Cutting Through the Hotel Hype of the Blockchain, Web3 and the Metaverse

Let’s ignore the fact that most buildings in the metaverse presently look like a glorified Minecraft simulation without any significant gamification to compel daily active use. The core obstacle is that most people don’t yet have VR headsets and are thus excluded from said immersive pre-experience.
By Larry and Adam Mogelonsky - 8.17.2022

Now that we are firmly in the “crypto winter,” it’s time for a sobering moment on all the promised innovations for hospitality in the blockchain, web3, metaverse and non-fungible tokens (NFTs). While we’re both big proponents of this space as we see lots of lucrative opportunities for hotels around the world, these use cases cannot be too far-fetched or inconvenient to all stakeholders, lest they fall flat.

This article is not intended as an introductory course to web3, but know that, for all inventions throughout human history, the innovations that increase convenience will eventually become king. This convenience can be on the customer side like Apply Pay or Google Pay currently working to eliminate the need to carry a physical billfold. It can also occur for internal stakeholders, like all the automation tools being implemented behind the scenes at hotels to reduce the amount of repetitive work.

With many of the proposed applications for blockchain technologies, it’s a good thing to be skeptical. Stemming the axiom of convenience is king, the three cardinal questions that we ask and answer in any discussion related to the metaverse or NFTs are:

  1. How is this more convenient for the guest?
  2. Why can’t we do this using existing, non-blockchain systems?
  3. Will this save money for the hotel organization or brand?

Always Control Your Costs

Let’s start with the third question and work backwards. As any good financier knows, you can control your costs but topline revenues are always a tad ambiguous, especially with the one-two punch of the pandemic followed by the travel recovery giving us no verifiable near-term historical occupancy and rate data to budget against. Yes, there’s a lot of potential revenue through blockchain implementation as well as sizeable first mover advantage, but there are also no guarantees that the topline promises of NFTs or building a hotel in the metaverse will meaningfully contribute to the bottom line.

Hence, you need a scrupulous eye for how much these systems cost in terms of both initial setup and ongoing SaaS, as well as the sunk time to retrain your teams, the resources required to evolve the corporate culture to wholly embrace the potential for web3, the opportunity cost where your IT professionals could be focusing on other (likely more crucial at this juncture) labor efficiency projects and any customer dissatisfaction incurred during the onboarding process.

Few web3 pundits declare then dispel these all these hidden, time-based expenses (time you likely don’t have right now). Frankly, with labor issues dominating all of our thoughts these days, it’s very hard to justify a nice-to-have web3 project, even if forecasts show a huge upside within five years’ time.

Stacking Your Tech

It’s called a tech stack because it is built one floor at a time, with each built to coexist with the previous, deeper layers. Thus, fundamental to anything metaverse or using an NFT platform that operates using a cryptocurrency is to know how these web3 applications will interact with the preexisting ecosystem. Unless it’s an entirely new property that’s also planning to develop its own software from the ground up, most web3 isn’t yet set up to be “turnkey” for hospitality platforms.

Similar to the current progression towards digital room keys accessible via a mobile wallet or branded app, web3 platforms need to offer the same transitionary flexibility so that those guests who want to stick to the old school methodology of plastic keycard (and those who don’t have a new enough phone to facilitate these advances) aren’t forced into a methodology that they perceive as inconvenient.

Given these interaction difficulties, the second question comes into play. Many of the proposed web3 utilities can be accompanied three-quarters of the way using non-blockchain technologies, albeit with higher labor costs. Still, these existing systems will be easier to deploy, not disrupt your corporate culture and have heightened convenience for the average consumer. For instance, given that most travelers don’t yet know how a blockchain or crypto wallet works, hotels investigating NFT projects should also look at how they can facilitate payment in USD or another fiat currency with the conversion into crypto mostly happening automatically and out of sight.

The Future Is Frictionless

For our purposes, consider the word frictionless as synonymous with convenient. Now to rail on the metaverse for a moment, let’s consider the value proposition of experiencing a hotel in one of these virtual worlds instead of going there in real life.

One valuable use case for the metaverse is that people can pre-experience the digital twin of a guestroom or event venue prior to, and therein incentivizing, a booking. This has great potential, both for property familiarization and for upselling or for visualizing furniture configurations. The metaverse also has lucrative training applications. However, the technologies are not quite convenient enough for both sides of the stakeholder equation.

Let’s ignore the fact that most buildings in the metaverse presently look like a glorified Minecraft simulation without any significant gamification to compel daily active use. The core obstacle is that most people don’t yet have VR headsets and are thus excluded from said immersive pre-experience, while the controller platforms aren’t easy enough for non-techie salespeople to operate. For selling rooms online, isn’t it more convenient for hotel teams to just film then upload a short virtual tour? And to tour an event venue, wouldn’t it just be easier to hop on a video call with a sales manager who can walk you through the space, all with live Q&A?

On the training side, remember that part of hospitality is the familial bonds developed amongst coworkers – a key non-wage incentive to drive employee retention. Yes, the metaverse can help to offer some more flexibility with regard to a work-from-home model. But onboarding typically involves lots of quality, in-person time between trainee and trainer, and shifting much of this to a colder, less personal channel such as interacting primarily within a virtual world may demotivate some associates from staying with the job.

A Dream of the Crypto Spring

All those present-day obstacles aside, we’re still bullish. Lots of capital (both monetary and human) is going into developing the platforms that will make NFT purchasing or tokengating more convenient for the average hotel guest as well as make the metaverse look uncannily real so that people actually want to hang around in there. Humans are horrible at predicting exponential trends so expect this to happen far faster than you think.

To reiterate from the start, always evaluate technologies in terms of what will give your customers more time to enjoy themselves or your teams more time to focus on other tasks – that is, convenience. Besides this as the cardinal rule, also be cautious about shiny new toys that don’t come with a varnishing kit. As we often joke amongst ourselves, if we were given $100 for every time we heard a tech company describe itself as innovative or revolutionary, we would be retired on a yacht in the Mediterranean. This was the case with the latest ICO and NFT boom then bust where most crypto projects revealed themselves as vaporware. That said, the survivors will flourish.

Look beyond the buzz words and ask about what will drive mass adoption based on convenience and present-day value. Blockchain will eventually ‘change everything’ and it is something that you must explore then roadmap, but all implementations must be framed in terms of enhancing the onsite experience and the overall value for customers above all else.

Larry and Adam Mogelonsky represent one of the world’s most published writing teams in hospitality, with over a decade’s worth of material online. As the partners of Hotel Mogel Consulting Limited, a Toronto-based consulting practice, Larry focuses on asset management, sales and operations while Adam specializes in hotel technology and marketing. Their experience encompasses properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Their work includes six books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017), “The Hotel Mogel” (2018) and “More Hotel Mogel” (2020). You can reach Larry at [email protected] or Adam at [email protected] to discuss hotel business challenges or to book speaking engagements.

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