With NFTs are rising in popularity, Fred Bean, CEO and founder of HotelPORT shares his thoughts on the pros and cons of this new technology and its future
Everyone is talking about NFTs – non-fungible token technology, and businesses are spending big bucks on massive opportunities for bringing this technology to the hospitality industry. In fact, last year over $2B was spent in the first three months. While the global luxury hotels and resorts industry is expected to be a $160 billion market by 2031, the experience economy is forecast to reach $8 trillion, with the metaverse market opportunity a mind-blowing $13 trillion.
It is no wonder that excitement has reached fever pitch, and big brands are jumping on board. It’s not difficult to see the potential of this technology and what it could bring to a hotel, as the possibilities are endless. Leading hotel chains are already releasing their versions of NFTs with actual use cases to benefit their clients worldwide.
In 2021, Marriott International was among the first brands to benefit from the value of NFTs in the form of hotel technology to reignite a passion for travel following a long lockdown period. The hotel partnered with digital artists TXREK, JVY, and Erick Nicolay, to create unique digital images that owners would claim as their original artworks. During the Art Basel Miami Beach 2021 event, the hotel unveiled a collection of artworks with NFTs awarded to individuals who could redeem them for travel experiences. It inspired people to start traveling again. Marriott saw where people were hanging out during lockdown and knew they had to be there too.
The most successful metaverse and NFT projects will be those that build communities. Finding new ways to engage communities and appeal to them. Initiatives that tap into the growing experience economy is key for any business venturing into Web3. Wyndham Hotels partnered with a crypto start-up to create a Bitcoin rewards programme for their guests which allows them to claim Bitcoin rewards for cash or loyalty perks.
However, even with the emerging rise of technology, the basic business model of the hotel industry requires an in-person experience. At the end of the day, hotels need guests to physically visit their locations and stay in “real” rooms.
Some hotels are considering selling reservations as NFTs. The idea is basically that a customer books a room and receives an NFT. If they can’t meet the reservation, they can resell it to someone else. It will enable them to make their money back, and the hotel doesn’t have to deal with an empty room. It sounds good in theory, but ultimately this will lead to chaos.
This model will likely encourage a secondary market for popular tourist destinations. Scalpers will buy up nights in advance, then resell them for a profit when tourists run out of alternatives. The biggest problem, however, will be the impact this has on the local economy. If a business buys up nights to sell at a hugely inflated price, they may stop selling once they’ve made enough profit. This would leave many rooms empty, which would lead to staff losing their jobs. This will trickle down to local businesses, bars, and restaurants that will lose thousands from non-existent guests. The solution could be that other industries, such as airlines, move in to buy up the NFTs; however, this would affect the smaller players that don’t have the resources to do this.
Metaverse technology, if utilised correctly, should enhance and complement the “in real life” hospitality and travel experience, not try to replace it. The potential of this technology is limitless; however, before we get carried away with the possibilities, it needs careful monitoring and agreed rules and systems from the outset.