How a good payments experience makes hospitality stronger
How a good payments experience makes hospitality stronger
Anticipating guests’ needs and giving them a first-class experience is the cornerstone of the hospitality industry. As the lodging sector competes for guest dollars, hospitality business leaders are recognizing that an optimized payments experience supports ROI and brand reputation, and improves business and cost efficiency.
Lodging is back on track
Leisure and business travel – and even event volume – bounced back in 2022 and the first half of 2023. Pent-up vacation and travel demand, as well as more companies increasing in-person activities, has returned business to nearly pre-pandemic levels for many hoteliers.
Conversely, profit margins have been affected by inflation, technology investments and staff recruitment and retention efforts that resulted in wage and benefit increases. This has prompted lodging industry finance leaders to explore ways to boost efficiency, control costs and build long-term organizational resilience.
In U.S. Bank’s new survey in collaboration with FT Longitude, lodging executives share their perspectives on the current state of their payment processes and how they are working to improve resiliency through advanced payment strategies.
Throughout the lodging industry, leaders are working to understand how more efficient processes, including payments, can catalyze growth, streamline revenue management and reduce costs.
They know that consumer preferences are continuing to evolve, and to attract and retain loyal guests they are looking for technology that provides security, flexibility and a seamless experience. Three-quarters of survey respondents say that evolving their payments acceptance processes is a vital part of becoming more resilient to remain competitive, adaptable and successful now and in the future.
Resilience and efficiency matter to a hotel’s business customers and suppliers, too. When it comes to back-office payments, 70% of respondents agree or strongly agree that a positive experience is as crucial to retaining business customers as it is to retaining guests.
While 41% of respondents say that a top priority is reducing or eliminating paper checks from business customers and suppliers, they are also exploring other, more strategic ways to evolve processes.
Ability to meet the top three B2B payment priorities
% that are able to meet this demand mostly or all the time
Control payment acceptance costs
Transaction security and fraud management
Reduce or eliminate paper checks
Room for improvement
More than four in 10 (43%) of the leaders we spoke to say their operational efficiency has increased in the past year, but nearly half (49%) believe they still need to achieve payments efficiency. But 68% say that improving payments efficiency is not a crucial part of their current strategy.
While they understand that boosting payments efficiency can help them achieve long-term resiliency, their short-term priorities are different:
Easy guest experience
Increase operational efficiency
Hoteliers are balancing guest satisfaction with controlling expenses
To be a more resilient organization, 68% of the leaders in the survey say that lower payment acceptance costs are vital to controlling overall operational expenses. Security and simplicity are other priorities for a payment acceptance solution that supports resiliency:
Ease of use
Total cost of ownership
Service and support
Not surprisingly, 71% say that the payment experience can make or break a relationship with guests. And they know that an easy, convenient and secure process attracts and retains loyal guests. But there are obstacles:
say that difficulty in system integration prevents progress
say that upfront solution purchase and implementation costs slow transformation
say that hard-to-use systems or interfaces reduce efficiency
How to choose a payments provider
An effective payments solution exists for lodging organizations of all sizes, and having a clear idea of needs can save upfront and long-term costs. This is how to get started.
Research, research, research
Before choosing a new payment-processing solution, determine whether there’s a compatible integration for the existing Property Management System (PMS). Make sure the necessary certifications are in place or can be achieved efficiently, and work out whether there are staff and resources ready to implement the technology.
Consider payment subscription programs
Lower upfront costs of a payment solution by choosing a provider that offers a payment subscription program. These offer fixed monthly payments that include terminal rental fees, merchant acquiring, payment gateway and transaction security. Equipment costs are moved from being a capital expenditure to an operational expenditure, and as an added bonus, there will be access to the latest terminal models as they become available.
Flexibility keeps guests coming back
To stay competitive, hoteliers are providing more ways to pay than ever before. Anticipating evolving consumer preferences is tricky, so many lodging organizations are offering multiple options that suit every kind of traveler and budget.
Here’s how guest payment preferences have changed from last year:1
• 2023 • 2022
Buy now, pay later
Buy now, pay later
1 This question was asked to lodging executives in our survey last year. The list of potential payment options was mostly the same, but two further options were included for participants to choose from.
Transaction security is a priority
According to IBM, the global average cost of a data breach in 2023 was $4.45 million, and 56% of lodging leaders say there has been an increase in inquiries related to transaction security within the past 12 months.
Unsurprisingly, 44% say that fraud management technology is their top investment to support guest retention. Lodging executives understand that security risks threaten every aspect of their business – from immediate loss of revenue and consumer loyalty to a damaged reputation.
Hoteliers have already taken steps to build resiliency into their business models: they have used technology to enhance the guest experience, from mobile check-in, to bundled charges, to biometric services and buy now, pay later.
But they still have work to do: only 27% consider themselves advanced/very advanced in their payment acceptance strategy. If they can carefully assess needs, help stakeholders to understand benefits and illustrate how investing in payments efficiency can control costs and boost brand reputation, hoteliers will create resilient businesses that are ready to meet and exceed travelers’ expectations.
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