Solution - Tokenized Travel assets

For the retail markets, the key requirement for creating a vibrant market would be the following - volatility, liquidity, returns % & ease of onboarding.

Enter “RWA for Time-sensitive industries”. Time sensitive industries represent industries which are backed by assets(or services) which lose their value after a specific point in time, like an expiry date. Example: a hotel room booking loses its value after the checkout date; A flight ticket loses its value after the flight has departed. Examples of time sensitive industries include - Travel, Hospitality, Events, Shipping & Logistics, restaurant reservations and many more.

Lets take the example of the TRAVEL industry. Owning up to close to 10% of the global GDP, this is one of the largest industries at 8 trillion. TRAVEL obviously here includes Lodging, Boarding, Tours, amusement parks and multiple associated industries. Lets break it down further to Lodging alone. The global hospitality industry itself is to the size of 1 trillion USD, almost the size of the entire crypto market, if not more, considering the tail end of coins with phantom values. The hospitality industry is a well fragmented with participants ranging from HOtels, travel agents, tour operators to the large online travel agencies. While there are certain channels heavily dominated by certain monopolistic companies, there still is vast opportunity for new entrants to make a mark.

Addressing the benefits that we discussed earlier.

1. Volatility & Liquidity -

   The time-sensitive nature of this industry means that the assets will lose value if held beyond a certain point in time. Example, holding a booking for a hotel room loses its value after the checkin date. Hence movement of these assets is crucial for the industry hence adding troves of transactions on a daily basis in form of reservations and bookings. Use it or Lose it, creates the volatility in the space as well. We see that hotels who “create” this asset have to consume them by the date, else it is non-capitalised.

2. Return %

   Travel industry was one of the first industry to onboard digital distribution, even before finance and many other industries, during the internet rise. This gives us 3 decades of pricing data of how these assets perform during different periods in time. There are specific events during the year where the value increases (eg: hotel room price during NYE increases in Times Square in a predictable fashion). In addition there are spike events and concerts which create sudden rise in prices (Eg: F1 race in Singapore or Las VEgas increases prices for the hotels predictably). The scale and scope of these price increases translates into the predictable returns as well and decades of data to back it. This ranges between 25% to 1000% over a period of 8 -12 months. A 100 USD room in Paris is currently selling at 1000 USD per night in Paris for July-August 2024, in anticipation of the Olympics.

3. Ease of onboarding -

   Travel is one of the first global industries which does not have very many regulations. Rather there are guidelines which are mostly driven by private entities who are industry leaders. Example: the rules of how these assets are distributed, priced and consumed are decided by travel agent associations, hospitality companies or distribution companies, in most cases organizations which are swift to decide and execute due to the profit oriented nature of the bodies. This is in stark contrast with the Govt regulations which take years to decide and slow to implement. And being on a global scale, also means, anyone across the world can access the asset for anywhere across the world. Eg: A resident of Ghana can easily today buy and transact for a hotel room booking in Japan. This too with no KYC, at the point of purchase, but at the point of consumption(at the hotel). This makes it a globally accessible fast paced market with near-nil restrictions on who can participate on which asset.

Tokenized travel assets creates a play for existing travel companies, travel agents, trading desks to participate in creation of this new asset class. While the travel industry experts would initially have undue advantage in terms of industry understanding and price trends, conventional trading desks and individuals will also be able to get exposure.