As the hotel sector looks to claw back pandemic-induced losses, it’s clear that revenue optimisation and selling the right product to the right market at the right time, has become paramount.
Many are still grappling with traditional source markets and demographics – as well as paths to effective revenue management – but there’s a new breed of hoteliers emerging that has identified the mind-blowing possibilities that accepting, or even making crypto payments, could present.
Those daring to jump on the crypto bandwagon have realised that the new generation of crypto millionaires and billionaires is a highly lucrative one for the hospitality sector, but most are yet to dip their toes.
It’s clear that market volatility is an understandable concern. While there are no indices measuring crypto price fluctuations, historical price charts reveal extreme highs and lows compared to the prices of assets in mainstream markets, most recently demonstrated by the dramatic Terra Luna crypto crash. The coin price plummeted by 99%, sending shockwaves across the crypto world and driving all major coins into a bear market environment.
There’s also the environmental impact to consider given ‘mining’ cryptocurrencies is highly energy intensive. This poses a significant conflict of interests to a hotel sector under growing pressure to become carbon neutral.
But the urgency to adopt crypto is also mounting as partners and competitors get on board. Big-name early adopters range from Starbucks and Amazon and PayPal to Coca Cola and Sotheby's, as well as airlines including Latvia’s airBaltic (the first aviation company globally to accept Bitcoin payments for fares in 2014) and LOT Polish Airlines.
And as Dubai eyes crypto-hub status, its airline, Emirates, has announced its intention to add bitcoin as a payment option and to make NFT collectibles tradable on the company’s website.
The number of travel companies accepting crypto currencies old (Bitcoin and Ethereum) and new (see binance.com for the long list) is growing too, ranging from Cheapair.com to Virgin Galactic, and, at a time when hotels need to reduce reliance on Online Travel Agencies (OTAs) more than ever before, these sites, including Expedia and Destinia, already have the advantage of tapping into crypto buyers and payers.
These customers are bigger spenders than traditional card payers, according to Destinia, which first accepted cryptocurrency in 2014. It says Bitcoin customers spend $18 more per transaction on average and most use the currency to make hotel reservations.
Hotel companies that have taken the plunge include The Pavilions Hotels & Resorts, which launched in July 2021 with Coindirect, accepting 42 virtual currencies, and since then, S Hotels & Resorts, Sri Panwa in Thailand, The Chedi Andermatt and The Kessler Collection.
Last month (May), Dillip Rajakarier, the CEO of Bangkok-based Minor Hotels revealed the company was developing its own cryptocurrency to pay for F&B, spa and hotel rooms at its properties, while the Gulf region’s first crypto-to-crypto payment gateway for hotels was unveiled in Dubai by The Manor by JA hotel at Al Furjan community. The new gateway, to be operated by Binance, will enable visitors and tourists to pay for their stay using virtual assets.
While the ability to tap into a new high-spending crypto-rich demographic is the primary appeal, the trading opportunities are also there to be exploited and can play a key role in revenue optimisation.
To avoid excess inventory when guests cancel at the last minute, some hotels and resorts are converting room nights for sale into nonfungible tokens or NFTs that can be bought or sold by hotel guests. There’s a platform facilitating this – pinktada.com – which gives crypto users the “freedom to be flexible”. Its technology converts each room reservation into a RNT (Room Night Token) that can be swapped or sold based on the live market price up to two days before check in.
It's a win for both parties – hotels are guaranteed revenue whether the room is used or not, while travellers can use their RNTs for other hotels or sell them to another Pinktada traveller.
At a time when market competition is fiercer as the travel industry recovers from the pandemic and faces new geo-political challenges affecting demand, accepting crypto unlocks an entire new customer base. In fact, a recent study by BitPay found 40% of customers who pay with crypto are new clients of that company and their purchase amounts are twice those of credit card payments.
If you are going to accept crypto, there are no half measures. You need to go all in and stay on top of technological advances if you want to succeed in this arena. Beyond opening new revenue streams and aiding inventory management, crypto has interesting implications for hotel loyalty programmes and even talent acquisition – as the industry looks to attract new team members, could there be an opportunity to pay a % of their salary in crypto?
And what about NFTstays? It’s already being done in New York, with specially curated NFTs packaged with three- to six-night stays at NoMo SoHo.
Guests booking these packages have access to exclusive preferred rates at competitive prices by purchasing an NFT depicting a recognisable part of the iconic hotel, such as The Lovewall in NoMo Kitchen and ‘The Tunnel of Love’ - the hotel’s iconic archway at the main entrance. Additional perks when booking an NFT include late check-out, complimentary breakfast, a welcome amenity and more.
This is next-generation inventory management in motion.
Of course, it should be part of a holistic and future-facing revenue optimisation strategy, which at Black Coral, is our specialty.
Get in touch if you’d like to know more. Judith@blackcoralconsulting.com
Judith Cartwright (née Halkenhaeusser)
Founder & Managing Director Black Coral Consulting | Total Revenue Management | HSMAI Board Member | Former SVP Global Revenue Management & Distribution Kerzner International (Atlantis, One&Only, Mazagan Beach Resort)