The idea of the Metaverse – a network of digital spaces where social interactions can occur facilitated by virtual and augmented reality – has gained traction as technology has improved. Traditionally, the hospitality industry has been associated with the physical reception of guests, but this has changed with the advent of new technologies and the emergence of the hospitality metaverse. In addition, as the travel industry recovers from the COVID -19 pandemic, many companies are considering the Metaverse for hotels– a possible new solution to these challenges. But how big is the market for Metaverse in the travel and hospitality industry?
We interviewed the most prominent metaverse specialist for the hospitality and travel industry Simone Puorto, to try and understand in practical terms, how the metaverse can help hospitality. In our discussion with Simone, he set the stage for hoteliers to understand the Metaverse and the opportunities that come from working in it. We have tried to take a pragmatic approach and will continue to do so on articles related to future innovations.
Just an Umbrella Term
What is the metaverse in simple and practical terms?
Simone Puorto: Understanding the goals and intentions behind the Metaverse concept is essential, as there is no standard, shared definition. For example, Mark Zuckerberg’s vision of the Metaverse is heavily focused on virtual reality, as his company, Meta, holds a significant share (90%) of the VR headset market. On the other hand, Apple is looking to redefine wearable computing with its Apple Glasses, which many predict will replace iPhones in the next decade. This has led to various definitions of the Metaverse being proposed, often for commercial or branding purposes only. In science fiction, the Metaverse has often been depicted as a virtual world controlled by a centralized, oppressive entity, as seen in novels such as Snow Crash and Neuromancer. Another common misunderstanding about the Metaverse is that it is purely virtual, but this is not the case. The Metaverse is a hybrid of the physical and digital worlds, also known as “phygital.” This means that there is a constant interaction and overlap between the physical, virtual, augmented, and mixed worlds.
I think the term “metaverse” is just a new, cooler name for what we know as “The Internet.” It’s not something to believe in, as many think. It’s not a religion; it’s simply a tool. I don’t “believe” in my refrigerator. I use it when I want a cold soda. A fitting analogy for the Metaverse would be the iPhone, launched in 2007. While the device itself wasn’t particularly innovative, the idea of combining existing technologies like digital cameras and mp3 players into a single device was revolutionary. The Metaverse is the same: it’s just an umbrella term for technologies that have been around for a long time. It’s the Internet’s iPhone. To cut a long story short: all technologically enhanced realities, such as digital overlays on the physical world, VR roller coasters, or Pokémon GO, are all examples of XR (extended reality). So whenever we interact with a reality that is not purely physical, in reality we are already in the “metaverse” and hotels have half of the guest experience as digital (before arriving and after leaving). So there’s a big opportunity for hotels in really understanding the metaverse.
Should hotels invest in metaverse digital twins? If so where?
Simone: The Metaverse relies on multiple technologies, including virtual reality, to function. For hotels and destinations, virtual reality allows for creating a digital twin or a copy of the real-world location. This can be used by travelers to experience their room before making a reservation and ultimately have a more immersive experience when they visit in person. In the past, travelers had to rely on a few photos to decide on a hotel room, but now they want more information before making a purchase. For hotels the Metaverse offers a level of immersion that a brochure or a 2D website cannot match. Yesterday we used to book on paper catalogs. Today we do it on Booking.com, and tomorrow we’ll use Decentraland. The Metaverse is not changing how we book or experience hotels and travel; it is simply changing the medium through which we do it. It is like saying that since we switched from booking from telephone to email, we have dematerialized travel. It’s pure nonsense.
In addition to virtual reality, the Metaverse also utilizes augmented reality. This allows users to experience real-world locations, such as the Colosseum in Rome, while also overlaying a layer showing what the amphitheater looked like in the past. While virtual reality may be the more “sexy” choice for exploring the Metaverse, augmented reality is likely a more practical entry point for hospitality companies due to the cost of building digital twins in the Metaverse and the interoperability issues among different metaverses. This means that content created in one virtual world cannot (usually) be transferred to another brand of metaverse (moving from Meta’s version to Decantraland etc), which is a significant risk for hotel businesses that invest in a single world. The cost of creating even a small space in a virtual world, such as a 400-500 square meter meeting room, can be upwards of 25,000-50,000 euros. This makes it too risky for most businesses to predict which Metaverse will be the Facebook or the MySpace of tomorrow… In an ideal scenario, it would be possible to play the popular game Axie Infinity, sell an in-game asset on OpenSea using Ethereum cryptocurrency, use that Ethereum to purchase different digital outfits in Minecraft, and then wear those outfits in Decentraland. Are we there yet? Unfortunately, we aren’t. As of today, there’s no such thing as THE Metaverse. Instead, there are many branded metaverses and walled garden platforms. More than the Metaverse, what we’re experiencing today is a multiverse.
Decentralization
Why does it matter to the Metaverse?
Simone: The utopian idea of the Metaverse for hotels and Metaverse, in general, is for it to reach its full potential and become a truly decentralized and inclusive space. Let me be brutally honest: what Zuckerberg has in mind for Horizon is a dystopian advertising nightmare that plays out on a super immersive, centralized platform. To create a metaverse that will be sustainable long-term, we should prioritize decentralization and value creation over realism and immersivity. If we don’t, the Metaverse will be a more advanced version of “The Sims,” which can be entertaining but ultimately serves little purpose. Consider this: Let us say you use a Meta VR headset. You may know that there are cameras outside the headset to define the boundary of the virtual space, so no one bumps into walls in the room. These cameras can capture the physical space around you and the people in it. There might be a travel guide for Istanbul on a shelf in the room that the camera sees. The next moment you might see ads on Facebook or Instagram for flights to Turkey. Well, that’s not the Metaverse I envision. As a (semi) joke, I always say that any bad news for Zuckerberg’s Metaverse is pretty good news for the Metaverse.
Selling rooms as non-fungible tokens (NFTs) is a possible way for the hospitality industry to increase direct bookings and revenue.
The Metaverse must be decentralized and run on the blockchain. Glorified social networks like Facebook present a cool metaverse, but it’s still centralized and controlled by one company. You cannot move your digital assets to another metaverse; once you get kicked out, it’s all gone. That would just be Web2.0 in 3D. It should not be just one company that has oversight of the Metaverse. Users should be able to log in with their digital wallets without needing centralized usernames, passwords, or walled-garden identities. That being said, it is unlikely that there will be only one Metaverse, and it is more probable that there will be several specialized metaverses, such as one for work, one for socializing with friends, one for dating, and more. As long as interoperability is guaranteed, I am pretty ok with that.
How NFTs Can Revolutionise the Hospitality Industry
What parts of the metaverse could or should a hotel invest in?
Simone: So now the fun part: How business owners can leverage Metaverse for hotels and restaurants. Some companies are already making billions by dropping non-fungible tokens (NFTs) into digital wallets. For example, instead of sending newsletters to inform about new articles in the Shiji Group’s Insights blog, NFTs can be sent directly to the wallets of the target audience, allowing them to access the articles without invading their privacy or requiring personal information. This is a more efficient way to interact with the community and does not require knowing an individual’s email or name. The semi-anonymity of decentralized wallets is sufficient. NFTs can also be used to resist online travel agencies (OTAs) duopoly in Europe. While NFTs are often associated with digital art or JPEG images, they can be used for much more than that. They allow for the exchange of information between two points through a decentralized system that does not require human supervision or control.
Selling rooms as non-fungible tokens (NFTs) is a possible way for the hospitality industry to increase direct bookings and revenue. Companies like Pinktada and Takyon are already doing this, as it makes total sense. In the future, even loyalty program points may be replaced by NFTs in digital wallets. When NFTs are minted (the term used when creating a new NFT), the creator can receive a commission, such as 10% of all future transactions, when a room is bought for $200 and resold for $500.
We could imagine guests having all their preferences and personal information stored as an NFT and shared with a hotel when they book their room. But removed at the end of their stay, taking away the risks of data breaches and privacy issues, while still permitting guests to receive a very personalized stay.
Now back to the importance of decentralization – imagine that today we create a decentralized autonomous organization (called a DAO), and each of us owns a token that we use on the blockchain to make decisions. The cool thing is that this is unhackable, and no one needs to be in control of it all. As a result, DAOs can be the perfect solution to some of the pressing destination management problems we have today – for example, using NFTs to let different hospitality stakeholders decide how to run a populous tourism destination like Venice or Amsterdam more efficiently. You’re replacing the need for trust with cryptographic truth. It’s e-Democracy.
FURTHER READING:
The harsh truth, however, is that we are still struggling with outdated property management systems in the hospitality industry, so I am not sure how quickly these systems will catch on, as integrating them with legacy PMSs seem quite challenging. However, NFTs are a crucial element of the Metaverse in general; think about the need to buy land in some virtual worlds. These parcels are, de facto, NFTs.
So what can hotels do to benefit from the metaverse today?
Simone: The Metaverse is a new dimension of reality that will majorly impact our lives and businesses. It will change how we interact, communicate, and think about ourselves. As it develops, it will create new industries and disrupt existing ones. For the moment, hospitality companies interested in experimenting without overinvesting can consider advertising in the Metaverse, such as the food industry is already doing by using avatars dressed as Deliveroo or Uber Eats drivers to deliver orders to people’s doors.
One way for hotels and other hospitality businesses to get involved in the Metaverse is by advertising on platforms like Roblox, which has 50 million daily users, including many young people who may not be able to book a hotel room themselves but who can influence their parents’ travel decisions. In addition, advertising on the Metaverse allows companies to test the waters without committing significant resources to build their platform, which carries the risk of not being viable in the long term. Instead, they can reach their target audience through existing platforms and see how they can benefit from the Metaverse.
There is a widespread fear of missing out on the Metaverse today, similar to the internet boom of the mid-90s. During this time, companies that added a “.com” suffix to their names saw abnormal increases in their stock value, regardless of their involvement with the Internet. Similarly, brands associated with crypto, blockchain, Metaverse, or Web3 are experiencing similar hype and inflated value. But it’s worth remembering that from the ashes of the .dot com bubble, the e-commerce market was born, worth 5 trillion dollars today.
In summary, the Metaverse is no longer just a science fiction/cyberpunk concept but a rapidly growing industry that has the potential to transform our lives and the way we interact with each other and the world around us. Its success will depend on how it is developed and adopted, and it is up to us to shape its future in a way that benefits all members of society. Are you up for it?
If you’d like to learn more about the Metaverse, check out Simone’s Metaverse glossary on Hospitality Net here.
