Online travel site Expedia.com’s announcement that it is accepting Bitcoin as a form of payment for hotel purchases is not only a sign of the decentralized peer-to-peer payment network inevitably going mainstream, but it also gives Expedia, like other early adopters, some distinct marketing advantages.
As of last week, customers can shop from Expedia’s inventory of hotels and pay for accommodations using Bitcoin. Expedia partnered with third-party Bitcoin payment processor Coinbase to integrate payment support into the hotel booking experience on its website.
An Expedia rep says it’s “basically just a matter of time” until the brand rolls out the functionality to other product lines like flights and car rentals and notes the speed will depend on the demand the brand initially sees with hotels.
According to the Bitcoin Press Center, Bitcoin is in use by a growing number of businesses and individuals, including restaurants, apartments, and law firms, as well as online services such as Namecheap, WordPress, Reddit, and Flattr.
While it is unclear exactly how many consumers use Bitcoin, the Press Center says the value of all Bitcoins in circulation exceeded $ 1.5 billion, with millions of dollars in Bitcoins exchanged daily as of August 2013.
Jeff Klee, chief executive (CEO) of travel site CheapAir.com, which says it was the first to offer Bitcoin for travel booking, says the Expedia deal is good news for the virtual currency.
“Any time another merchant starts accepting [Bitcoin], it gives it more credibility and helps in the process of making it a more mainstream purchase option,” Klee says.
CheapAir.com began accepting Bitcoin for flights in November and added hotels in January.
The travel site first began looking into Bitcoin after a customer asked about the payment option, he says.
“We did research to see what it would take to accept it and it was relatively easy, so we did the development work and launched it on flights as a test to see if there was any real interest and we were surprised pleasantly by the response, so we decided to take it further,” Klee adds.
According to Klee, Bitcoin has resulted in positive response from users, as well as the acquisition of new customers. Klee notes there is a group of travelers who have given CheapAir a try for the first time solely because they heard the brand accepts Bitcoin. And even though the total number of Bitcoin customers is still relatively small, they have proven to be exceptionally loyal, he says. He also notes the profile of a Bitcoin purchaser seems to be different than the brand’s traditional customer base in that Bitcoin users seem to travel more frequently and are more likely to purchase flights in business or first class.
Klee says he is also a fan of Bitcoin because “banks and credit card companies have held the economy hostage for a long time. The 3 percent transaction cost that is embedded in the cost of everything you buy is what banks charge merchants. Bitcoin is a legit challenger and if eventually it can become more widely adapted, it will lead to lower prices and eliminate transaction fees from the system.”
Indeed, Dane Atkinson, CEO of SumAll, a provider of data tools for marketers that recently released a Bitcoin analytics product, says a big advantage for Expedia is the 1 percent increase in revenue on Bitcoin transactions the travel site will see as opposed to using a platform like Visa. He estimates Expedia will save roughly $1 out of $100 for every hotel purchase made with Bitcoin and he says processing fee savings will likely be more valuable on flights once Expedia expands, as the margins are tighter than hotels.
And that’s money that could go toward marketing budgets. In addition, brands that accept Bitcoin can promote themselves as progressive and as always on the lookout for ways to help their customers, Atkinson says. It also opens the brand to Bitcoin users looking for places to stay. Calling the partnership a win-win for both parties, he says it makes Expedia look like a high-tech customer-focused business and Bitcoin look stable.
And that’s part of the reason Expedia was interested, the rep says. Bitcoin has been on Expedia Global Product vice president Michael Gulmann’s radar for years and many internal employees, particularly in engineering and design, have also been Bitcoin enthusiasts, the rep adds.
The brand started seeing some demand for Bitcoin in comments from customers but also from hotel partners that wanted to provide their own customers with a Bitcoin payment option but found it too costly to implement themselves, the rep says.
Scott Morgan, chief financial officer of Bitcoin wallet, map, and business directory company Airbitz, says the announcement is huge news for Bitcoin.
“The rush to accept Bitcoin is now on. By the end of the year, if your online company does not accept Bitcoin as a form of payment, management will have a lot of explaining to do to their board of directors,” Morgan says.
In addition, Morgan notes companies that get on board with Bitcoin now will get free advertising in the form of buzz as opposed to later when the currency is more mainstream.
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