Does African Tourism Really Need Blockchain Technology?

In an era when digital transformation is reshaping industries, blockchain technology is emerging as a groundbreaking innovation with the potential to redefine tourism and travel. Blockchain, essentially a decentralised ledger that securely and transparently records transactions across multiple computers, offers solutions to longstanding challenges in the sector, such as fraud, inefficiencies, and a lack of trust. 

Tourism, a multi-trillion-dollar industry that contributed over 10% to global GDP before the COVID-19 pandemic, relies heavily on intermediaries such as booking platforms, payment processors, and travel agencies. These middlemen often inflate costs and introduce vulnerabilities. Blockchain technology can change this situation by allowing direct transactions between people, creating unchangeable records, and using smart contracts, which are agreements that automatically carry out actions based on 

PubMed Central notes that in developed economies, where digital infrastructure is robust, blockchain has already demonstrated tangible benefits, from streamlined bookings to enhanced customer loyalty programmes. However, in regions such as Africa, adoption lags due to infrastructure and regulatory hurdles. Yet, blockchain technology holds promise for economic empowerment.

Global Use Cases of Blockchain in Tourism and Travel

Blockchain’s applications in tourism are diverse, addressing pain points across the value chain, from planning and booking to post-travel experiences. One primary use case is secure and efficient bookings and payments. Traditional systems are prone to fraud, with overcharges or counterfeit reservations common. Blockchain enables direct, intermediary-free transactions, reducing costs by up to 20-30% through disintermediation. For instance, smart contracts automate reservations: once payments are confirmed on the blockchain, access to hotel rooms or flights is granted instantly, minimising disputes.

Another key application is loyalty and reward programmes. Airlines and hotels often manage fragmented loyalty points that expire or are difficult to redeem. Blockchain tokenises these points as cryptocurrencies or non-fungible tokens (NFTs), allowing seamless transfers between partners. 

Travellers can trade points peer-to-peer or use them universally, boosting engagement. A study highlights how blockchain enhances data accuracy and transparency in these programmes, preventing fraud and improving customer retention.

Luggage tracking represents a practical innovation. Lost baggage costs the airline industry billions annually. Blockchain-integrated systems, using IoT devices, create an immutable trail of a bag’s journey from check-in to arrival. Companies like SITA have piloted this, where each stakeholder, airports, and airlines update the ledger in real time, reducing mishandling by 25%. This not only saves costs but also enhances traveller trust.

Identity management and secure data sharing are also transformative. Passports and visas involve cumbersome verification. Blockchain-based digital identities, stored securely, allow quick, privacy-preserving checks. For example, decentralised identifiers (DIDs) enable travellers to share only the necessary data, thereby complying with regulations such as GDPR in Europe.

In sustainable tourism, blockchain tracks carbon footprints and verifies eco-friendly claims by hotels or tour operators, appealing to conscious travellers.

NFTs are emerging for experiential tourism. Tourists can collect digital souvenirs, unique tokens representing visits to landmarks, creating new revenue streams. During the pandemic, virtual tours tokenised as NFTs allowed remote engagement, blending physical and digital worlds. Supply chain transparency in food tourism ensures authenticity, for example, by verifying organic sourcing in culinary tours.

In payments, cryptocurrency integration facilitates borderless transactions. Platforms accept Bitcoin or stablecoins, bypassing currency conversion fees, which is ideal for international travel. Overall, these use cases demonstrate blockchain’s ability to foster efficiency, security, and innovation, potentially adding $1 trillion to the global economy by 2025 through enhancements to tourism. 

Incorporation in Developed Countries: Successes and Examples

Developed economies have led the adoption of blockchain in tourism, leveraging advanced infrastructure and supportive regulations. In Europe, TUI Group, a major tourism conglomerate, has integrated blockchain for its entire booking ecosystem. By using a private blockchain, TUI manages inventory in real-time across subsidiaries, reducing overbookings and enabling dynamic pricing. This has cut operational expenses by 15% and improved customer satisfaction through transparent dealings.

In the US, companies like Travala.com have pioneered cryptocurrency-based bookings. Partnering with Binance, Travala allows payments in over 50 cryptocurrencies for hotels and flights worldwide. This bypasses traditional banks, offering lower fees and instant settlements. Success metrics include over 2 million bookings, with users saving 40% on average compared to fiat platforms.

Australia’s tourism board has experimented with blockchain for traceability in wine tourism. Using distributed ledgers, wineries track grape-to-glass journeys, assuring tourists of authenticity. This has boosted premium tour revenues by 20%.

In Asia, Singapore’s Changi Airport employs blockchain for passenger identity verification, speeding up immigration by 50% via biometric-linked ledgers.

Winding Tree, a Swiss-based platform, creates a decentralised marketplace for travel services, connecting suppliers directly with buyers. Airlines like Lufthansa have joined, reducing dependency on OTAs like Expedia, which charge high commissions.

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Comparison with Africa and Nigeria: Successes and Lapses

HFTP.org records that, in contrast, blockchain adoption in African tourism, including Nigeria, remains nascent, hampered by infrastructure deficits and regulatory ambiguities. Africa contributes only 5% to global tourism receipts, with Nigeria’s sector generating about 3.6% of GDP.  While developed countries boast high internet penetration (over 80%), Africa’s average is 40%, with Nigeria at 50%, limiting the reach of digital tools.

Successes in Africa are sporadic. In Kenya, blockchain pilots for wildlife tourism track conservation funds transparently, attracting eco-tourists. Rwanda uses blockchain technology for coffee-tourism traceability, similar to Australia’s wine model. 

Startups such as TravelChain in Nigeria are exploring decentralised bookings for local hotels, but their scale remains limited. The Central Bank of Nigeria’s eNaira, a CBDC, could integrate with tourism payments to enable seamless inbound transactions.

However, lapses dominate. Regulatory bans on cryptocurrencies in Nigeria (lifted partially in 2023) deter investment. Unlike Europe’s supportive policies, African governments often view blockchain sceptically due to fraud risks. Infrastructure challenges, unreliable power, and internet hinder blockchain’s always-on requirement. Skills gaps mean few developers can implement solutions, in contrast to the talent pools of developed nations.

Public-private partnerships enable developed countries to succeed, while Africa’s efforts remain fragmented. For instance, TUI’s blockchain integration benefits from EU funding, while Nigerian tourism relies on underfunded agencies like NTDC. Adoption in developed areas focuses on luxury and efficiency; in Africa, it’s survival-oriented, addressing basics such as access to payment services for unbanked populations.

Blockchain for African and Nigerian Tourism: Why Not?

Blockchain can democratise tourism in Africa by reducing costs and empowering local communities. In Nigeria, where intermediaries take 20-30% commissions, direct peer-to-peer platforms could boost small operators’ revenues, fostering inclusive growth.  It addresses fraud: fake tour packages plague the sector; immutable ledgers ensure verifiable reviews and bookings. For outbound tourism, blockchain simplifies remittances and payments, aiding Nigerians travelling abroad.

Sustainability is key, blockchain tracks eco-impacts, attracting green tourists to sites like Yankari Game Reserve. It enhances financial inclusion; with 57% of the population unbanked in Nigeria, crypto payments open markets. Lessons from developed countries indicate that job creation is possible; blockchain technology could generate new tech roles within the tourism sector.

Challenges outweigh benefits currently. High implementation costs: developing blockchains requires expertise that Africa lacks and could strain budgets. The volatility of cryptocurrencies poses a risk to tourists, deterring their adoption. 

Regulatory voids invite scams, as Nigeria’s crypto ban history underscores. Infrastructure lapses cast doubt on reliability, as power outages disrupt nodes. Privacy concerns in data-scarce regions could exacerbate inequalities. Unlike the seamless integration of developed economies, Africa’s digital divide means blockchain might benefit urban elites, widening gaps. Environmental impact (energy-intensive mining) also clashes with sustainable tourism goals.

Incorporating blockchain could profoundly impact inbound and outbound tourism. Inbound, secure, transparent systems attract more visitors. Verified reviews and payments reduce risks, potentially increasing arrivals by 15-20%, as seen in blockchain-adopting destinations. NFTs for cultural heritage, such as tokenising visits to Lagos’ markets, create a buzz and attract millennials.

Outbound tourism benefits from cost savings. Nigerians spend billions abroad; blockchain cuts fees, making travel affordable. It enables micro-insurance via smart contracts, covering risks like flight delays. Economically, it could add $50 billion to African tourism by 2030 through efficiency gains. Socially, it empowers women-led SMEs in the hospitality sector.

However, negative impacts include job losses due to disintermediation and increased cyber risks if not adequately secured. Environmentally, while mining is energy-heavy, proof-of-stake blockchains mitigate this. Overall, positive impacts hinge on addressing lapses through education and policy.

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FAQs

1. What are the main use cases of blockchain in tourism?

Blockchain enhances secure bookings, loyalty programmes, luggage tracking, identity management, and sustainable practices by reducing intermediaries and providing transparency.

2. How has blockchain been successfully implemented in developed countries? 

Companies like TUI in Europe and Travala in the US use blockchain for efficient bookings and payments, cutting costs and improving trust, with examples including real-time inventory management and crypto integrations.

3. What challenges hinder blockchain adoption in Nigeria’s tourism?  

Key barriers include poor infrastructure, regulatory uncertainties, skills shortages, and high costs, in contrast to the supportive environments in developed economies.

4. Should Africa incorporate blockchain into tourism?  

Yes, for cost reductions and inclusion, but no due to volatility and infrastructure issues; a balanced implementation with policies is recommended.

5. What impacts could blockchain have on African inbound tourism? 

It could boost arrivals through secure systems and NFTs, increasing revenues and sustainability, but it requires overcoming digital divides to ensure equitable benefits.