Skippers is a coliving hotel. We are developing new travel experiences for the current generation of solo travellers as well as developing the next generation of hospitality tech.
Traditionally hotel membership or loyalty schemes are non-transferable. We believe there is considerable opportunity for transferable memberships in the form of NFTs.
This approach can provide genuine value to guests giving them the opportunity to upgrade their overall stay experience as well as giving them a way to part ways and cover some of the cost or even make a profit on their original membership cost.
What is an NFT?
An NFT can be thought of as a line in a spreadsheet.
The only difference between you adding the line in, say Excel on your computer with a few different columns and an NFT is that the latter is stored in a public database with some tools that allows users to buy and sell each line on the spreadsheet in a public and traceable way.
As such it is considered a ‘digital asset’ as it lives in a public record and can be bought or sold. Anyone can register a new asset in the public register for a small fee and it can then be sold to anyone.
They are most popular as images or videos, in reality this is just a column with a link to an image that’s hosted on a server somewhere. In the case of memberships it’s a line where you might have some benefits described.
Why should any hospitality operator care about Web3?
Forgetting about the hype on the news, Web3 provides a significant amount of technical infrastructure that can be used to build tools and products that previously would have required a quantum more work.
This means that smaller hotel chains and operators are able to access technology that previously would have required sizeable teams.
It enables new ways of thinking for all players in the hospitality business.
Web3 vs. Traditional Memberships
There is no argument that in theory five traditional memberships sold to a guests once that is non-transferable will cost less to service than five NFT memberships which are transferable to an unlimited number of guests.
However, the hypothesis is that convincing someone to buy a membership that they could resell vs. one which they cannot resell is easier. Even if ultimately they don’t.
Under Web3 all the infrastructure for buying, selling and tracking sales of these digital assets is already in place.
Advantages
- {Easier to sell} Guests may feel happier buying a membership if they think there’s a chance they could resell it later;
- {Limited supply} Tied to the easier to sell creating a limited supply of memberships is possible and scarcity often drives the desire to be an owner, whether that’s a rare car or hard to obtain membership;
- {Transparent value} The market will quickly show the value of a membership. If it’s worth nothing the resale value will be low, if it has increasing value say an exclusive bar membership in a growing city then the value will increase;
- {Flexible benefits} Benefits could be perpetual i.e. lifetime discount at a bar for holder or finite x days free stay when you buy the membership;
- {Passive revenue} It is possible to set-up Web3/NFT memberships to provide the creator (operator) with an automatic % of the resale value of the membership;
- {Under usage} While memberships may be resold or overused the chances are that the majority of memberships generate more revenue than they cost or are not resold;
Disadvantages
- {Cost to service} The cost to service memberships could exceed the passive revenue from their resale or ongoing use;
- {Technical effort} Depending on what benefits you want to offer and how you track them there’s some technical or administrative effort currently;
- {Canabilisation} There’s a risk that you might cannibalise existing sales through discounting;
Risk management
Above I mentioned a few risks in particular the one that would worry me is the cost to service. If the memberships are reselling at a rate that’s so low that the commission isn’t covering the cost then I have a problem.
There are two options here:
- Limit the time: There’s no reason you need to create a membership that lasts forever, you could limit it to x months/years and extend if you want to;
- Buyback: If the cost to service is higher than the commissions or you want to reduce the number of memberships available you can buy them back and take them off the market;
Ultimately if your membership scheme has genuine value and the popularity and/or scarcity increases over time then your membership programme should be successful.
What’s next?
We are working on developing a platform initially for accommodation providers that will integrate with existing room management systems and enable an operator to sell, manage and track benefits.
We will then look at other areas such as F&B, bars, restaurants etc.
If this is an area you’re interested in please get in touch we’d love to talk to you.