Travel in the Metaverse, NFTs and Web3 – Part 1

This year’s most talked about travel destination isn’t the Maldives or somewhere in the Caribbean, but the Metaverse.

As the Metaverse and other concepts including blockchain, Web3 and NFTs gain increasing exposure, so too has their entrance into the world of travel in several innovative ways. (For the less initiated, we have explained the terms at the bottom of this article.)

Over two articles we explore some use cases in the travel industry for these innovations, and contemplate the legal challenges that may arise along the way.

In part one we look at the Metaverse and Postage Stamp NFTs. In part two, we consider document verification and customer loyalty and reward schemes.

Immersive Experiences in the Metaverse

An area that is still in its relative infancy, compared to the rest of travel and Web3, is the use of the Metaverse in both VR (virtual reality) and AR (augmented reality).

Currently, two clear use cases are being explored by travel companies:

• Try before you buy – allowing customers to take a tour of your hotel or resort. Thomas Cook offered a VR experience of a flyover of New York, which resulted in a 190% increase in booked New York excursions. Qatar Airways allows passengers to explore the cabins of their planes through their QVerse VR. Millennium Hotels invites guest to virtual hotel tours.
  
• Providing actual experiences – this might be far from spending a whole week in VR, but escapes for ‘short term breaks’ are being considered and are gaining popularity.

An example of an actual experience is Travelzoo’s ambitious plans to launch its subscription-based META service. The company is positioning TravelZoo: META as a Support (SaaS) eCommerce system which can offer customers immersive vacation encounters combining personal metaverse goods with in-real-life physical goods.

Whilst Travelzoo won’t create the destinations itself, the goal is to work with creators to make experiences exclusively available to Travelzoo: META members. Phase 1 testing began in May 2022.

The legal considerations associated with immersive experiences will include:

• The commercial agreements between the arrangers of experiences and their actual creators
• IP ownership when such agreements are made and what IP is given away, if any, to customers
• Drafting appropriate terms and conditions to deal with codes of conduct for visitors and the consequences for breaching them
• If the advertised product or sample doesn’t match what the customer ultimately receives.

Under current regulations, package holiday providers must comply with their obligations under the (national equivalent of the) Package Travel Directive if they combine two or more of the following:

• Transport of passengers
• Accommodation
• Car rental
• Tourist services that do not form an intrinsic part of the holiday

Could a trip to the Metaverse be a tourist service? Current technology may be a far cry from triggering
the threshold for a package holiday, but it is not impossible to imagine regulations being brought in if
serious consumer money starts being spent.

Postage Stamp NFTs

Airlines and travel companies may start (and some are starting) to provide customers with collectible
NFTs when they visit certain destinations or book specific package holidays. A customer could either
collect these NFTs as they travel and keep them for personal enjoyment/status or sell them if there is a
secondary market.

These collectable NFTs could provide the collectors with certain benefits or perks
(as discussed in more detail below). The benefit for travel companies include:

1. Generating commercial and marketing hype around a collection
2. Increased engagement from customers who would like to collect the NFTs
3. Secondary market sales/royalties if NFTs are sold between users

The airline airBaltic has launched a variety of different location-based NFTs, called the airBaltic City Collection.

Having first launched 100 unique NFTs for the city of Kuldiga, they followed up with subsequent smaller batch releases resulting in fourteen different editions in total.

AirBaltic has also launched the ‘Planies’ NFT collection which consists of 10,000 NFTs and will provide owners with the ability to connect the NFT to the airBaltic loyalty programme. We look at Planies in Part two of this article.

The key commercial issues that travel companies considering issuing NFT collections should consider are:

• Make sure you clearly define the rights you retain, and the rights are you giving away
• Outline how these rights will be dealt with in the event of a fork of the blockchain, ideally you should retain the ability to decide which version of the NFT carries the rights granted to the NFT holder
• Make these rights visible and accessible! It is no good to have carefully drafted terms and conditions, if no one reads them or can easily access them and understand who owns what
• Enforcement may be prejudiced if the travel company is unable to demonstrate that the purchaser (or transferee) saw the terms to which they were agreeing
• Ensure that the ownership agreement / licence is in the footer of the webpage, can be found on the minting (the process of converting the digital files into a blockchain digital asset) page for the NFT, and is on the marketplace when the NFT is being purchased
• Be clear what happens if there is a breach. Even if you do not want to limit an NFT owner’s ability to commercialise their NFT, it is still prudent to set out terms and conditions which, if breached (e.g. if the NFT is being used inappropriately), will terminate the owner’s right to commercialise the NFT
• Be familiar with the tools available to you (via third party sites) to enforce action against such breaches. For example, intellectual property take down requests or reporting fraudulent activity on OpenSea.
• Creators should also ensure that their trade marks cover content made for Web3 or the Metaverse, and in the event that they do not, file new applications.

In our second article, we look at different travel related uses of blockchain technology in the forms of document verification and reward schemes.

Glossary

• Blockchain – a shared ledger made up of “blocks” securely linked together using cryptography. Usually, these are managed by peer-to-peer networks on computers (nodes), where the blocks are verified as true by the majority of nodes. This applies to both existing and new blocks.
• Fork – a fork can happen whenever the users of a blockchain decide to change the blockchains protocol/rules. This will create two versions of the blockchain (with identical information up until the fork), an old chain and a new chain with new “rules”. Forks can either be soft forks or hard forks, the former is where the new chain is backwards compatible with the old chain and so is still technically “one” blockchain. A hard fork is where the rules have changed so drastically, that the new chain is no longer compatible with the old chain and so splits into two separate blockchains.
• Metaverse – virtual realities (VR) which can be accessed through user engagement (via headsets such as Oculus Rift) in 3D generated spaces on platforms such as Roblox and Fortnite.
• NFTs – Non-fungible Tokens, which are unique digital assets stored on a blockchain, which may reference image, video or audio files.
• Web3 – a decentralised, trustless, and open online ecosystem that employs blockchain to provide users with access to infrastructure without any intermediaries. For example, NFTs, the Metaverse, decentralised apps, DAOs (decentralised autonomous organisations) are all part of Web3.