From Trips to Tips: How Faster Payments Can Elevate Travel and Hospitality
The hospitality and travel industries have endured a turbulent few years, with the pandemic bringing operations to a halt as travel restrictions led to declines in tourism and subsequent layoffs. Now that the public has resumed its travels and is eagerly securing accommodations, the industries are on the road to recovery. However, legacy payment methods and outdated technologies continue to impede industry progress and compromise travelers’ experiences.
Recent research has shown that cash, while still a preferred payment method, causes stress for consumers during travel due to concerns about theft and the cost of currency conversion. Many travelers prefer digital wallets, but most hospitality merchants are still running on legacy payments, with 75% purchasing new payments technology only once every three to 10 years, or even less often. This approach not only fails to accommodate consumer preferences but also overlooks the interests of hospitality workers, with 82% of the latter favoring instant payouts for tips. Implementing real-time payment solutions in the travel and hospitality sectors holds the promise of enhancing customer experiences and encouraging repeat visits while also boosting staff morale and retention.
- Customers and Workers Want Faster Payments
- Real-Time Payments Smooth Business Travel Disbursements
- Faster Payments’ Edge for Travel and Hospitality Companies
- Why Travel and Hospitality Firms Need Real-Time Payment Capabilities
Customers and Workers Want Faster Payments
Instant payments could benefit all reaches of the travel and hospitality industries, as customers enjoy a better experience, companies see higher revenues and workers get faster payouts.
Digital wallets have become essential to travel and hospitality experiences.
A recent study revealed that digital wallets have become an indispensable travel companion for 74% of consumers, especially 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 only $33 spent by customers using traditional payment methods.
74%
of travelers report that digital wallets have become an integral part of the travel experience.
The same spending trend holds true for the retail sector, where the average retail purchase among digital wallet users is $95, in contrast to $81 for non-digital wallet users. This points to two conclusions: First, digital wallet users are more satisfied with their payment experiences and are therefore inclined to spend more, and second, venues offering digital wallet interfaces can increase their revenue.
Instant tip payouts could help hotels solve staffing issues.
Hotels have faced staffing struggles since the beginning of the pandemic, but instant tip payouts could offer a transformative solution for better hiring. A new PYMNTS Intelligence report indicates that, on average, hospitality workers earn about $10,000 in tips each year, almost 60% of which are paid in cash. However, nearly 79% of these workers would select instant tip payments if given the choice, and 85% of workers who do receive tips via instant digital payouts are highly satisfied with the real-time methodology. By offering instant payouts, hotels could gain a crucial staffing advantage, enticing prospects to work for them rather than competitors.
Real-Time Payments Smooth Business Travel Disbursements
Business travel is a significant revenue driver for the travel and hospitality industries. However, travelers typically cover expenses out of pocket, relying on subsequent reimbursement by their companies. Accelerating this process could be a huge help in alleviating financial strain and improving business travelers’ overall experience.
78%
of employees are satisfied with instant payments for business expenses, compared to 70% across all payment methods.
43% of consumers now prefer instant payments for business expense reimbursements.
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 being the driving force behind the uptick. Employee satisfaction with instant payments also reached a high of 78% in 2023, compared to 70% across all payment methods.
These trends underscore the importance of providing instant payment alternatives for business expense reimbursements to meet the growing expectations of employees. Additionally, they highlight the value of instant payments for hospitality and travel companies in serving their regular customers.
American Express recently launched a new instant payment option for corporate travelers.
The new service enables businesses to provide virtual cards to their employees through American Express Global Business Travel’s Neo1 spend management platform. Consequently, business travelers can manage their own travel arrangements and expenses without the burden of out-of-pocket payments and subsequent reimbursement requests. This innovation not only automates expense management, including employee expenditures, but also gives employers the option to set specific spending limits and permissions. As digital payments become more widespread, employees increasingly expect their employers to issue reimbursements faster than the traditional paper-based methods.
Faster Payments’ Edge for Travel and Hospitality Companies
Although businesses face challenges in adopting new payments technology, savvy travel and hospitality firms recognize the competitive advantage instant payments offer and are seizing the opportunity.
Hoteliers see faster payments’ potential — though challenges remain.
A 2024 lodging survey representing more than 10,000 properties worldwide found that 71% of hoteliers agree that guests perceive guest-facing technologies as “empowering.” These technologies include not only payments but also mobile check-in and checkout, digital keys, digital concierge services, in-room tablets and others.
71%
of hotel operators believe that guests view guest-facing technologies as empowering.
Significantly, contactless payments rated highest among the most promising solutions, emphasizing the importance of offering fast and convenient payment options that reduce the need for physical contact.
However, 21% said this technology can also be a source of friction for guests — in particular, if it is not properly implemented. At 69%, the difficulty of integrating new technology with existing legacy systems was cited as the industry’s top challenge, resulting in operational inefficiencies, data silos and poor guest experiences. Another major challenge is maintaining the security and privacy of guest data, at 38%. This is a key priority for hotel professionals, with 76% saying they are prioritizing the adoption of robust cybersecurity measures to protect guest information and ensure data protection compliance.
While 80% of hoteliers named driving guest loyalty as their top priority, increasing employee productivity was a close second, at 76%. Of employee-facing technologies with this potential, digital tipping was ranked the most promising.
Some hospitality firms are forging strategic partnerships with instant payment providers for tip payouts.
Davidson Hospitality Group, for example, recently partnered with digital tipping platform provider eTip, enabling customers to offer gratuities via their smartphones 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 offers organizations reporting features that facilitate analysis of tipping trends, staff performance and guest satisfaction.
Why Travel and Hospitality Firms Need Real-Time Payment Capabilities
Real-time payments have emerged as a valuable tool for firms across a wide swath of industries, and the travel and hospitality sectors are no different. Consumers expect convenience, speed and efficiency in every aspect of their travel and hospitality experiences, and traditional payment methods fail to satisfy their demands due to delays in processing times and the potential for security issues. Real-time payments offer a solution tailored to the modern traveler’s preferences, allowing for instantaneous transactions that enhance the overall experience, from booking accommodations to purchasing tickets to settling bills.
Travel and hospitality staff are also clamoring for real-time transactions. Timely access to earnings is crucial for employee retention and morale, especially in industries known for their seasonal fluctuations and variable income streams. Real-time payments empower staff by providing instant access to their wages, enabling better financial planning and reducing the stress associated with traditional payroll cycles. This not only fosters a more engaged and motivated workforce but also enhances the industries’ appeal.
Embracing real-time payments is a strategic imperative for travel and hospitality businesses seeking to thrive in an increasingly competitive landscape. By meeting the demands of customers and staff for speed, convenience and security, firms can enhance operational efficiency, drive customer satisfaction and foster a more resilient workforce.
Customers should be able to pay for travel as easily as they pay for other products — from devices to dinner. Point-of-sale solutions; digital wallets; buy now, pay later; and frictionless checkout experiences that work on any device all have roles to play. A single system that can simultaneously access various payment methods including vouchers, loyalty points and bank transfers will reduce customer pain points and, as a result, journey dropouts.”
Managing Director — Global Open Banking & API Lead
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.
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