As NFTs continue to grow in popularity, HotelPORT CEO and Founder Fred Bean 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 companies are spending big on massive ways to bring this technology to the hospitality industry. In fact, over $2 billion was spent in the first three months last year. While the global luxury hotel and resort industry is projected to be a $160 billion market by 2031, the experience economy is projected to reach $8 trillion, with the Metaverse market opportunity reaching a staggering $13 trillion.
No wonder the excitement has peaked 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 benefiting their customers worldwide.
In 2021, Marriott International was among the first brands to capitalize on the value of NFTs in the form of hotel technology to reignite travel passions after a long lockdown. The hotel has partnered with digital artists TXREK, JVY and Erick Nicolay to create one-of-a-kind digital images that owners would call their original artwork. During Art Basel Miami Beach 2021, the hotel unveiled a collection of artworks with NFTs awarded to people who could redeem them for travel experiences. It inspired people to travel again. Marriott saw where people were during lockdown and knew they needed to be there, too.
The most successful Metaverse and NFT projects will be those that build communities. Finding new ways to engage and engage with communities. Initiatives that capitalize on the growing experience economy are key for any business embracing Web3. Wyndham Hotels has partnered with a crypto startup to create a bitcoin rewards program for its guests, allowing them to claim bitcoin rewards in exchange for cash or loyalty perks.
However, even with the emerging advances in technology, the fundamental business model of the hospitality industry requires personal experience. Ultimately, 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 cannot fulfill the reservation, they can resell it to someone else. This allows them to get their money back and the hotel doesn’t have to deal with an empty room. This sounds good in theory, but ultimately this leads to chaos.
This model is likely to encourage a secondary market for popular tourist destinations. Scalpers buy up nights in advance and then resell them for a profit when tourists run out of alternatives. However, the biggest problem will be the impact on the local economy. If a company buys up nights to sell at a grossly inflated price, it may stop selling once it has made enough profit. As a result, many rooms would be empty, which would result in employees losing their jobs. This will trickle down to local businesses, bars and restaurants losing thousands of non-existent guests. The solution could be for other industries like airlines to step in to buy out the NFTs; However, this would affect the smaller players who do not have the resources to do so.
Metaverse technology, when used properly, should enhance and complement the “real life” hotel and travel experience, not seek to replace it. The potential of this technology is limitless; However, before we get carried away by the possibilities, there needs to be careful monitoring and agreed rules and systems from the start.