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Fiserv: Payments Will Decide Travel Industry’s Winners And Losers In The 2020s

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Certain things will never change when it comes to travel and hospitality. Consumers will always want clean rooms, punctual flights and polite staff. Even so, significant changes, many brought about by younger consumers and increasingly digital operations, are producing shifts in the hospitality industry — shifts that are cementing the bonds of connected commerce, promising to leave behind those operations that fail to evolve.

In fact, a new PYMNTS discussion featuring Karen Webster and Jacob Buckstead, Fiserv’s head of Travel and Hospitality Solutions, shed new light on those hospitality industry changes, and how payments is not only playing a main role in all that activity, but is a prime player in the emerging new(ish) world of hospitality.

 

One of the main ways to see that is through the use of mobile wallets. By 2021, according to projections, some 20 percent of travel bookings will involve mobile wallets, according to Buckstead. What’s driving much of that trend is what also drives much of the other payment changes in retail — and will continue to be a growing force in travel and hospitality.

“What you will see in the coming years,” he said, “is more of the Uber- and Lyft-type experiences in the hotel industry.”

First Past the Line

Indeed, he said, the preference for friction-free, seamless and trustworthy transactions — and related experiences such as check-in via mobile phones and other offerings — will beat out price considerations for a good number of travel and hospitality consumers. “The people who do it first, and can do it well, will win loyalty from their customer base, and everyone else will be playing catch-up,” Buckstead said.

And those enhanced payment experiences will likely translate to other areas of travel and hospitality, not the least of them being loyalty programs, connected to relevant experiences that might include restaurant meals or travel excursions.

“What you’ll see over the next few years is continuing innovation until someone gets a considerable market share that hits the millennial demographic,” noted Buckstead. “Then everyone else follows. We are seeing some movement on this already.”

More evidence of such general change recently came from Marriott International, via the launch of its Homes & Villas homesharing program. The idea behind that effort is for Marriott to offer a small set of professionally managed luxury properties to high-earning members of its loyalty program, Bonvoy. Marriott consumers can earn and redeem Bonvoy points when they book and stay in more than 2,500 properties. As Marriott envisions it, the ideal Home & Villa customer is a repeat business traveler who uses those Bonvoy loyalty points for high-end leisure trips.

“I think it’s huge,” Buckstead said of the relatively young Marriott program. Indeed, Marriott’s practice of seamlessly loading loyalty programs and rewards for Bonvoy members is, in his view, among the hotel brand’s most valuable operating tactics.

Loyalty programs in the hotel space are also changing in other ways.

The old, traditional loyalty programs that revolved around mere points are still around, and likely will be for a long while. But changes are coming, driven in large part, again, by the preferences of millennials and other travelers. Loyalty programs are becoming more sophisticated in their use of consumer data, which can help anticipate consumer preferences — in turn helping hotels and other travel operators offer better rewards. As in all areas of retail, consumers want more personalization and personalized services, which is happening in travel and hospitality. Personalization can then lead to even more customer loyalty, in a kind of virtuous cycle.

That really makes sense when you start digging deeper into the travel and hospitality expectations of millennials and Gen Z consumers — people who have come of age in a digital and mobile world, and would seem to have little patience for a relatively clunky and friction-filled consumer experience.

As recent PYMNTS research into the connected consumer and connected commerce has shown, one in every five millennials would abandon travel booking processes if their preferred payment method was not offered. In fact, according to one survey, 20 percent of customers will opt against completing a travel or hospitality reservation if it turns out their preferred payment method is not offered — that holds true not only for, say, card versus mobile payment options, but also for local payment methods.

That’s just one big source of likely friction.

That not all that’s happening, especially when it comes to those younger travelers. One of the biggest trends is that hotels are making their own shopping and check-in processes more automated and streamlined. That leads to more features such as one-click or mobile (contactless) check-in procedures, direct booking services and rooms outfitted with so-called smart technology.

Higher Stakes and More Payment Options

The stakes are pretty high — and getting higher.

Millennials and Gen Z account for a growing portion of the consumer population, with millennials now comprising some 20 percent of all global travelers. Those travelers are younger and more energetic than their older counterparts and put more of a premium on experiences than past generations, making them a highly sought-after demographic.

The lesson of all that data and all those trends is becoming pretty clear. Platforms and travel and hospitality operators that want to gain access to these customers must keep up with fast-changing travel trends and, most importantly, payments, according to experts cited in the latest PYMNTS Commerce Connected Playbook.

Those newer and more seamless forms of payments, according to Buckstead, are likely to include point-of-sale installment payment plans, much more often than is the case now. Such a payment method can help a business in the travel and hospitality space gain that edge he was talking about earlier. “I think it is one of the lowest-hanging-fruit opportunities for hotels today,” he told Webster.

For example, Buckstead noted, millennials will soon make up the majority of business travel. “It will be super appealing,” is how he described those installment payment methods. So, too, will other payment methods that could appeal to specific markets, which could include Germany, where most consumers don’t use credit cards with the same ferocity as U.S. travelers.

The enduring factors will remain in travel and hospitality. But as Buckstead and PYMNTS research indicate, many of the real changes will come from payments. And now is the time to get on board with that innovation.

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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