Background

The point of this article is to share an experience I had relating to a business of one of my clients. For the sake of this post, I will refer to said client as "The Hotel" and will refrain from using specific monetary figures as to ensure confidentiality of client information
The Hotel operates a hospitality business located on the African continent in a country that is often considered to be politically unstable. They have been operating for more than six years now, showing growing popularity in both the local and international market and frequently maintain occupancy rates that are well above what could be considered average in the industry
The service that I provide consist of operational and administrative optimization. I look at how the business operates as well as how documentation and accounting flows from start to finish, identify areas of inefficiencies and recommend improvements. These improvements often lead to a direct financial benefit to the business (like claiming tax benefits that were previously not claimed due to the owners not knowing about it or were unable to implement a system whereby they would have sufficient documentation at hand to be able to claim the benefit) as well as indirect benefits (like spending less time on certain tasks due to a more efficient process)

The Hotel

The business was already operating very well before my services were requested. Small adjustments were made to their payroll and expense capturing processes that resulted in direct and indirect benefits that were noticeable but not necessarily significant
Another area of focus was on their income side. Apart from the local travelers enjoying the stay at The Hotel, they also get a lot of European and UK travelers. They obviously value any customer they get, but international customers from the aforementioned areas usually have a lot more money to spend on the activities, the restaurant and the bar located at The Hotel, so it's important for them to keep attracting these customers

The Issue (the area of inefficiency)

They receive bookings and deposits for said bookings via one of the following channels:
a) the customer books directly with The Hotel by sending an email or calling to make the booking b) the customer makes a booking and deposit through a third party, contracted by The Hotel to advertise the accommodation on their various websites
The first option is preferred seeing as the third party in the second option charges a high fee for having the booking made through them. It ranges, but a whopping 17% fee on the booking value isn't uncommon
Over time they have been able to get more and more local customers to book directly with them instead of through a third party, especially the more recurring customers. Resulting in much higher gross margins for them from the local market
They would need an international bank account for different currencies if they wanted to do the same for the international travelers and the additional costs and effort (as well as a little more accounting and tax administration) made them decide to just stick with the third party and bite the 17% fee bullet. To their credit, they have increased the listing prices on the third party's website to make up for the fee and this doesn't seem to slow down the bookings coming in, so they have countered the fee by increasing their prices listed by the third party, but it doesn't eliminate the issue itself, which is the high fees being paid

The Recommendation

At the time (well over a year ago) I suggested they start accepting deposits from international customers via Bitcoin. It seemed like a credible solution to the issue as it would:
  • eliminate the need for more bank accounts and banking fees (with minimal lightning fees)
  • systematically eliminate the 17% fee charged by the third party by having recurring customers book directly with them, gradually increasing gross margins on those customers significantly
  • simplify the accounting treatment as they would only have one "foreign currency" to account for
  • make the funds available to them a lot faster than through the third party, which processes payments only once a week or every two weeks
  • allow them to, if interested, to retain a portion of income in a currency that is neutral to the volatile political environment of the country in which they operate
It is also worth noting that there are several exchanges registered in the country in which The Hotel operates that would allow them to convert acquired Bitcoin to their native currency if they prefer not to hold on to said Bitcoin, so being "stuck" with Bitcoin instead of their native currency isn't a problem and the fees relating to these conversions range, in total, from 3 to 7 percent, so it's not for free, but a lot better than the current 17% charged by the third party

Conclusion

The Hotel was reluctant to integrate Bitcoin into their income process. To remain professional, I only suggested it twice because the agreement is that I would make recommendations and if they are not willing to implement them then that's that. It's their business after all and they are still doing very well for themselves regardless. They don't need Bitcoin at the moment, but it would have complimented their business model in a nice way, in my opinion
If they had implemented it, the outcome would depend on various factors that are difficult to determine, like how many people would actually make deposits/payments with Bitcoin if they have that option? How many of the recurring clients would open a lightning wallet so that they can make bookings directly with The Hotel if they did not have a wallet before and how much of a discount to the listing price with the third party would The Hotel have to give for the direct booking to incentivize people to book directly?

I hope you found this article interesting. I really enjoy my work and in recent years I have developed a passion for Bitcoin. This platform seemed like a good place to share my thoughts and ideas as well as learn a lot from individuals that value the same kind of virtues that something like Bitcoin promotes. Decentralization, transparency and sovereignty

Thanks for sharing. Here is my 10 cents. I don't relate with the approach you are taking. I managed/owned a Hotel in Patagonia and dealt with online travel agencies paying fees from 15% all the way up to 30%. I acknowledge the fact that some OTAs are worse than others but I was satisfied in most cases paying those fees, why? for the following reasons:
1/ Got more exposure and could leverage marketing tools available to help boost occupancy rates. 2/ Agency will deal with payment upfront avoiding me the pain of going through AP explaining exchange rates, taxes or even have an employee engaged in checkout payments, handling cash. 3/ Visibility to smaller and wholesale agencies that could verify rates both on website and OTAs where the same. No one wants to partner with someone that does not understand the sale through channels model.
If you are running the business for destinations that are sub 50% yearly average occupancy, you need to do you it through channels, like any tiered sales model hospitality needs agencies, specially when dealing with international markets. I can well relate with managers not accepting your proposal.
On the other hand I would rather take a different approach, instead of fighting the fees from agencies I would propose to expand the addressable market to include bitcoiners. Not aiming to change your current revenue streams but to build on top expanding to ppl that may pay with sats driving them to your business.
My question here is, are there resources available for letting the bitcoin community know about your hospitality business? I don't know but I think it is worth exploring if there exists a btcbnb or something out there.
Just a thought. I wish you well!
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Thanks for the input! I would like to address some points made to clarify some statements made in my post:
  • your mention about leveraging the third party's marketing tools to help boost occupancy: I 100% agree. For this particular client, most of their revenues come from bookings made through the third party, so I didn't recommend they stop using them at all, I was trying to put more focus on recurring customers and trying to systematically increase the number of international customers that book directly, rather than cease using the third party, which wouldn’t be an option for them. For example, they have a large group of people from Germany that come every year, but they always book through the third party. If they could incentivize them to book directly and pay with Bitcoin, they would increase their margins for the group (and they have many recurring, international customers like this that have their contact details, but can’t make a direct payment)
  • the agency and upfront payment: that’s true, it is a convenience, but in my opinion the added effort of handling Bitcoin would be minimal to their business as they have competent staff in their invoicing and accounting department and by doing so the fees saved would outweigh the cost of additional hours needed to handle it (when considering if a recommendation should be made, I always try and determine the cost/benefit of the recommendation before bringing it to the client’s attention and in this case the benefit seemed to outweigh the cost)
  • I’m afraid I don’t understand number three you mentioned
Great suggestion about trying to focus resources to try and attract Bitcoiners! Haven’t even thought of that. The issue is just that the owners are very sceptical about Bitcoin and if I could summarize their issues with it, I would say it boils down to understanding and trust. I don’t think they fully understand what it is, despite my explanations and practical examples and I think they view it as a purely speculative token/coin (or maybe even a scam) that can go to zero at any time. Anything is possible, but for me, the chance of it going to zero is less likely than the chance of their native currency getting completely devalued due to government meddling/policy (since January 2023, their currency has lost 15% in value to the USD and international sentiment doesn’t seem to indicate it slowing down). So, I will definitely keep it in mind for my other clients when they are interested in integrating Bitcoin in a meaningful and valuable way into their business, thanks!
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Hey I am very sorry then I didn't get it 100%. Thanks for the clarification.
I-ll try to whisper so we do not awake a very toxic maxi here, but IMO its very difficult to onboard a fiat centrix business to BTC without the owners being on BTC or unless there is a state mandate.
Fiat centrix by choice or because there is a full working circular economy around the legal tender, payrol, providers, utilities, taxes, everything is fiat.. Accepting BTC as a business means you are customer averaging into bitcoin. Normies won't do that, their normie customers neither. Adoption begins at the individual level, not a state, not a business,.. at least this is what I believe, individual comes first.
Getting normie customers onboarded and then a normie business owner onboarded in a fiat centrix scenario.. good luck with that. Check/in check/out price can change two digits both on the downside or upside against the dollar, illiquid markets will punish ramping on and off BTC. And then there is custody,... If the owner doesnt want to keep BTC they will need to use stableshitcoins,.. well this are dollars but in reality they are not, just tokens comming from an algorithm behind a shady businnes,.. whatever.. I wouldt recommend this.
I would suggest start small, target bitcoiners as customers, digital nomads and offer the owners you can get paid later in BTC.
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I like what you're saying that adoption comes at the individual level first. But I think that although an entrepreneur might not be convinced or clear what Bitcoin is, if they're made aware that they can get extra customers, Bitcoin customers that want to pay with Bitcoin, they'll be interested. Especially when they're made aware what's possible with Lightning and know that they have the possibility to create new business models that aren't possible with their current setup.
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I hear you… And thanks for the suggestion about trying to attract Bitcoiners rather than trying to get non-coiners to pay in Bitcoin. This should be more effective if you can find the Bitcoiners
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Thank you for sharing. Your observation was noted by the Bitcoin beach leaders as well. In their situation, the tourists were only using hotels owned by foreign companies since the unbanked locals could only accept cash which was too inconvenient for the tourists.
Have you read the Bitcoin beach whitepaper?
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Awesome. I haven't read it no, but I know about Bitcoin beach. Will give it a read!
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When you say deposit, are you saying that they put up a certain % of the total rack rate / advertised daily rate to hold the room (with option to back out within a certain timeframe), or are you referring to full payment for the duration of the stay, at the time of booking?
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Yes, I am referring to when a customer pays a percentage of the advertised fee to secure the booking and they usually have a couple of weeks before the booked date to cancel it and have their funds returned. I have seen this policy vary between businesses though, some straight up require 100% of the fee for the booking and cancelling would result in loss of funds while others are more lenient about refunds
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Really useful! Thank you
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Thanks!
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142 sats \ 1 replies \ @Hopeful_Sat OP 6h Thanks for the input! I would like to address some points made to clarify some statements made in my post:
your mention about leveraging the third party's marketing tools to help boost occupancy: I 100% agree. For this particular client, most of their revenues come from bookings made through the third party, so I didn't recommend they stop using them at all, I was trying to put more focus on recurring customers and trying to systematically increase the number of international customers that book directly, rather than cease using the third party, which wouldn’t be an option for them. For example, they have a large group of people from Germany that come every year, but they always book through the third party. If they could incentivize them to book directly and pay with Bitcoin, they would increase their margins for the group (and they have many recurring, international customers like this that have their contact details, but can’t make a direct payment) the agency and upfront payment: that’s true, it is a convenience, but in my opinion the