Hospitality businesses are taking a serious look at non-fungible tokens as a way of offering their brands in an exclusive and direct deal with the customer
If you've not heard of NFTs before or are baffled by the concept of blockchain, now's the time to get up to speed. NFTs, or non-fungible tokens, are fast finding their way into the hospitality world, or rather, the hospitality world is finding its feet with NFTs.
With NFTs continually increasing in popularity across all markets, we wanted to lead the way in the UK hospitality industry
NFTs are being bought and sold all over the internet, and Adam Handling – owner of Eve Bar in Covent Garden – is the latest hospitality business operator to get involved.
Handling's NFTs will act as a voucher for a real-life experience or purchase as well as a digital asset. Each NFT will be accompanied by a recipe for a new, exclusive cocktail that the owner can then make at home, and the buyer will also enjoy a certain number of complimentary drinks when they visit Eve Bar.
Those buying the rarer NFTs – which are designed by Eve's manager Marco Grisafi, head bartender Giulia Gazzetto and Josh Linfitt, bar manager of Ugly Butterfly (Handling's restaurant in St Ives in Cornwall) – will receive an exclusive recipe as well as a one-to-one tutorial with the cocktail creator. It's expected that the price for one of Handling's NFTs could be around £4,000 when they go to auction on NFT marketplace OpenSea – a significant sum of money for the business.
"With NFTs continually increasing in popularity across all markets, we wanted to lead the way in the UK hospitality industry," Handling tells The Caterer.
An NFT in itself can be a work of art, conflating the design and hospitality worlds. "As recognised innovators, our beautifully illustrated menus naturally lend themselves to the NFT market," continues Handling. "There is scope for NFTs to allow anyone, regardless of where they're based, to engage with our creative concepts. We also have the capability of letting a young artist showcase incredible work on a global scale, and that's an opportunity that's too important to miss."
However, they're more than just an attractive sideline. "The unique nature of NFTs means they have potential for much more than just marketing stunts," says Joel Davidge of bar agency the Cocktail Service. "NFT sales can reach eye-watering amounts, so there is definitely potential for them to be used as a method of creating capital in hospitality. NFT drops [the date, time and minting price of an NFT] give entrepreneurs the potential to raise funds in the present while creating demand for an offering in the future."
Hotel reservations through NFTs
Flyfish Club is one such venture in the US, where Belarusian-American entrepreneur Gary Vaynerchuk is selling a number of NFTs to fund the creation of a new restaurant in New York City solely for NFT owners. "We've recently seen luxury hotels like the Ca' di Dio in Venice accepting reservations via NFTs," says Davidge. "Ca' di Dio also auctioned the opportunity to stay in the hotel on its opening night via NFTs. "One of the main ways hospitality businesses can use NFTs is by leveraging the fact that each token is unique. They are a tool for creating bespoke, hyper-personalised experiences for guests."
The possible uses for NFTs in hospitality are endless, says James Brooks, founder of Team Brooks. After building his social media agency for food brands, he launched the Secret Food Society, a community of people passionate about food and NFTs, where he sold his first collection of 100 digital artworks, all based around food. His second drop will offer certain NFT owners the opportunity to enjoy an all-expenses-paid, real-life food tour of the UK.
"There will also be limited-edition collaboration items, so we might collaborate with some really well-known food and beverage brands to create limited-edition products that will only go to our NFT holders, for example," he says.
Brooks is excited by NFTs not just because of their potential to facilitate exclusive real-life experiences, but also because of the potential for recurring, passive revenue. He talks of restaurants or brands using NFTs to sell a more secure version of the ‘black card' concept, which could then be sold on by its owners, with royalties for the restaurant or brand, creating a potentially ongoing passive revenue stream.
There are some significant risks to consider, though, says Davidge. "The NFT world has been described as the Wild West; there are only a handful of legitimate marketplaces where you can buy NFTs without the risk of being scammed." There are also tax implications, says Brooks, as HMRC has offered ‘guidance' to businesses trading in cryptocurrency and NFTs, but there are no hard and fast rules when it comes to taxes, so regulations could change at any time and potentially see businesses stung with large fees.
"There is also no getting around the fact that creating and reselling NFTs uses up a large amount of energy in the form of computing power," says Davidge. "It's hard to calculate exactly how much, but one study of 18,000 NFTs claimed that the average NFT has a similar carbon footprint to the amount of electricity generated in a month by a person living in the European Union. Sustainability is a growing trend in hospitality, so this poses a potential issue for those wanting to incorporate NFTs into their business plans."
What is an NFT?
NFT stands for non-fungible token. Like cryptocurrencies, NFTs are blockchain-based, but unlike Bitcoin and Ethereum, which can be traded and where one Bitcoin is always equal to another, each NFT has its own digital signature, making NFTs unique and non-interchangeable. Everything from artwork to music to tweets can be sold as an NFT. In 2021, Twitter founder Jack Dorsey sold his first ever tweet for $2.9m (£2.2m).
Glossary Blockchain – a system in which transactions, usually made in cryptocurrency, are stored permanently using a peer-to-peer linked network.
Cryptocurrency – digital currency (such as Bitcoin or Ethereum) that is secured by a system that uses cryptography.
Minted – to ‘mint' an NFT means you are bringing it into creation by purchasing it on an online marketplace.
OpenSea – one of the largest NFT marketplaces.
You need to be a premium member to view this. Subscribe from just 99p per week.
Already subscribed? Log In