Travel startup Winding Tree has raised approximately $15 million in an initial coin offering (ICO) that was supported by many travel providers, including Lufthansa and some hotel chains.
Winding Tree is seeking to build a new open data infrastructure for the online travel industry, which has been growing as people from newly wealthy countries join the ranks of those traveling for pleasure and business. Yet the booming global $1.2 trillion travel business, which has joined all others in moving online, remains stubbornly stuck in the area of mediated transactions. It’s rare (and difficult) for consumers to purchase hotel rooms and airline tickets directly from the providers of same with the transparency that’s expected in other sectors.
While the plethora of online brands gives the illusion of a healthy competitive market, in fact almost 95% of the online travel market is controlled by just two companies, according to institutional research conducted by the research firm Trefis. The online ticketing agencies Priceline and Expedia (known as OTAs) account for all but a tiny sliver of the brands most consumers think of as separate companies. Expedia holds about 75% of the U.S. online travel market through its brands like Trivago, Travelocity, Hotwire, Hotels.com, Egencia, CarRentals.com, and Classic Vacations. Priceline owns almost all the rest, via its own brand and its subsidiaries including Kayak, Booking.com, Agoda, and Rentalcars.com.
That’s where Winding Tree comes in. The company is building an open-source travel platform that is aimed at both the travel consumer as well as the hotel brands and airlines. The decentralized platform would mean that no intermediary could get between the buyer and seller and jack up the price. Winding Tree will build the platform, but it will be governed in a way that’s familiar to bitcoin enthusiasts – run by a foundation and anyone on the platform could propose a rule change, which will finally empower smaller OTAs against the duopoly.
The platform will use a token called a lif (incomprehensibly pronounced “leaf”) as its medium of exchange and the plan was to sell as many lif tokens as possible during a Token Generation Event that began Feb. 1, 2018. The company seems to be straining to avoid the term ICO, but approximately 15,000 ethereum tokens were exchanged for lif tokens. With ethereum trading at around $1000, that translates to a cool $15 million for the nascent platform to begin winning converts. When the token goes live this week – buyers are scheduled to get their lifs at midnight on Feb. 21 — they can immediately begin buying services from some of the start-up’s partners, who include Lufthansa, Swiss Air, and Eurowings, and rooms from Nordic Choice Hotels, which operates almost 200 hotels in Scandinavia.
Modern Consensus has confirmed that Lufthansa and other partners participated in the raise.
It remains to be seen whether a $15 million infusion can make much of dent in the enormous travel and tourism industry, which last year rang up a staggering $2.3 trillion in accommodation, transportation, entertainment and attractions. But it’s beyond question that the industry is ripe for disruption.
John Packel is working to apply blockchain solutions at ConsenSys, having been recruited to the ethereum startup after almost a decade in business travel at American Express. Packel told Modern Consensus, “Over 9 years in business travel at American Express, I experienced first-hand many examples of the gross inefficiencies in the travel industry and the tremendous amounts of manual labor that go into attempts at reconciling disparate data sources. We sold a product to audit corporate negotiated discounts that hotels fail to load in their systems, and a payment product behind the scenes included a human making up to 10 attempts to fax a recipient. The industry is crying out for blockchain solutions.”
Packel is bullish on Winding Tree’s embryonic attempts at addressing these problems. “Max and his team at Winding Tree are leading the most ambitious effort to date to make that possible with their Ethereum-based platform.”