Some hotels are using non-fungible tokens (NFTs) as another business opportunity. Currently, if guests book a room for the night and cancel before they arrive, the hotel may not rent that room again, resulting in a loss of dollars. Sure, the hotel can impose a penalty on the guest, but that’s effectively a partial refund. The hotel still doesn’t get the full rent due if the room was booked. NFTs can change that.
Instead, suppose the guest bought an NFT that represents the booked room. Instead of canceling their reservation, the guest could sell the NFT allowing someone else to gain the benefit of the hotel room for the night.
Three Economic Scenarios of Rooms as NFTs
The logical question to ask is, who would benefit from hotel rooms booked as NFTs? Here are three potential economic scenarios of hotel room NFTs:
- Guest books room, makes a profit – In this scenario, if a guest books a room at a popular hotel resort during the same week that a celebrity is scheduled to stay in the same resort, if that guest can’t check in, he could sell his NFT noting that such-and-such celebrity is often seen at the hotel. Fans of that celebrity might pay more for the NFT than the guest paid, essentially gaining the benefits of staying in a ritzy hotel hoping to bump into said celebrity while living la vida loca.
- Guest books room, can’t sell NFT – The other possibility is that the guest who bought the NFT can’t sell it. In that scenario, the guest, not the hotel, takes a loss on the night.
- Guest books room, sells NFT for less paid for – One likely scenario, which could happen quite often, is the guest must sell the NFT for a loss. Suppose the guest booked a room at famous hotel months in advance but a scheduling conflict caused her to change her plans the week prior to her scheduled stay. On such short notice, she may have difficulty finding a buyer willing to buy the night at the hotel at the same price as the original booking. In that case, the guest may reluctantly sell her NFT at a loss.
Each of these scenarios is realistic and possible, but they also let the hotel profit whether anyone stays in the room or not. In scenario #1, the hotel makes the money they want to make on the booked room, but the individual who originally booked the room for that night makes a profit by selling his booked reservation. In scenario #2, the hotel makes money, but the guest is out of pocket for the full expense. In scenario #3, the hotel makes the money they want to make while the frustrated guest takes a minimal loss.
How Hotel Reservation NFTs Could Create a Secondary Market
These aftermarket scenarios could get interesting as guests with hotel reservation NFTs in their hands could throw in some perks to make the transaction more interesting and lucrative. For instance, consider these additional scenarios:
- To ensure the sale goes through, the guest could offer an expensive bottle of champagne to his NFT buyer;
- A guest could ensure a profit off the NFT by throwing in a pair of concert or sports tickets to a popular entertainer (and beef up the price if the event is sold out);
- The NFT seller could throw in dinner for two as a perk to the buyer;
- The aftermarket sale could include a pay-per-view movie for the buyer;
- If the hotel room was originally booked by a business, the business could offer a free service to the person or business that buys the NFT reservation;
- If the hotel sits on or near a golf course, the seller could throw in a round of golf for the buyer.
If hotel reservations were sold as NFTs, a secondary market could quickly develop as speculators snatch up rooms and sell them for a profit at hotels booked months in advance with no vacancies in sight. The hotels could be powerless to stop such a practice unless they place restrictions on the sale of those NFTs in the original reservation contracts.
How long could it take for a secondary market to develop for NFT hotel reservations? Probably not long.