The hospitality and travel sectors have endured a turbulent few years, with the pandemic disrupting operations, travel restrictions leading to a decline in tourism and subsequent layoffs. Now that the public has resumed travel and is eagerly seeking accommodation, industries are on the path to recovery. However, traditional payment methods and outdated technologies continue to hinder industry progress and compromise the traveler experience.
Recent research has shown that cash, while still a preferred means of payment, leads to stress for consumers during travel due to concerns about flight and the cost of currency conversion. Many travelers prefer digital wallets, but most hospitality merchants still operate with traditional payments, with 75% purchasing new ones. payment technology only once every three to ten years, or even less often. This approach not only fails to take into account consumer preferences, but also neglects the interests of hospitality workers, with 82% of them in favor of instant payments for advice. Implementing real-time payment solutions in the travel and hospitality industries promises to improve customer experience and encourage repeat visits while improving staff morale and retention.
Customers and workers want faster payments
Instant payments could benefit all sectors of the travel and hospitality industries as customers enjoy a better experience, businesses see higher revenues, and workers get faster payments.
Digital wallets have become essential to travel and hospitality experiences.
A recent study found that digital wallets have become an essential travel companion for 74% of consumers, particularly affluent and millennial travelers, at 83% and 82%, respectively. PYMNTS Intelligence research also found that customers using a digital wallet at a restaurant spent an average of $44 per visit, compared to just $33 spent by customers using traditional payment methods.
74%
travelers say that digital wallets have become an integral part of the travel experience.
The same spending trend applies to the retail sector, where the average retail purchase among digital wallet users is $95, compared to $81 for non-digital users. This leads to two conclusions: first, digital wallet users are more satisfied with their payment experiences and are therefore inclined to spend more, and second, sites offering digital wallet interfaces can increase their revenue.
Instant payment of tips could help hotels solve their staffing problems.
Hotels have faced recruiting challenges since the start of the pandemic, but instant payment of tips could offer a transformative solution for better recruiting. A new report from PYMNTS Intelligence says that on average, hospitality workers earn about $10,000 in tips each year, nearly 60 percent of which is paid in cash. However, nearly 79% of these workers would choose instant tip payments given the choice, 85% of workers who receive tips via instant digital payments are very satisfied with the real-time methodology. By offering instant payments, hotels could gain a crucial staffing advantage, incentivizing prospects to work for them rather than their competitors.
Real-time payments Seamless disbursements for business travel
Business travel is an important source of revenue for the travel and hospitality industries. However, travelers typically cover their expenses out of pocket, relying on reimbursement from their company later. Speeding up this process could go a long way in easing financial stress and improving the overall experience for business travelers.
78%
employees are satisfied instant payments for professional expenses, compared to 70% for all payment methods combined.
43% of consumers now prefer instant payments for reimbursement of business expenses.
This figure represents a marked increase from the 40% who chose instant payments in January 2023 and the 37% who did so in June 2022, with positive word of mouth likely driving this increase. Employee satisfaction with instant payments also reached a peak of 78% in 2023, compared to 70% for all payment methods.
These trends highlight the importance of offering instant payment alternatives for reimbursement of business expenses to meet the growing expectations of employees. Additionally, they highlight the value of instant payments for hospitality and travel businesses serving their regular customers.
American Express recently launched a new instant payment option for business travelers.
The new service allows businesses to provide virtual cards to their employees via American Express Global Business Travel's Neo1 expense management platform. Therefore, business travelers can manage their own travel arrangements and expenses without the burden of direct payments and subsequent reimbursement requests. This innovation not only automates expense management, including employee expenses, but also gives employers the ability to set specific spending limits and permissions. As digital payments become more widespread, employees increasingly expect their employers to issue reimbursements faster than traditional paper-based methods.
A Faster Payments Advantage for Travel and Hospitality Businesses
Although businesses face challenges in adopting new payment technologies, savvy companies in the travel and hospitality industry are recognizing the competitive advantage that instant payments offer and are seizing the opportunity.
Hoteliers see the potential for faster payments, although challenges remain.
A 2024 lodging survey of more than 10,000 properties worldwide found that 71% of hoteliers believe guests perceive guest technologies as “empowering”. These technologies include not only payments, but also mobile check-in and check-out, digital keys, digital concierge services, in-room tablets and others.
Importantly, contactless payments are among the most promising solutions, highlighting the importance of offering fast and convenient payment options that reduce the need for physical contact.
However, 21% of respondents say this technology can also be a source of friction for customers, particularly if not implemented correctly. At 69%, the difficulty of integrating new technologies with existing systems was cited as the industry's top challenge, leading to operational inefficiencies, data silos and poor customer experience. Another major challenge is maintaining the security and privacy of customer data, at 38%. This is a key priority for hospitality professionals, with 76% saying they prioritize adopting robust cybersecurity measures to protect guest information and ensure privacy compliance. data.
While 80% of hoteliers cite guest retention as their top priority, increasing employee productivity is a close second at 76%. Of the employee-facing technologies with this potential, digital tipping was ranked as the most promising.
Some hotel companies are forging strategic partnerships with instant payment providers for tipping payments.
Davidson Hospitality Group, for example, recently partnered with a digital tipping platform provider. Electronic tip, allowing customers to tip via their smartphone by scanning a QR code, tapping a banner on their screen and selecting their preferred payment method. The service not only disburses immediate funds to service staff, but also provides organizations with reporting features that make it easier to analyze tipping trends, staff performance and customer satisfaction.
Why travel and hospitality businesses need real-time payment capabilities
Real-time payments have become a valuable tool for businesses across many industries, and the travel and hospitality industries are no different. Consumers expect convenience, speed and efficiency in all aspects of their travel and hospitality experiences, and traditional payment methods are failing to meet their demands due to delays in processing times. processing and potential security issues. Real-time payments offer a solution tailored to the preferences of the modern traveler, enabling instant transactions that improve the overall experience, from booking accommodation to purchasing tickets to paying bills.
Travel and hospitality staff are also demanding real-time transactions. Rapid access to income is crucial for employee retention and morale, especially in industries known for seasonal fluctuations and variable income streams. Real-time payments empower staff by providing instant access to their salaries, enabling better financial planning and reducing the stress associated with traditional payroll cycles. This not only promotes a more engaged and motivated workforce, but also enhances the attractiveness of industries.
Embracing real-time payments is a strategic imperative for travel and hospitality businesses looking to thrive in an increasingly competitive landscape. By meeting customer and staff demands for speed, convenience and security, businesses can improve operational efficiency, increase customer satisfaction and foster a more resilient workforce.
Customers should be able to pay for their travel as easily as they pay for other products, from electronics to dinner. Point of Sale Solutions; digital wallets; buy now, pay later; and seamless payment experiences that work on any device all have a role to play. A single system that can simultaneously access different payment methods, including vouchers, loyalty points and bank transfers, will reduce customer hassles and, therefore, trip abandonments.
Managing Director – Global Open Banking and API Manager
Source: Mallick, A. 5 Ways Payments Can Support the Travel Industry. Accenture Banking Blog. 2022. https://bankingblog.accenture.com/5-ways-payments-can-support-the-travel-industry. Accessed April 2024.
