Selling Hotel Nights As NFTs - Good Thing? Bad Thing?

by Ryan Vagabundo

You might remember NFTs from the craze that started around mid-2021, but then crashed abruptly around mid-2022 (as part of the general retraction of the crypto market as all sorts of exchanges either get busted for fraud or raided by cyber criminals due to poor security).

As it turns out, NFTs aren't just about bored or gross monkey pictures you can put on your social media profile for the low low price of $250,000. At least one startup, Pinktada, is attempting to use them as a way to handle hotel reservations that basically mirrors the StubHub model where buyers and sellers can trade reservations directly.

At first glance, there are a couple of big warning flags for travelers in this model. One is in looking at what Stubhub did to the concert ticket market, basically artificially inflating it by facilitating online transactions for scalpers. Another is in adding another layer of complexity to what are already sometimes annoying booking and cancellation processes.

But is there any potential value here for the traveler? After all, Stubhub and the concert ticket game are a very different market from the lodging industry. Certain big name concerts are a virtual lock to sell out right away, so much so that Stubhub was originally pitched as a solution to control the scalping market that was already present. The only comparable situation in the hotel world is certain cities on certain event nights; think New Years Eve in NYC or Vegas. Many hotels often have to farm a portion of their inventory out to booking sites regularly in an attempt to keep rooms full when it isn't a holiday or there isn't some special event or huge convention in town.

The first question is, realistically, what are the chances of broad adoption of this by hotels? As a "vital" resource, a source of emergency shelter for some, and also a form of residence, hotels are governed by some added regulations that concert tickets are not. For example, if you've ever looked on the inside of a hotel door, you'll notice that the vast majority of localities have laws requiring the hotel to declare a maximum room rate that it cannot go over. There is also the issue of the person purchasing the reservation usually being required to be physically present at check-in. And can NFTs even be hammered into a legally binding contract that the hotel is forced to honor once it begins trading on a secondary market?

The hotels also have to be sold on the idea, and at first look, that seems like a real tough sell. That assumption would be backed up by the Pinktada website, which lists a relatively small handful of participating hotels at present, and most of those are timeshare condo type places and resorts that have seasonal variation in occupancy. What Pinktada ostensibly "solves" for hotels is unsold rooms, which they can usually address on their own as much as possible with discounts (there just simply won't be enough travelers and takers to fill all rooms in many cities on many nights, no matter what the asking price) and cancellation policies that require some sort of non-refundable deposit or the first night paid if the traveler doesn't show (which most of them are doing already).

Hotels might be tantalized by a more cynical line of thinking - if scalping becomes as common as it has on Stubhub, they might leverage it in the same way that ticket companies have. That is to say, simply going straight there to sell instead of through their own websites! But again, natural market forces limit this possibility to very busy cities on very busy nights.

Any smart hotel (or chain) will also factor in the potential blow to reputation from angry customers. And there's QUITE a bit of potential here. Most people still don't know what NFTs or any blockchain things are, don't care, and will never know or care. Tons of people still roll up to hotels day of looking to pay the rack rate even though it's been known for years now that you get gouged to the maximum that way. The hotel industry is not one rife with early tech adopters, especially when dealing with an older crowd.

So people will likely be resentful of the extra layer of confusion and complication, especially if they're directed to some unfamiliar third party exchange to try to sell their reservation if they end up needing to cancel (and ending up getting less than what they paid for it even if they jump through all the hoops). And if people make the connection between absurd price spikes and "scalpers" doing some sort of online thing? Forget it, watch Airbnb and such enjoy an absolutely massive boom in business as that's the final straw from the already pushy and disappointing hotel industry.

In short, I don't think it's worth even examining the value of this from a traveler perspective because I don't think it's ever getting off the ground. The offerings available through Pinktada are extremely limited as it is, and I don't see that expanding much in the future (none of the major chains seem to want anything to do with this idea). It might be limited to resorts offloading time shares and off-season resort rooms at a discount, but they make it a pain to check even on that by requiring you to create an account and log in to see prices. I don't think it will attract the attention of parasite "investors" (scalpers) in hotel stays unless it winds up with shockingly broad adoption, and even then it would probably only be an irritant in the busiest markets on the busiest nights.