By Steve Lapekas
Hotels and guests are already banking on initiatives that tap into the growing experience economy and Web3
If, at one point, you’ve found yourself muttering the words, “what in the world is an NFT?”
Well, you aren’t alone. While the modern world has set an undeniable precedent for digital adoption and savviness in the face of frequent innovation, the introduction of the metaverse and, around the same time, the popularization of cryptocurrency and NFTs left some of us feeling perplexed. Seemingly overnight, NFTs (short for non-fungible tokens) became the talk of the town, with individuals scrambling to get a piece of this exciting new digital pie. Given the recent events of FTX, Celsius, and other bankrupt cryptocurrency exchanges, everyone is taking a step back to include the world of NFTs. That said, let’s discuss the possibilities as this new “store of value” weathers the current storm.
As explained by Forbes, NFTs are digital assets that can come in the form of art, music, in-game items, videos, and more. NFTs are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. Since ‘non-fungible’ indicates an asset is not interchangeable, non-fungible tokens are digital assets that possess a unique value. A decentralized blockchain verifies the value of each NFT, and, as the non-fungible name implies, no two NFTs in the world can be swapped for an even trade.
According to recent statistics, the global value of the NFT market currently sits at $21 billion, and the market is expected to reach $174 billion by 2026. By 2026, 25% of people will spend at least one hour daily in the metaverse, reports Gartner. T. Moreover, about 30% of the businesses shall have metaverse products and services ready by 2026.
And while some individuals may steer clear of the blockchain sensation on account of its perceived complexity, many businesses are eager to capitalize on the allure of NFTs within their business model. Hospitality, it would appear, might be the latest industry to venture into this territory, which begs the question – could NFTs play a role in the future of hospitality?
Where NFTs and Hospitality Collide
Marriott International was one of the first hotels to integrate NFTs into its marketing strategy with the evolution of its “Power of Travel” campaign. The world-renowned hotel brand joined forces with digital artists TXREK, JVY, and Erick Nicolay, to create three NFTs that debuted at the Art Basel Miami Beach 2021 event. During the event, attendees were entered into a draw that produced three winners, each of whom went home with an NFT and 200,000 Marriott Bonvoy points.
Another prevalent example of NFTs making their way into the world of hospitality can be found in Dream Hotels. The Hollywood Hotel has launched an exclusive NFT Membership Program called Social Club, which members gain access to through purchasable NFTs. Members of the club are treated to exclusive events, access to pools, cabanas, lounge, gym, co-working spaces, VIP concierge services, and metaverse events. Members are also allowed a plus one throughout their experience. In many ways, Dream Hotel is tapping into the power of FOMO to create a new kind of VIP club that will pique the interest of young and/or digitally savvy travelers within the experience economy.
While both these examples lean towards the loyalty side of the hospitality segment, it’s important to recognize that the utility of NFTs is not necessarily limited to the expansion of traditional loyalty programs. In fact, there may be a future in which NFTs are used to drive revenue for hotels.
What Would an NFT Room Package Look Like?
If NFTs demonstrate staying power amongst consumers, we may see a significant industry shift towards a booking model that allows guests to book their stays via blockchain, specifically NFTs. Within this model, hotels would offer guests access to exclusive or discounted rooms (or room packages with exclusive experiences or add-ons) that are not available in the same capacity via traditional booking channels. One working example of this can be observed via Casa de Campo Resort & Villas, which recently partnered with Pinktada, a “membership-based hotel marketing and reservation platform that allows guests to reserve rooms with transferrable room night tokens (RNTs) using blockchain technology.”
When asked to explain the benefits of this booking approach on the hotel side, Casa de Campo’s senior vice president of sales and marketing notes that Pinktada bookings represent guaranteed revenue. “On the hotel side, the platform is delivering guaranteed non-refundable revenue as well as a proprietary interface that’s unlike anything the existing [online travel agents] platforms currently provide,” he shared. “This allows us to offer our guests greater flexibility, online experience, and guaranteed revenue.” This model follows suit of other platforms consumers know and love, such as StubHub. Rather than canceling a booking through the hotel (which represents a loss in revenue), this would place the responsibility in the hands of the guest, as they can swap, trade, or sell back their RNT on the exchange platform.
Similarly, NoMo SoHo, the 26-story, 264-room downtown Manhattan property, has launched “NFTStays,” a collection of specially curated NFTs packaged with three- to six-night stays at NoMo SoHo. By booking with these NFTs, each depicting a part of the iconic hotel, guests are granted access to luxurious guest rooms at exclusive rates, late check-out, complimentary breakfast, a welcome amenity, and more. The best part? These packages aren’t beholden to a specific date; rather, they simply need to be redeemed within 12 months of purchase (with the exception of certain blackout dates), which allows guests more travel flexibility.
When considering the hospitality industry’s ancillary revenue segment, NFTs are an exciting and profitable proposition. Ancillary revenue, as any hotelier knows, refers to the revenue gained from sources other than the primary product offering (the rooms). While ancillary revenue streams have traditionally included F&B services, entertainment, wellness, and more, NFTs may be a perfect addition to the mix.
Web3 will revolutionize how guests discover, engage, and build loyalty with hospitality and travel brands globally. Indeed, metaverse technology will dramatically change every step of the travel journey. As hotels look to sort their ancillary revenue sources into packages that appeal to specific traveler demographics and customer segments, such as blended travelers or millennials, NFT packages may become an enticing, FOMO-centric offering that captures traveler interest and drives ancillary revenue for hotels. Could NFT hotel room packages be an integral part of our industry’s future? As of right now, I think it’s still too soon to tell – but it’s certainly an emerging technology and innovative idea that hotel brands should keep a close eye on as we move into 2023 and beyond.