted business models. Alongside efforts to improve our existing business model, Travala.com will be implementing new decentralised business models in the near future.
Decentralised Business Models
Since setting out to build Travala.com we have always had the intention to decentralise aspects of the business in order to leverage the advantages of disintermediation. After meeting several internally significant business milestones, we are now planning to phase-in more advanced decentralised functionality and use cases to our business model.
Fully decentralised technologies are still new and experimental. There are few proven use cases to benchmark against, and even fewer best practices. Because there is no real decentralised platform playbook, our approach will be to undertake incremental change with fine tuning rather than major upheavals of existing systems. We will focus on selecting the right technologies that underpin a decentralised platform, and building a community of advocates who support our vision.
Decentralised Accommodation Booking
Under a decentralised model, accommodation seekers are able to book stays without the need for an intermediary. Said another way, individuals seeking to rent an apartment, bedroom, or hotel room can deal directly with the property owner. In this case, Travala.com will act solely as the technology provider to facilitate bookings. Our key responsibilities will include:
- Providing tools for security and data ownership such as user reputation, trust mechanisms, and dispute mediation;
- Governing AVA supply, incentives, and rewards;
- Developing the community and offering developer tools to assist with new platform developments.
The business model for a decentralised Travala.com still includes commission fees, but at a lower percentage of the booking value than currently. The benefit for travellers is a lower cost, more transparent, more customized booking experience.
The benefits for property owners are more control, improved transparency, less fraud, and lower fees. Decentralised bookings are a large divergence from the approach taken by existing peer-to-peer travel booking marketplaces, but we believe the market is ready to accept such an offering.
To support our decentralised business models, we envision the creation of a globally distributed and decentralised salesforce incentivised by tokenised rewards to help Travala.com achieve the global scalability needed with its Direct Contracting Program (DCP).
Similar to how Uber expanded their workforce through low-friction onboarding of service providers (drivers), we will empower independent agents to expand our DCP network without growing our salaried employee costs. Over time, this will potentially save us billions of dollars in overhead costs.
Anyone, anywhere in the world will be able to participate in this program to earn a possible lifetime revenue stream, paid in the form of AVA. Earnings are based on a percentage of the total revenue generated from the accommodation partner on the Travala.com platform. A onboarding process will be required to both vet the quality of participating individuals and set them up for success.
The Travala.com Decentralised Salesforce will help us compete in fast-growing travel accommodation markets against status quo platforms which already have millions of directly contracted properties listed.
Verified reviews are a valuable commodity in the travel and tourism industry. Certain platforms within the space are charging tens of thousands of dollars per year just to license the right to use the reviews they’ve compiled. The value of compiling reviews is clear. More than 80% of TripAdvisor users, for instance, make decisions based on the reviews they read (“Eighty percent of TripAdvisor users,” 2014).
However, status quo review systems are notoriously inadequate. An inability to solve the identity problem combines with improperly designed incentives to result in rampant fake reviews or reviews that are negative-only. This is evidenced by, for instance, a BrightLocal consumer review survey which found that 75% of consumers believe they have read a fake review in the last year (Murphy 2018).
The importance of a genuine verification system and adequate economic incentivisation for well-intentioned reviewers cannot be understated. Thankfully, by leveraging decentralised technology under a Booking Platform Consortium model, a way to create such a system is now possible.
With such a model, Travala.com can lead the way in creating the technology that incentivises users to write thoughtful reviews (by allowing them to generate earnings from the reviews), and preventing non-Consortium members from freely using the reviews to their benefit.
At first, Travala.com would be the only member of the Consortium. Business development efforts would target similar-sized and like-minded travel booking platforms. Under this model, the ownership of the reviews stays with the Consortium, and it would be a copyright violation for others to use them.
To start, we would lend the existing reviews already compiled on Travala.com to the new review platform. Once others join the Consortium they get the right to use existing reviews and submit new reviews. To join the Consortium, travel booking platforms will do the following:
- Submit a one-time payment to all Consortium members, with the payment split in proportion to the percentage of reviews submitted by each member. The first five Consortium members join free of charge.
- Lock-in a staked position in AVA which must be purchased on the open market. The first five Consortium members get an early-stage discount.
- Destroy 10% of their staked AVA position every year as a fee to maintain membership.
- Platinum Members are the only ones who get full rights to use the reviews how they see fit. This protects Travala.com’s search engine optimisation while still giving booking platforms a cheaper way to get reviews. Platinum Memberships are priced on an ad-hoc basis.
Decentralised Referral System
Affiliate marketing always requires the vendor to be honest and report affiliate earnings correctly. While a decentralised referral system wouldn’t completely eliminate the need for affiliates to trust Travala.com, it would at least enhance the transparency of the payout system. Further, since payments themselves can be made using cryptocurrencies, there is the benefit of vastly reduced transaction fees, particularly for cross-border payments.
Travala.com will track registrations of users who were referred by affiliates, then pay affiliates a percentage of the commission earned through bookings from the customer for a duration of five years. Once a month, bookings and affiliate earnings are uploaded to the IPFS to create an immutable record of who got paid, why, and when.
Any parameter of the Travala.com blockchain software can potentially be made modifiable, with holders of AVA given voting rights on select governance issues relating to the platform. For example, a percentage of every booking could go into a community fund, with AVA holders voting on proposals for how to spend the funds. Proposals could include marketing, development, or anything else that is relevant.
It is also possible to let the network vote on more fundamental parameters such as the percentage of commission charged to travel suppliers, or the number of AVA repurchased and destroyed. Further, voting can also be used as a policing mechanism with AVA holders voting to ban properties that violate laws or are otherwise bad for the platform.
The primary advantage of decentralised governance in our context is that it improves community engagement and builds loyalty. Giving AVA holders the right to vote on certain issues empowers them, not unlike shareholders in a public company.
Global travel technology companies like Amadeus and Sabre are ancient with low-level APIs used by basically all OTAs either directly or indirectly via third-party APIs that resell them. Their business value is that they access an enormous quantity of product across flights, hotels, rental cars, etc., and are integrated with all major stakeholders in the industry. These APIs are used because they are unified and reliable. Their purpose is to ensure everyone speaks the same language to each other, and to mediate contract disagreements.
Disrupting these entrenched APIs is extremely difficult. However, if it can be done at all, the most likely usurper will be one that is built on decentralised technology. If Travala.com can create a protocol that allows each industry stakeholder – airlines, hotels, car rentals, other travel-adjacent businesses, and consumers – to interact directly, and to do so using a unified protocol (API) that is enforceable directly on the blockchain, then there will no longer be a need for intermediaries like Amadeus and Sabre.
With enough traction from the early-adopters who take advantage of the lower costs enabled by disintermediation, a tipping point would be reached where industry stakeholders switch en masse to the new platform. In this scenario, the value of a common cryptocurrency would increase along with its utility.
The Travala.com Blockchain, therefore, could be the technological advancement that finally disrupts the entrenched APIs, thereby adding billions of dollars of Total Addressable Market to Travala.com and increasing its potential future valuation.