Hospitality in the Metaverse

Hotels are increasingly about much more than a place to sleep. Particularly in the lifestyle and luxury sectors, hotels are focused on the entire guest experience, from enhanced and more diverse food and beverage offerings to innovative wellness concepts, broader entertainment options, and sophisticated co-working spaces. The objective is to truly engage guests and locals alike with hotel destinations that foster community, connectivity, and collaboration.

But what about nights when guests aren’t staying at a hotel? Enter the metaverse. Hotel companies can use this virtual universe—where people can interact with each other and digital objects in a three-dimensional environment—to bridge the gap between stays at physical properties. In fact, we believe the metaverse will become another front in the ever-more competitive travel sector as hotel companies increasingly use it to expand the reach of their brand, deepen guest loyalty, and drive revenue.

The Opportunity

Hotel guests stay in hotels on an episodic basis. What the metaverse promises is a place for people to connect and collaborate on a regular, ongoing basis over shared experiences such as concerts, conferences, trade shows, and other networking and entertainment traditionally hosted in physical hotel properties. For example, CitizenM in 2022 said it was developing a hotel in the metaverse to offer such shared experiences.

The power of the metaverse is that, unlike the current internet, it provides a truly immersive experience. Guests could virtually walk through a hotel and experience curated elements of its physical offering and brand, from a grand lobby with towering ceilings and modern furnishings to virtual shops, art galleries, and other amenities. Visitors could mingle with other avatars enjoying a virtual cocktail at the lobby bar, or stop by the concierge for suggestions on the evening’s entertainment.

Such an immersive experience, in addition to providing multiple commercial and partnership opportunities, could help drive a sense of connection among metaverse guests and a sharper, enhanced understanding of the hotel’s value proposition. This increased sense of connection can be effective in spurring occupancy and room rates at physical locations—which are key components in building a business case for the investment necessary to establish a vibrant metaverse presence.

Key Considerations

Several considerations need to be assessed as part of a strategy to establish a hotel experience in the metaverse which could potentially be superior to what guests have come to expect in physical hotels:

• Investment. Establishing a presence in the metaverse requires significant human and capital resources, particularly as the creation of engaging, interactive, and useful content demands constant attention and iteration. That’s even more important here: virtual hotel experiences need to not only meet but exceed the expectations of the audience a hotel seeks to reach, a challenge exacerbated by today’s relatively low rate of metaverse adoption. A critical first step is for hotels to inform and shape their metaverse content using their understanding of guest needs and expectations in the physical world.
• Integration. Hotels will need to determine how to best integrate their presence in the metaverse with their physical locations. They can’t treat their virtual and physical strategies as separate and distinct—both elements need to be supported, with human and capital infrastructure developed and implemented to drive an integrated strategy across events, amenities, loyalty programs, and every other aspect of the guest experience.
• Security. A primary driver for hotels to establish a presence in the metaverse is to deepen their connection to existing and potential guests, which requires collecting and maintaining data and information about visitors to virtual properties. Yet the metaverse presents risks of cyberattacks, fraud, and data breaches. That’s why a meaningful investment in cybersecurity and monitoring is necessary: as in the physical world, properly securing data and information is critical to maintaining guest trust and, by extension, guest loyalty.
• Location. As in the physical world, in the metaverse it’s all about location. There are four primary considerations: accessibility, so a hotel is easy to find and navigate to from different devices and platforms; demographics, ensuring it’s located in an area of the metaverse likely to reach its intended audience; branding, with a location consistent with the hotel’s ethos and values; and cost, as higher costs for locations in the metaverse are often associated with more stable legal rights as well as higher potential for visitors (and revenue generation). The landscape of the metaverse remains fragmented and uncertain when it comes to locations that will prove viable and stable which makes these location considerations particularly challenging.
• Revenue. Which elements of the virtual experience should a hotel offer for free? What should it charge for? These decisions will be informed, in part, by how hotel stakeholders view the metaverse strategy from a revenue generation standpoint—that is, is it a stand-alone profit centre, a destination to drive revenue to physical locations, or a combination of both? Pricing approaches include membership models where guests pay a monthly fee to access all events or content created at the hotel; a ‘pay as you go’ model, which affords a more dynamic approach to pricing/yield management; or a combination. Hotels will need to experiment to determine how they can best achieve their revenue generation goals.

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A hotel in the metaverse holds endless possibility. Hotel companies have an opportunity to establish and optimize virtual venues that, alongside their physical locations, allow visitors to find community, connect, and collaborate. These efforts can drive deeper levels of guest engagement, satisfaction, and loyalty, extending a hotel’s brand reach and resulting in a stronger, more resilient operating model.