CheapAir.com adopts Bitcoins to book hotels

• Travel agency began taking digital currency for flights in November
• Hotels and airlines have not yet joined the trend

It may soon become easier for travelers to book entire vacations using Bitcoin, the digital currency.

Online travel agency CheapAir.com has started accepting Bitcoins to make reservations at the more than 200,000 hotels in its worldwide network.

In November, the website began taking Bitcoins for flight purchases, and CEO Jeff Klee said the website gained new customers after that.

"We've been really pleasantly surprised by the response," he says. "We're making a lot more Bitcoin sales than we expected to make."

More mainstream merchants are starting to accept the digital currency, which is as easy to use as Paypal, Visa or MasterCard.

Users buy Bitcoins through online exchanges and store them in a virtual wallet. They can then make online transactions or make purchases in person at places that have the technology to transfer Bitcoins out of virtual wallets.

Merchants like Bitcoins because the transaction fees can be lower than they are for credit cards. Consumers like them because the transactions are immediate, much like cash.

Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, says he expects even more mainstream merchants to adopt the currency.

"Were going to see an ever-growing number of merchants begin to accept Bitcoin," he says. "Bitcoin is a network … Facebook is a network. Why do you join Facebook? Because everyone else is on Facebook. The more people will own and spend the Bitcoin, the more merchants will accept them, and more people will use them."

The D Las Vegas Casino Hotel and Golden Gate Hotel & Casino in Las Vegas recently began accepting Bitcoins for some purchases.

PointsHound, a hotel booking start-up, recently began letting customers earn Bitcoins for their hotel stays.

Klee says that while the travel industry is starting to embrace Bitcoins, it won't become common unless hotels and airlines get on board.

For now, CheapAir.com accepts Bitcoins but exchanges them for U.S. dollars to book with airlines and hotels. The value of Bitcoins fluctuates.

"Until they start accepting Bitcoin, it's a little bit difficult for third-party companies to do it," he says. "The suppliers will be the ones to dictate how widespread they are."