How Hotels Can Capture A Greater Share of Online Bookings Through Payments

By Neil Dsouza, Country Manager, SEA, Japan & Australasia, Ingenico ePayments

New figures released by Phocuswright at Web in Travel, indicate online travel agents (OTAs) currently enjoy a 70% share of online hotel bookings across Asia, while reservations made directly on hotel websites account for less than 30%.

OTAs have become a critical distribution channel for hotels, making their properties more visible and bringing them new business. Additionally, hotels are profiting from the Billboard Effect – whereby hotels listed on one or more OTAs tend to receive bookings not only through that channel but also through additional channels such as their own website, mostly due to hotel customers visiting numerous sites for research before making their final booking.

With that said, the downside of the huge growth in OTAs has been felt, often painfully, by hoteliers both in financial terms due to OTA commissions, as well as loyalty and guest retention. We estimate that hotels receive an average of 75-85% of the revenue per booking from an OTA, sometimes even less. And despite their stay on the property, that guest then becomes a loyal customer of the OTA where they booked.

Rate parity agreements usually demand that hotels offer their best rates to OTAs without undercutting those on their own sites. As Phocuswright points out, there is a general perception that OTAs are cheaper than booking direct. Couple that with the fact that many OTAs offer a better online user experience and mobile optimization, and there in the disparity begins to be revealed.

Hotels are being challenged to meet the growing demands of customers on their own websites, particularly when it comes to an easy quick and seamless payment processing solution. This is especially the case with hotels in Asia. So how can hotels gain a greater slice of the online booking market in the face of increased competition in the sector and yet remain profitable?

Advance payment solutions offer a key to unlocking the problem

The inability to process payments securely through the hotel’s website has prevented many hoteliers from offering attractive pre-paid rates. Meanwhile, Asia’s rapidly growing number of millennial shoppers is forcing merchants to bring the payment experience to them anywhere and everywhere they may be -- via smartphones and tablets.

Additionally, the user experience for payments should be more guest-centric and offer more options. Depending on the hotel website, guests may be required to visit another site for currency exchange verification and only then use their credit cards to hold the reservation, creating foreign currency exchange concerns and confusion for guests. The majority of leading OTAs have addressed this problem by offering customer currency pricing.

The check-out process on the hotel website can also be limiting and offer fewer options than those provided by their OTA counterparts. Consumers are by and large looking for security, convenience and (especially with millennials) the best deals. Essentially, they look for: i) The ability to lock in their price and pay in local currency; ii) the ability to check out using a preferred local payment method; iii) competitive pricing (including pre-paid rates in order book their rooms at the best price).

Hotels that want to compete with OTAs should work towards these elements as well. However, it’s clear that payment processing presents a number of challenges to many hotel groups in Asia.

How can hoteliers in Asia deliver guests a 5-star payment experience?

Secondly, hoteliers in Asia should have the ability to collect payments over the phone securely. This means that the agent should be able to process the payments during a call without interruption or requiring the reservation agents or call centres to handle any credit card data. One solution is for customers to enter their credit card details or 3-digit security code using their phone keypad. Tokenization, card scheme surcharging, BIN look-up and recurring payment are all supported and card data is neither perceptible to agents nor stored in the call recording.

Likewise, the email link payment solution, which allows guests to complete the payment without collecting any information over email/phone/fax, can facilitate hoteliers to handle the payment hassle of email bookings in a secure manner and be an alternative option for inbound call bookings.

Thirdly, hoteliers should provide an integrated solution which is open to both smart terminals and physical world payments. Payment vendors should provide hoteliers with a payment solution at all touch points, allowing them to cultivate customer loyalty, gain trust without threats, gain more revenue per booking and meet their guests’ changing expectations.

And lastly, there is a trend of payments moving from offline to online. Manual transactions, which are still being carried out by a surprising number of even large chains, present not only a resource-intensive process, but also the (much) greater possibility of human error and data security breach. By comparison, online payments requires less resources and because there is no manual handling of card data, there is no chance for data breaches, and it provides customers with a PCI Compliant experience，which is especially useful for environments such as food and beverages (F&B), spas and conferences.

The Future of Payments

In hospitality and especially in Asian hospitality, payments often began rather simply: with credit cards and occasionally with cash. However, cultural preferences have stimulated a range of alternate payment methods across the Asia Pacific region including Tenpay, Alipay, Konbini and PayPal. These increase convenience and enable a wider demographic of consumers to shop online, and hotels would be wise to take note. Especially with the proliferation of mobile adoption in the region, payments are evolving rapidly, offering both hoteliers and consumers more options to reach their goals.

As social media platforms evolve, payments will play a much bigger role within apps such as Facebook Messenger, WeChat, Line, Kik, Telegram and Slack. Sophisticated messaging bots will allow consumers and online business to engage in social or ‘conversational’ commerce and hotel groups can leverage these payment technologies to provide enhanced, guest-centric transactions on their websites.

Gamified check outs are also just beginning to appear within a small number of eCommerce sites and are expected to accelerate in the next few years. Providing an incentivized check out whereby guests can spin a wheel to receive an add-on at the hotel, or can win extra loyalty points for example, can make the booking experience enjoyable and offers the hotel a leg-up on what the OTA offers. Preliminary data shows significant conversion increases (+/-15%) among eCommerce customers.

With the right payment partner at their side, hotel groups have the possibility of leveraging numerous trends that will affect the travel in the coming years, creating new and more secure shopping experiences and developing deeper relationships with new customers.

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Neil Dsouza Country Manager, SEA, Japan & Australasia, Ingenico ePayments