Travel technology consulting veteran Norm Rose urges a push for smart contracts to improve the efficacy of negotiated corporate travel agreements.


Emerging as the next generation of the internet, Web3 has a broad definition. It includes virtual reality in the metaverse, blockchain, token-based economics and decentralization of technology. For the corporate travel industry, the focus is on using smart contracts, programs stored on a blockchain that run when predetermined conditions are met, to automate corporate travel agreements. Travel buyers should push for smart contracts to address several longtime issues with the effectiveness of negotiated agreements.

While discounts can be a powerful way to sell flights, other elements in the travel journey — such as lounge access, priority boarding and elite status — may also factor into a corporate customer’s purchase decision. As McKinsey recently pointed out, airlines may protect their margins by tailoring both discounts and perks for each corporate client according to their needs and patterns.

IATA’s New Distribution Capability promised to transform pricing in a way that mirrors McKinsey’s sentiment, but how many readers of The Company Dime have unique corporate-specific bundles with airlines? It is time to ask why special corporate bundles have not been fully implemented, and the answer is simple: legacy technology.

Travel Tech Consulting founder and president Norm Rose

Yes, you’ve heard this one before. Many believed the NDC API standard would be the solution. But NDC is simply an application programming interface designed to connect with an airline’s passenger service system, replacing legacy Edifact connections. The GDSs and NDC aggregators have embraced the new API for a few years, but where are the corporate bundles? The primary focus has been on simply equalizing direct and indirect channel content. Bringing the missing content to market is essential for corporate travel tools to be viewed as viable, but this has not brought us to a unique corporate bundle future.

Smart contracts can automate the soft benefits negotiated with airline agreements in the form of upgrades, upgraded status or simply a credit with funds to be used at the corporation’s discretion. These benefits have been part of airline negotiations for decades. Corporate buyers often struggle with tedious, manual processes to execute these benefits without a strategic focus. Imagine an important recruit receiving an upgrade or an executive offered refundability on a nonrefundable ticket — executed strategically at the point of sale by a smart contract.  A broader use case may be a company benefit, such as a discount on ancillary services like Wi-Fi or fast-track boarding for international flights over six hours. The number of use cases is endless as, for the first time, the industry can meet the goal expressed in the McKinsey paper. Ancillary benefits may be bundled together to create more compelling offers on specific routes or with particular types of travelers. 

Things may be worse on the hotel side. According to Tripbam, discounts off the best available rate are accessible only 62 percent of the time, while chainwide deals, used for nearly 30 percent of corporate bookings, only have 60 percent availability. These rates are not being honored due to a lack of rate loading accuracy and local revenue managers manipulating availability, according to Tripbam. This should raise a flag for corporate buyers, shaking your confidence.

All of this contributes to well-known headaches related to policy compliance and leakage. Few corporate employees would believe they could get a better deal on a computer by shopping at Best Buy or directly with Lenovo versus using their corporate negotiated rate for laptops with HP.  Why, then, do travelers shop for travel? When they cannot access their companies’ negotiated benefits, they think they can obtain better value from the general market.

Here’s where Web3 technology in the form of smart contracts can play an essential role in reshaping the corporate discount landscape. When I was quoted in a September 2016 article by The Company Dime about smart contracts, the blockchain infrastructure was not yet in place to utilize them for contract adherence.  I am happy to report that today, Web3 can meet this challenge. 

Web3 is all about the exchange of assets without the interference of intermediaries as gatekeepers. Once loaded into a smart contract, agreement terms are immutable, meaning no one can alter them. If airlines load unique bundles and corporations load negotiated hotel rates into smart contracts, they establish permanent, shared sources of truth. All parties can monitor these. Smart contracts can then act as reference points for online booking tools or supplier web channels, ensuring compliance while providing real-time performance tracking for buyers and sellers. This is a marriage of Web3 (smart contracts) with Web 2.0 booking tools.  

In a way, it all sounds too easy, and it is not. Smart contracts are a component of blockchain technology; thus, their construction is not the same as traditional centralized databases using rules technology. Special skill sets are needed. The good news is that several startups are utilizing blockchain technology for travel. Now is the time for the brave, innovative corporate travel manager to work with supplier partners to experiment with Web3 technologies and achieve end-to-end contract adherence in corporate travel. 

Disclosure: Norm Rose is an advisor to blockchain firms Simard and Winding Tree. 


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