For now, hotel sector hesitant over bitcoins
24 JANUARY 2014 7:07 AM
Bitcoins have garnered much press, but for the hotel industry it represents a distant likelihood, save for some independent properties.
GLOBAL REPORT—A handful of independent, mostly economy hotels accept bitcoins, the digital currency launched in 2009, as a payment method. But branded hotels are unlikely to follow suit ... at least for now, sources said.
An even smaller number of online travel agencies accept bitcoins or offer them as rewards in place of air mile and hotel loyalty program points.
For both hotels and OTAs, transactions involving bitcoins are converted into local currency before they’re added to profit and loss accounts.
Bitcoin use in hotels is relegated mainly to independent owners with an interest in crypto-currency and the immediate power to experiment.
“Bitcoins will definitely take up more of the distribution-channel pie, mostly because they are easy to use and eliminate middle men and fees,” said Mike Abridello, owner of the 11-room Prodeo Hotel + Lounge in Buenos Aires, which accepts the currency but so far has done little business in it. “OTAs will adopt them for these reasons, and by virtue, more hotels will follow suit. Hotels started accepting PayPal only because Expedia did.”
Another property that accepts bitcoins is the 25-room Bandholm Hotel in Bandholm, Denmark. GM Asbjorn Joseph Evensen said the only guest securing payment in bitcoins decided to use his credit card on final payment.
“That said, all the time, bitcoins get more and more implemented in business. A photographer at a forum we held at the hotel wanted to be paid in them,” Evensen said. “Bitcoins are not a huge part of our investment strategy. They maybe are for another time, but good publicity has come our way.”
On 22 January, the 638-room D Las Vegas Casino Hotel and 121-room Golden Gate Hotel Casino Las Vegas began accepting bitcoins. The D is a Lexington Legacy property. The Golden Gate property is significant, as it is the entertainment city’s oldest casino still in operation, dating to 1906.
Co-owner and CEO of both properties Derek Stevens said the Fremont Street area of the city has become a technology hub and his guests have increasingly asked about the possibility of bitcoin payment.
“I’ve been monitoring bitcoins for a year, so we are prepared to see how this plays out,” Stevens said.
He said both front desks and all hotel restaurants will be equipped with iPads dedicated to accepting payment from bitcoins. However, guests will still need to present a credit card at check-in.
“I think early adopters will benefit a great deal from instigating bitcoin payment now. There are still regulatory and taxation issues, but those will play out during 2014, by the end of which there will be more clarity on the issue,” Stevens said.
The Howard Johnson Inn Fullerton Hotel & Conference Center and Days Inn Buena Park, both located in southern California, experimented with bitcoin in 2011.
“There were no real problems (with using bitcoins, but) it was just a waste of time, as I had to convert back to U.S. dollars anyway,” Jefferson Kim, owner of the properties, said.
Other hotels accepting bitcoins include: The Surf Ranch in San Juan del Sur, Nicaragua; L’Hotel Coppedè Roma in Rome; Pedro’s Hotel in Belize; and Urban Living Suites in Toronto.
As of 10 January, PointsHound allows travelers to accrue bitcoins based on spend, although it does not accept them as payment. CheapAir.com accepts bitcoin for flights and, according to its website, hopes “to extend this payment option in the near future to hotels.”
“It’s an experiment that’s doing better than expected already, but frequent travelers know how to get the most out of their spend, so perhaps it is those accruing fewer than 25,000 air mile points that might be those tempted to go down the bitcoins route,” said Pete Van Dorn, co-founder of PointsHound. “I think bitcoins have a long way to go to reach mainstream adoption. It is an interesting idea generating cool dialogue, but it will not happen overnight.”
Tom Robinson, co-founder of Elliptic Enterprises Limited, which launched what it claimed was the “world’s premier bitcoin deep cold storage service,” was more buoyant about the currency.
“As many hotels operate on small profit margins, the uptick in bitcoin use will be of benefit to them, as bitcoins bypass the middle man,” Robinson said.
Champions of bitcoins stressed the currency also makes sense for hoteliers in countries that are more prone to credit controls, hyperinflation and political turmoil.
“I have worked in software development and finance in New York, so I truly believe that crypto-currencies will play a big part going forward,” Abridello said. “It’s simply a matter of cash management, and bitcoins are the easiest transactions I could do. Set-up is painless. It is the email of money.”
He suggested more booking engines and payment platforms will begin to accept bitcoins and thus hoteliers will do so by virtue of these initiatives from third-party applications.
“A year ago, there were tens of businesses accepting bitcoins. Now there are thousands, and I see highly possible another factor of 100 in the coming year,” Robinson said.