What seems to be the biggest problem is the actual number of people who want to pay with BTC at all.
That seems indeed to be a problem. In some communities like Bitcoin Beach the high acceptance is only possible due to Bitcoin supporters having migrated there (either foreigners or from other locations in the country). So in this case you have, as a merchant, a significant incentive to accept Bitcoin even if this means to pay a fee to a payment processor.I would say that Bitcoin Beach (El Salvador) still has one significant advantage over some of the other already mentioned locations, namely that it is relatively close to tourists from the US who are known to spend a lot, and are also very familiar with cryptocurrencies. On the other hand, someone from Europe who wants to travel to El Salvador or Boracay will need to spend a lot of money and time to get there at all.
I think that these locations would achieve much more if they did promotion in such a way as to give certain discounts on, for example, hotels to those who would pay in advance with BTC. People need to be attracted somehow, and I think that simply too little has been done for such projects to succeed.
And yes, there are the known problems with Bitcoin payments, apart from the already mentioned inconvenience of on-chain payments due to the fees. In bull markets the people tend to hold, they don't want to "lose" their "precious Bitcoins" spending them, forgetting that they could simply re-buy BTC regularly (via DCA for example, or estimating the amount they have spent and rebuying it). While in bear markets, people tend to panic and cash out to fiat. We've still not advanced that much since 2013 it seems ![Sad](https://bitcointalk.org/Smileys/default/sad.gif)
It seems like an eternal problem that BTC has, although people started to be much more careful about it only after the bull run of 2017. There are more and more people who are pushing Bitcoin towards the idea of digital gold, and this is somehow dissuading people from using it as a currency - because why spend today if it will be worth twice as much
tomorrow?
It's however possible that the stricter KYC-related regulations for "cashing out" could drive a new wave of demand for Bitcoin payments, and this could help these "circular" communities too.
That makes sense, because why wouldn't I simply spend BTC in some exotic country instead of converting it to fiat and at the same time be forced to pay perhaps too much tax. In addition, considering how obsessive CEXs have become with coin analysis, unpleasant situations can always happen. We all probably have coins that at some point were part of some suspicious transaction, so even though this does not mean that we are guilty of it, we should not doubt that it can always be used against us.