OPINION

A bit of luck and a bit of coin

Travel players get a toe in the cryptocurrency rabbit hole as a Covid slowdown provokes new ideas. Or is this simply the future?

by Vijay Verghese/ Editor

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Now you see it, now you don't. Will Bitcoin holidays become a reality or will price fluctuations and extreme volatility keep it a no-go area for hotels and travel agents?

YOU always need a bit of coin to travel. Wads of cash are hard to carry and conceal in these uncertain times, traveller’s cheques are safer but cumbersome, and Club Med has long abandoned the coloured pellets it once used for cash at its resorts, a nostalgic stab at the cowrie shell economy it assumed city dwellers craved. This proved a rash move after growing instances of baby Ben flushing the family fortune down the toilet.

But what about Bitcoin? Can cryptocurrencies cut it in the real world?

When Hong Kong-based The Pavilions Hotels & Resorts decided to start accepting 40 kinds of digital currency in July 2021, heads turned. Founded almost two decades ago by Hong Kong lawyer Gordon Oldham – who is no stranger to the cut and thrust of commerce and swashbuckling adventure – and his wife, Danielle, the resort dream was an ode to the love-struck romance of The Far Pavilions.

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The Pavilions Phuket duly opened in 2008, an uber-luxury setting atop a vertiginous hill. The first time I motored up with my Suzuki jeep sliding backwards, seemingly more partial to gravity than gears, I wondered how any labouring swain was going to make it up here. Today the group has the wind in its hair and runs 13 properties in Europe and Asia, and franchises are being rolled out too. Now it wants Bitcoin.

Cryptocurrencies have been slowly creeping into the mainstream lexicon ever since someone known as Satoshi Nakamoto (considered a pseudonym) invented Bitcoin in 2009. His seminal whitepaper sparked the development of cryptocurrencies. Blockchain records that later emerged were thought to keep transactions safe as the computational power required for an attack was far too great for random bad actors to muster.

{Crypto-bashers believe there are two key problems: the currency has no intrinsic value, and sharp volatility in price render it unsuitable for currency

It has not been all smooth sailing for this mysterious treasure. “Bitcoin is the greatest scam in history,” wrote Brian Harris quite unequivocally in Vox, an online perspective platform. “It’s a colossal pump-and-dump scheme… promoters ‘pump’ up the price of a security creating a speculative frenzy, then ‘dump’ some of their holdings at artificially high prices.”

The crypto-basher brigade believes there are two key problems: the currency has no intrinsic value, and sharp volatility in price renders it unsuitable for currency.

For the average Joe Schmo, this is all in the darkest beyond. It is a murky world peopled by beavering ‘miners’ (think of them as auditors) who produce Bitcoin by verifying 1MB transaction ‘blocks’ to earn a reward. But since there may be several miners attacking the same problem at the same time, you would have to arrive at the correct answer first in order to earn your coin. Value was based on scarcity created by limiting available Bitcoin to 21 million. Of this about 2m is still available for prospectors.

With that out of the way, a few people now appear convinced that cryptocurrencies (of which Bitcoin is the best known), are the future. Others have been driven by the Covid economic slowdown to explore extreme ideas.

Consider the players in the travel field. Mega-booking site Expedia accepts 30 cryptocurrencies. Its business along with that of many others is routed through Australia-based OTA Travala, which launched in 2017, and now offers a portfolio of over two million hotels.

Bitcoin Travel has its own operation mimicking the common online travel agent model. PayPal users in the US are permitted to hold, sell, or buy four currencies (Bitcoin, Bitcoin Cash, Ethereum, and Litecoin) that may also be used at certain checkout points.

Latvian Riga-based airBaltic claimed in 2014 to be the first airline to accept cryptocurrency and was soon followed by LOT Polish Airlines in 2015.

Crypto has reached space with Richard Branson’s Virgin Galactic announcing it will accept Bitcoin for your four-minute turn as a weightless passenger. And it’s not just the big boys who want to race down the mine sans-canary. The swish and secluded Aiyana Retreat in Denmark, Western Australia that specialises in whale watching started taking cryptocurrency in late 2017. While trawling down under, pub-crawlers will be chuffed to learn that Sydney and Melbourne have a slew of sedate cafes and raucous bars that accept Bitcoin.

Do consumers have the money and the moxie for this brave new world? For those less driven by the soft focus luxe allure of The Far Pavilions and more by the thrift imperative, ever more urgent in Covid times, eTravelSmart is an Indian online bus booking platform. Yes, Bitcoin for a rattling bus. And, for cut-rate flights, there’s always the California-based CheapAir that has set out its stall quite clearly with an unambiguous name. It claims to have become the ‘world’s first online travel agency’ to accept Bitcoin in 2013.

Low margin players in the travel industry are unlikely to storm the crypto gates in a hurry as price fluctuations can clip profit considerably. This is a highly speculative business and travel is already fraught with risks, say many. Asian travel agents are averse to stepping into this area.

CheapAir’s CEO and cofounder Jeff Klee says the business can be “unattractive” as so many suppliers simply do not accept these currencies. This necessitates changing payments into dollars and “paying the supplier separately.” Yet there are obvious benefits to being a first adopter. It may take a while for crypto to come into common use as in South Korea where it can be used to pay for movie tickets, coffee and even charity donations. As many as 70,000 convenience stores across the country (including 7-Elevens), and even Domino’s Pizza, accept Paycoin.

The Pavilions Hotels & Resorts works with the UK-based Coindirect to service its crypto. These are path-finding initiatives as travel evolves. But will regular folk, beyond Gen Y, be willing to travel light of wallet, armed with just digital cash to blow?

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