The COVID pandemic has caused everyone to rethink how they want to live, work, and travel. While the hotel and restaurant industries took a major hit at the beginning of the pandemic, this has also presented an opportunity for hospitality companies to reinvent themselves and to consider new ways to add value to the lives of their guests. One avenue for remaining “pandemic-proof” is for hospitality companies to incorporate services into the metaverse. There is much unknown, but the metaverse provides a future of growth and promise.

What is the metaverse?

 — Depositphotos — Depositphotos
 — Depositphotos

The metaverse is the latest hot topic for technology of the future, but there is a lot of confusion as to what the metaverse actually is. More buzz around the topic was created when Facebook changed its name to Meta, which simultaneously led to more confusion as people began to think that Facebook owned or was the sole creator of the metaverse. However, there is no single owner of the metaverse, similar to how no one person owns the internet. The major American tech companies, such as Google, Microsoft, Apple, and Meta (formerly Facebook) are all investing in the metaverse and creating their own contributions to it (Chen, 2022).

In actuality, the metaverse is the next phase of technology and virtual reality. The metaverse is a part of the broader Web3.0. Web3.0 encompasses the digital world beyond websites and social media. Web3.0 is about creating a virtual world beyond our own, using cryptocurrencies, blockchain technology, non-fungible tokens (NFTs), and beyond. The metaverse is one aspect of this new digital world. In the metaverse, we can create avatars that look like us and we can interact with others (through their avatars) and explore the virtual world that we are in. But the metaverse is not one distinct place. Instead, just as each company can create its own website, each company can create its own virtual world. Alternatively, just as each company can create a Facebook or Instagram account, each company can take part in a virtual world that has already been created. The possibilities within the metaverse are endless and have not yet been fully developed (Hotels Editors, 2022).

(Metaverse and Hospitality: Everything You Need to Know, n.d.)

What are NFTs?

NFTs are digital files that are sold on the blockchain. Non-fungible means that the digital file that you buy is unique, like a trading card. You can exchange trading cards with other people, but each one is different. In contrast, you can buy bitcoin and it does not matter who you buy from, as long as you receive the proper amount of bitcoin in the end (Clark, 2021).

What makes NFTs a bit confusing is that you can copy a digital file over and over again, and each copy is essentially just as good as the original. While those investing in NFTs likely know this, many people are looking towards NFTs as an investment opportunity, where they can buy artwork now and sell at a great profit in the future. And, while a digital file can be copied, buying artwork using blockchain technology means there is only one owner (though the artist may retain some rights to the work as well). “To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original” (Clark, 2021).

How can the hospitality industry benefit from NFTs and the metaverse?

Late last year, Marriott Bonvoy jumped into the NFT space by auctioning three NFTs at Art Basel Miami (Hotels Editors, 2022). While any company can buy or create NFTs, Marriott Bonvoy was the first big name in the hotel industry to sell NFTs.

A more creative foray into the metaverse is happening with a company called Roomza. Roomza is a new hotel concept where the company is building two-story hotels that only have rooms. There is no lobby, conference center, or other open spaces that hotels traditionally provide. Instead, Roomza provides access to its own metaverse that has all the amenities of a traditional hotel. The benefit to this is that meetings or conferences can happen without the need for travel, between people in different cities, states, or countries. Two people could meet at a virtual bar for a drink, and in the physical hotel rooms each person could order a real hand-crafted cocktail (Hotels Editors, 2022). The possibilities for a hotel that provides virtual meeting spaces are endless.

Examples of NFTs from The Bored Ape Yacht Club, a collection of over 10,000 unique NFTs (Hissong, 2021).— Source: Northern Arizona UniversityExamples of NFTs from The Bored Ape Yacht Club, a collection of over 10,000 unique NFTs (Hissong, 2021).— Source: Northern Arizona University
Examples of NFTs from The Bored Ape Yacht Club, a collection of over 10,000 unique NFTs (Hissong, 2021).— Source: Northern Arizona University

What are companies doing now?

Considering that the metaverse is still hard to grasp for many but simultaneously rapidly evolving – and very much in its beginning stage – it makes sense to look at what companies are currently doing to mark their territory in the digital realm.

McDonald’s and the“virtual restaurant”

Back in February, McDonald’s filed “trademark applications for virtual goods, services and even virtual restaurants and cafes” as reported by Forbes (Bissada, 2022). According to the fast-food giant’s filings, the company plans to “operate a virtual restaurant online featuring home delivery” (Trademark Electronic Search System (TESS), 2022). Trademarks for McCafé specifically, such as online actual and virtual concerts, are also included. McDonald’s is following the footsteps of so many other corporations, such as Nike and fellow chain restaurant operator Panera Bread, who seemingly have recognized potential for growth and the diversification of their products in the metaverse. Currently, the combination of real-world results and rewards for customers facilitated through virtual experiences in the metaverse appear to be the gateway for corporations to explore and incorporate this new realm.

When digital journey becomes the destination

It is fair to say that most hotel brands have barely tested the waters when it comes to the metaverse. As mentioned above, Marriott Bonvoy has done so through commissioning digital artists to create three custom NFTs which were sold at the “Art Basel” Miami. These auctions included 200,000 points for their loyalty program – an interesting concept which provides buyers the experience of the metaverse, including investment into and ownership of something novel and digital, with actual applications and benefits in the physical world.

The Seattle start-up Roomza has gone even further, “creating a travel ecosystem where everyone wins” (About Roomza, Inc., n.d.). The concept is based on “rooms-only” hotels where meetings, social happenings, and other activities you would typically expect in a hotel are happening virtually. Roomza is almost completely removing the usual personal interactions by providing an entirely digital reservation and check-in process, virtual key cards on guests’ phones to open the rooms, and self-service (coffee) bars.

Rendering of a Prototypical Roomza in Seattle, n.d.— Source: Northern Arizona UniversityRendering of a Prototypical Roomza in Seattle, n.d.— Source: Northern Arizona University
Rendering of a Prototypical Roomza in Seattle, n.d.— Source: Northern Arizona University

What’s next?

Virtual Travel

An obvious application of hospitality in the metaverse space is to offer virtual travel experiences (Sorrell, 2022). However, while this might sound like an innovative idea, considering the customer and how hospitality companies could sell virtual travel is crucial, as it is unlikely that virtual travel would entirely replace in-person travel anytime soon.

Exploring the metaverse space, Jeremy Wells describes various ideas for how the hospitality industry can supplement actual travel with virtual. First, experiencing new locations through the metaverse can allow a whole new demographic of people to explore the world when they normally would not have the time, finances, or physical ability to do so. Second, travel companies could send out headsets to current clients who would like help deciding on where to travel. Viewing destinations virtually can get the customer excited about where to travel next. Similarly, a third application might be to explore accommodation options virtually to decide on the right fit. Fourth, there are many people who are anxious or fearful of travel. Allowing these people to experience travel virtually can help them ease their fears and become excited, rather than nervous, about their upcoming trip. A fifth application of metaverse use might be while actually on vacation. A hotel company could provide headsets in every guest room and the guest could use the headset to perform primarily administrative tasks from their hotel room. For instance, the guest could talk to the front desk, book a plane ticket, or explore in-room dining options, all without leaving the guest room (Wells, 2022). The possibilities of online travel and using it to supplement the hospitality industry are endless.

Loyalty Programs

Beyond selling or auctioning off digital files as NFTs, an alternative use of NFTs is as part of a loyalty program. Because NFTs are exchanged using blockchain technology where every transaction is recorded on multiple computers, NFTs are secure and verifiable. This makes for a fantastic way to record loyalty points or gifts while also building customer trust, as a customer could ensure that their loyalty rewards will not simply “disappear” on the blockchain. Companies such as AMC and Burger King have already begun offering to reward members special perks and discounts in the form of NFTs (Harrison, 2022).

How Is the Metaverse Revolutionizing the Travel Industry?, 2022— Source: Northern Arizona UniversityHow Is the Metaverse Revolutionizing the Travel Industry?, 2022— Source: Northern Arizona University
How Is the Metaverse Revolutionizing the Travel Industry?, 2022— Source: Northern Arizona University

Future Pandemic Mitigation

Businesses all over the world, and as such hotel chains and hoteliers, entered survival mode ever since the pandemic began. What some have known for a long time has become painfully obvious to others: only the innovative and flexible will survive. While there are companies who simply are too big to fail, most of them clearly do not benefit from such a safety net and have been pushed into adaptation hyper drive. "Necessity is the mother of invention" and even though technology does not equal innovation, it surely is a powerful force driving, and facilitating, advancements.

It is not surprising that to many the first point of attack was to reduce contact between staff and guests to suppress the virus while keeping the doors open. Curiously, decreasing one of the most essential parts of travel and hospitality was one of the only and potentially most impactful ways to save the industry. “Removing the requirement for face-to-face interaction at the front desk,” through self-check-ins, digitalized keys, and speedier processes, “makes the check-in process safer and more efficient” (How Are Hotels Adapting and Innovating During COVID-19? 2021). Other hotels opted to offer their rooms during the daytime rather than for the night by repurposing the spaces as “home offices away from home” via “workcations” with special rates for locals and companies who needed further options for their employees.

While travel, and therefore booking numbers and occupancy rates, have picked up due to higher vaccination rates and loser restrictions, the industry is not yet back to where it was and according to McKinsey, one of the so-called “Top 3” consulting firms, it could still be a while:

“Research suggests that recovery to pre-COVID-19 levels could take until 2023—or later. Investors are providing similar views of hotel companies’ prospects, as seen in the underperformance of US lodging real estate investment trusts (REITs)” (Krishnan et al., 2020).

So, what else could hotels do to stay relevant – and profitable – during our “new normal” and potentially future pandemics or other incidences of force majeure? Besides being hospitable and taking care of guests, there is another advantage that hotels are able to offer unlike anyone else: infrastructure. Of course, rooms and F&B usually are a hotel’s bread and butter, but it would be unwise to overlook the (untapped) potential of physical and virtual space and infrastructure that can be offered. Substantial, reliable IT departments and systems already are an integral part of many hotels nowadays (Lanz, 2014). They are needed so meetings, symposiums, conferences, and other events needed by companies can be properly organized and hosted. It neither appears to be farfetched nor a big step to imagine hoteliers providing the same kind of service – but simply in the metaverse. Even though travel overall is due to pick up again, many companies have realized how substantially more cost effective it is to reduce business travel by moving and keeping work online. “The challenge for the business-travel sector, of course, is that even if Covid eventually goes away, Zoom will still be here” and it is not expected that “firms will revert to pre-pandemic business-travel habits anytime soon” (Kelleher, 2022). This could prove to be an outstanding opportunity for hotels and hospitality companies to either re-position themselves or find a new, unique USP, where they neither have to give up the essence of the business, nor remain stuck in time. If investment, real estate, and art exist in the metaverse, why not hospitality too?

Like every individual and business out there, hotels have had to find their place and role in a new normal. While we might not have expected this to be in the metaverse, it certainly promises an exciting journey ahead.

References

Fred DeMicco
Northern Arizona University

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