CRYPTO A NO-GO?

As the business travel industry starts to return to some sort of normality after the Covid pandemic, companies in the sector are on the lookout for potential new markets and income streams.

The spectacular growth of the market in cryptocurrencies – even if the growth in their value has not necessarily gone in the same direction as the overall market – means that many companies are now starting to get interested in accepting payments in Bitcoin and other cryptocurrencies. Travel companies may now have to get used to dealing in currencies such as Ethereum, Tether and even Dogecoin, a cryptocurrency which started out as a “joke” but of which there are now more than 130 million in circulation.

One of the companies making it possible for travel companies to work with cryptocurrencies is BitPay. Its vice president of marketing Merrick Theobald says accepting crypto is attractive for merchants in the sector.

“The benefits of cryptocurrency are outstanding; there is nothing faster, better or cheaper than digital transactions on the blockchain,” he says. “It can be done in minutes, locally or cross-border, and there are a lot of protections for the merchant. It is a push payment, so there are no fraud chargebacks. That in itself would convince me that if I were a merchant I would offer crypto immediately.”

It is not just merchants that crypto payments appeal to.

“Cryptocurrency has taken off with younger demographics – millennials and Gen Z-ers; they are always on technology and cryptocurrency, being a digital payment, is ideal for them.”

In the business travel sector, there have only been a few forays into crypto, despite the potential for the market.

Corporate Traveller entered into a partnership with BitPay in April 2019 to “spearhead cryptocurrency payments in the business travel sector”, becoming the first TMC to accept them.

“The reason we started offering this method of payment was twofold: we saw a gap in the market and in response to a client request,” says Nicola McShane, VP global PR & communications at parent company Flight Centre Group.

Since the company started offering crypto as a payment option, it has generated further expressions of interest from clients.

“My colleague who manages this area said that he’s personally had four clients use this option of payment – one that uses it regularly, each month, and others that also use it occasionally,” she says.

The TMC does not speculate in cryptocurrency though. “Once we raise the invoice in GBP it is processed swiftly (within a matter of days) to ensure there’s no fluctuation risk,” says McShane.

In July this year, Kuoni Business Travel announced it would start accepting crypto payments with the company’s Andreas Schneider saying that clients were “becoming increasingly modern and innovative”.

The Business Travel Association’s chief executive Clive Wratten says that despite Corporate Traveller’s first mover status and Kuoni’s recent announcement, there is currently little or no appetite for payments using cryptocurrencies in business travel.

“I think there is too much else going on at the moment and there is a complete lack of understanding around it. Until it becomes mainstream and customers are saying 'this is where we are going to go', then TMCs are not going to give the option to pay using cryptocurrencies,” says Wratten.

Alternative ambitions
Online travel agent Alternative Airlines began accepting crypto payments in 2018. Sam Argyle, the company’s managing director, says, “Alternative Airlines has always offered a range of payment options at checkout and it felt natural to move into cryptocurrency. We work with three payment partners: Lisbon-based Utrust, owned by Elrond; crypto,com [which is Hong Kong-based and known for its huge spending on Formula 1 advertising]; and CoinGate from Lithuania which specialises in accepting niche coins.”

The company says crypto payments currently account for three per cent of its total order volume and this is growing fast.

“We have some ambitious goals,” says Argyle. “We expect that figure to be close to 30 per cent by 2025. The last few months have been more restrained given the market but we do think long term this is going to grow rapidly as cryptocurrencies become more mainstream and understandable.”

One of the biggest attractions of cryptocurrency business for the company is that purchases are typically three times the value of transactions made using other payment methods, says Argyle.

“It tends to be affluent, sophisticated consumers and typically they are buying long-haul, high-yield premium products: business and first class. We also see retention rates that are four times what they are in the rest of the business. This says to us that they are happy with the experience and also that there is a gap in the marketplace for people offering cryptocurrency payments for flights.”

For B2B payments, Argyle thinks it will take longer. “As a business, if we were to hold cryptocurrency to pay other businesses you would need to ask ‘How do we hold it , account for it and transfer it?’. Longer term there will be growing B2B use.”

Suppliers lead the way
Although the TMC take-up has been limited, a growing number of suppliers are joining the crypto party.

Air Baltic became the first airline in the world to accept bitcoin back in 2014. At the end of 2021, the airline said that the number of bookings made using crypto had increased 44 per cent year on year and that more than 1,000 customers had used them as a method of payment.

LOT Polish Airlines started accepting crypto a year later but there hasn’t been a flood of airlines rushing to offer the same payment option. This may be about to change.

In September 2021, BitPay inked a deal with UATP, the global network for air, rail and travel agency payments.

At the time, UATP’s CEO Ralph Kaiser said, “Crypto payment stands to be a market changer in the industry; this partnership creates the opportunity for the airlines to attract new customers and to be a first-mover in this very exciting space.”

BitPay's Theobald said: “We are seeing more and more airlines jumping onboard through the UATP relationship.”

One of the next carriers to join the party through the UATP partnership will be Vueling, which will become the first low-cost airline in Europe to accept cryptocurrencies.

Some private air charter companies have been accepting cryptocurrencies for years, according to Theobald.

“A few of them only accept cryptocurrency if it is after hours or on weekends. They won’t fly you somewhere if they are still waiting for a wire payment to confirm and that could take days.

“We are also seeing luxury hotels starting to accept cryptocurrencies. We have done exceptionally well with luxury products in general,” says Theobald.

The hotel groups that are doing so are generally high-end leisure properties, such as Pavilion Hotels & Resorts, Soneva and the Kessler Collection. Dubai’s FIVE Hotels started accepting crypto payments when it opened its first property outside the UAE, in Zurich, earlier this year. Others seem certain to follow as the potential for the market is recognised.

Widespread investment
Some reports suggest there are 300 million people holding currency in cryptowallets around the world. There is also an increasing number of companies operating in the sector.

“There are more and more companies getting into cryptocurrency,” says BitPay’s Theobald. “There are hundreds of thousands of them around the world right now and many prefer to pay with cryptocurrency to support the work they are doing.”

Cryptocurrency seems unlikely to replace other forms of payment any time soon, not least since existing methods such as corporate cards and lodge cards are so well established in the sector. Theobald is confident things will change though.

“I don’t see Bitcoin or paying with cryptocurrency replacing credit cards in my lifetime but will it take a hold of the travel industry – absolutely. Cheques are still around even though we thought they would be replaced. It is the same thing with credit cards,” he says.

Others are less optimistic about the prospects in business travel.

Matthew Chapman, co-founder and CTO of travel booking technology provider Vibe told BTN Europe, “Whilst there are perhaps nowadays more consumers wanting to pay for things using crypto currencies, when it comes to business travellers that doesn’t seem to have yet taken hold. Why? Probably because a great many of them simply use the company credit card.

“But even those who have to pay for things themselves and then get reimbursed would almost certainly find that their employer won’t refund them if the payment was made in crypto. This could change of course, but would require additional changes in traditional expense software platforms and so on, which is something I suspect most corporates would be unwilling to fund.”

Yet with companies in the business travel sector keen to grow as the horrors of the pandemic fade, it would be a brave company to ignore cryptocurrencies totally.

Read on to find out how one crypto company manages its business travel payments and programme.

CASE STUDY
The crypto travel manager

Katie Romanko, senior manager, travel and events, Coinbase

The cryptocurrency market, despite the volatility we have seen recently, is still enjoying double digit growth every year and, according to some estimates, is set to reach a market cap of US$6.8 trillion by 2025.

One of the biggest players in the crypto ecosystem is Coinbase, a secure online platform for buying, selling, transferring and storing cryptocurrency. The platform, founded in 2012 and which has a mission to “to increase economic freedom in the world”, now has more than 100 million verified users and US$217 billion is traded each quarter.

You would imagine that a company so immersed in the world of crypto would be keen to explore how to use it for their own payments but it is does not exclusively use them. In the first six months of 2022, for example, the company used $265 million of crypto assets out of a total $3.67 billion in operating expenses.

It is still very early days in terms of crypto use in the company’s travel programme. The company has been supportive of a number of initiatives, says Katie Romanko, the company’s senior manager, travel and events. It is working with TripActions on using cryptocurrency for reimbursement through the travel management company’s Liquid payments platform, although Coinbase is not currently using Liquid itself. It is also in discussions with airline e-commerce platform nuTravel on the use of blockchain and how the two companies might work together.

Coinbase was co-founded by Brian Armstrong and Fred Ehrsam in San Francisco but now calls itself “remote-first” and does not maintain a headquarters, although it has meetings space in the city as well as in New York and a number of other locations globally, including London, Dublin and Berlin. It has more than 4,900 employees.

“Now we are fully remote, it has really shifted the travel patterns,” says Romanko, who joined the company in April 2022.

“I am used to looking at office-to-office or candidate travel but there is not so much transient travel now we have moved to virtual meetings. As we are fully remote, the challenge is to keep the culture alive and so I am trying to build up a regular programme of offsites. Our leadership recognises how important it is to meet in person,” she says.

Romanko says the idea will be to have most people in the company travelling once or twice a year. “Initially we had everyone planning their own meetings but it was becoming difficult to manage different hotel blocks and meeting space. We really want to focus on using our office spaces.”

With remote-first meaning that the geographical spread of employees needs to be taken into account, Romanko is working on the idea of a standardised “offsite-in-a-box” that can be used anywhere it is required. “We are still playing around with the format,” she says.

With the crypto sector showing few signs of slowing, Romanko is likely to be kept very busy.