Homebloc – A Sneak Peek at the Future of Lodging Industry

Authored by: Luayy Alkilani

Link: https://medium.com/@homebloc.io/homebloc-phase-1-transforming-the-lodging-industry-33bf891b5269

In phase 1, Homebloc targets focal points in the inherited challenges of the lodging industry. This industry is growing steadily and expected to generate $ 1.09 trillion in 2022 as forecasted by Allied Market Research.

Homebloc will utilize the natural functions of blockchain technology and tokenize rental rights. The tokenization mechanism will enable Homebloc to provide a reduced booking fee, better rental flexibility, improved rate prices, and enhanced living experience.

The Lodging Industry

The lodging industry is mainly divided between hotels and short-term rentals. The inherited challenges are often derived through the booking mediators.

Hotels: Mediators in this industry are referred to as Online Travel Agencies (OTAs) and they are considered the supermarkets for travelers. As published by the Travel Daily News only 42% of British travelers finalize their purchase through a hotel brand. A similar trend is also noticeable in the US market.

Short-Term Rentals: In the short-term rentals industry it is also dominated by mediators — Online Rental Platforms (ORPs).

Airbnb, a well-known ORP for short-term rental, was able to pull off about US$1 billion in revenue only in Q3 2017, as CNBC headline states.

1. Lodging Industry Challenges

Let’s look at the main challenges the lodging industry face which Homebloc addresses and able to resolve.

1.1 Online-Booking Fees

In both hotels and short-term rentals, the consumer is charged between 10% — 22% of transaction fees. The average consumer is often unaware of these fees since the nature of these fees is usually wrapped under “Service and Tax Charges”.

  • Online Travel Agencies (OTAs):

Hotels suffer from steep revenue margin cuts caused by OTAs. Since OTAs typically charge hotels between 18% — 30% commission in return for their traffic. In addition, hotels often provide a lofty discount rate for OTAs that can reach up to 50% of the retail price.

  • Online Rental Platforms (ORPs):

ORPs also charge a commission to property owners with an average of 3%.

The online-booking fees break down is shown in Table 1.


– Transaction Fees: These fees are allocated between the merchant bank, consumer bank, payment gateway, and the credit card association.

1.2 Cancellation and Overbooking

The traditional structure of this industry inflicts limited flexibility on booking cancellations. Centralized platforms typically allow a timeframe for cancellation without a fee, and it becomes more restrictive the closer to check-in.

When the cancellation request is close to check-in, they could refund between 75% — 25% with an additional penalty fee.

  • Online Travel Agencies (OTAs):

OTAs often cannot provide real-time room availability and price information. OTAs purchase rooms in advance from hotels to secure discounts, and any cancellation might not reflect into the hotel’s true vacancy.

Since the market is concentrated within OTAs the consequence is the lack of real-time room availability causing hotels to engage in overbooking.

Consequently, it results in hardship in reaching optimum capacity utilization or running into overbooked situations where the hotel is forced to accommodate guests somewhere else. Which in return causing ineffectiveness of rate prices and less satisfactory guest experience.

  • Online Rental Platforms (ORPs):

In the current short-term rentals model, ORPs have no way of verifying the authenticity of user information. In addition, hosts can misrepresent their property to look much better than it really is. Or they might not have updated any property damages occurred while it has been listed in the market.

This results in potential fraud as well as high cancellation and refund rates, that ultimately affects the guest experience. Further, it could affect a consumer’s decision to choose hotels rather than short-term rentals for guaranteed experience and safety purposes.

2. Homebloc Solution

Homebloc is approaching the industry challenges through tokenizing ‘room-usage’ or ‘rental rights’ via blockchain technology. These tokenized rights will be tradable Peer to Peer (P2P) on a decentralized trading platform.

The platform is currently functional on Mini Programs of WeChat for Chinese users, with over 120,000+ accessible hotels. Along with the North American and international version of the platform set to be launched in August of 2019.

With Homebloc team, the support of the community and the leadership of its founder Joshua Peng a Tokenomics Competition winner. Homebloc has established a capital interest of millions of dollars amongst blockchain venture capitalists.

Homebloc has three main offices in New York City, Singapore, and Shenzhen China.

2.1 Tokens Mechanism

  • HST-R Token:

This token will represent a fiscal value of the right to use a hotel room or a short-term rental.

Each HST-R token represents a usage agreement that has time-limited permission for use. At the expiration date, the settlement conditions encoded on a smart contract will automatically trigger the system to close the contract and dispose of the digital tokens involved.

Additionally, the HST-R token will be encoded with specific information: Address, identifying label, rental length, pictures and/or videos of the place to be rented.

Homebloc partnered with Ulord to build the underlying architecture of the HST-R token to form complete automated protocols.

  • HOM Token:

The HOM token is a cryptocurrency that represents both the economic value in Homebloc ecosystem and the value of Homebloc in the market.

The HOM token will function on the decentralized platform as a means of transacting, and any rewards mechanism.

2.2 Homebloc Ecosystem Benefits

  • Online Booking Fees:

Homebloc charges hotels a flat 3% fee as a commission to sell rental rights on the platform.

When consumers buy rental rights, the HST-R tokens with rental information is transferred to the consumer’s account; resulting in a charge of 3% to the host.

The banks, payment gateway, and the credit card association transaction fees are almost eliminated through blockchain technology.

Further, utilizing the HOM token as a digital currency will eliminate the need to pay exchange rates or international settlement by travelers.

As a result of cryptocurrency’s value fluctuation nature, Homebloc will also incorporate a ‘HOM Credit’ solution. The HOM Credit will be pegged to specific market value to eliminate market uncertainty for consumers. This is an optional solution for users that functions as another form of a “stable coin”.

Online-booking fees comparison is shown in Table 2.


  • Cancellation Flexibility and Overbooking:

Once a consumer purchase ‘rental rights’ — HST-R Token — from a host, the consumer has the freedom to list them on a secondary market. This listing will enable these token rights to be tradable in a peer to peer structure with another platform user.

This mechanism renders ‘cancellation’ as obsolete since consumers can now trade their HST-R tokens at will on a P2P market without intermediaries. Producing a free market of supply and demand to determine the true value of each traded contract.

To discourage arbitrage opportunities and profit-seeking sale strategies, Homebloc charges a consumer 5% fees to list a contract on a secondary market. If the same HST-R token is sold again, this third transaction incurs a fee of 7% instead of 5%.

The secondary market transaction fees are shared by Homebloc platform and the original host that issued the HST-R token.

Further, Homebloc can display room availability in real-time on the platform since the blockchain network is interconnected in nature. This will help in price efficiency, defeating overbooking practices, and increase capacity utilization in hotels.

2.3 Homebloc Innovation

  • Data Ownership and Customer Service:

Transacting with centralized platforms subject user’s information to be compromised to identity theft or having their data sold to advertisers.

The blockchain distributed network mechanism makes it much harder for any data breach since there is no single point of failure. Moreover, all the data will be timestamped with ownership rights without running into the potentiality of it being manipulated.

Homebloc will also enable users to upload an update of the rented place with a photo and/or video into the platform. In return, each time a new renter request viewing that data before renting. The owner of that data is rewarded with HOM tokens, and the Homebloc ecosystem is incentivized to provide an up to date property information.

Also, working with mediators can be transactional without the ability of hosts to develop a relationship with consumers. Further, consumers can find it difficult finding a responsible party when encountering a problem for it to be resolved.

However, through Homebloc the consumer work directly with the host, enabling them to receive better customer service. This will also open the opportunity for hosts to develop a relationship with their consumers and to resolve their problems swiftly.

  • Smart-Locks:

Mainly In short-term rentals, one of the challenges is the entry into the property. The host must either deliver a key to the renter themselves or find another way for delivery. This is inconvenient, and often unsafe.

Homebloc will make the use of the Internet of Things (IoT) technology to use a system of ‘smart-locks’ to interact with blockchain technology. This will provide a self-operating rental experience.

Homebloc will use smart-locks that works with barcodes. The renter receives a barcode via an ‘entry code’ smart-contract, automatically provided when they purchase the HST-R tokens.

The access to the property is then permitted once the smart-lock reads the barcode and verifies the information.

To learn more please visit our website www.homebloc.io and join our Telegram Channel (https://t.me/Homebloc_io_en).

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