Check-In Time: Hospitality Welcomes Real-Time Payments

After the devastating downturn brought on by the pandemic, the global travel, tourism and hospitality industries are poised for remarkable growth this year. In fact, international arrivals are projected to surge by more than 15% in 2024 from 2023, finally surpassing pre-pandemic levels. By 2028, travelers are expected to embark on 1.4 billion cross-border trips, marking a 17% increase from the record highs of 2019. This expansion opens a world of opportunities for travel and hospitality businesses eager to capture a larger share of the bustling market of tech-savvy customers demanding seamless and efficient digital services everywhere they go.

Promising as these developments are, the travel and hospitality sectors are not without their challenges. Many firms continue to struggle with outdated and complex payment systems that hinder efficiency and profitability. A recent survey revealed that a significant number of travel finance executives (66%) believe their payment processes are holding them back. To thrive in this rapidly evolving environment, travel firms must modernize their payment systems. By adopting innovations like real-time payment solutions, they can enhance cash flow, streamline operations and meet the high expectations of today’s travelers, positioning themselves for success in the booming market.

Travelers’ Growing Demands for Real-Time Payments

Upgrading Hospitality Payments Systems

How Real-Time Payments Help Hospitality Balance Sheets

Deploying Real-Time Rails to Improve Hospitality Payments

Travelers’ Growing Demands for Real-Time Payments

Travelers expect the same seamless payment experience while traveling that they enjoy in other aspects of their daily lives. With so many payment options available, these consumers are increasingly gravitating toward the easiest and fastest method: real-time payments.

Travelers’ top payments priorities include ease of use and security.

According to a recent survey, travelers prioritize ease of use and security when it comes to payments. They also tend to avoid relying on credit or financing options like buy now, pay later (BNPL), largely due to concerns about payment reliability. In fact, 73% of travelers report having experienced payment acceptance issues or declines at some point. These preferences underscore the need for more dependable payment solutions, which is why digital wallets leveraging real-time payment rails are gaining traction. By employing advanced technologies such as card tokenization and enhanced customer authentication protocols, these wallets offer security features that enable banks and card issuers to verify user identities with greater confidence, significantly reducing the risk of fraudulent transactions and, consequently, the likelihood of payment declines.

77%

of travelers prioritize travel experience over cost.

Travelers care more about the experience than the cost.

A recent study revealed that 77% of travelers value having the right travel experience over the cost of their trip. This insight presents a compelling opportunity for hospitality firms considering the adoption of real-time payment systems. While implementing these new systems may involve initial costs, the data suggests that consumers are willing to pay extra for the experiences they truly want. This should reassure hospitality businesses that investing in advanced payment technology could yield positive returns through increased customer satisfaction and loyalty.

Upgrading Hospitality Payments Systems

The hospitality sector’s existing payments stack is highly complex, designed to handle payments from across the globe. Upgrading these systems to improve efficiency is crucial, particularly for businesses striving to meet evolving customer payment expectations.

Upgrading payment systems is an imperative for travel companies.

47%

of hospitality firms earning more than $1 million annually utilize instant payments.

In a 2024 study of payment trends in travel, 90% of global travel firm executives surveyed said upgrading their payment systems and financial operations technology will be a top priority this year. To this end, roughly 5 in 6 of these executives reported increasing their investments in payment technology upgrades.

Real-time payments could play a key role in these renovations. Currently, just 47% of hospitality firms earning more than $1 million annually leverage instant payments, along with 38% of firms in the $250,000 to $1 million revenue range and 37% of those earning less than $250,000. Among the firms that used real-time payments in the last year, 79% of those that sent them and 81% of those that received them indicated they plan to increase their usage in the next year.

Elavon introduces a hospitality payments solution designed for easy integration.

The Elavon Cloud Payments Interface provides an embedded solution for hotels and hospitality businesses and their guests via an application programming interface (API). According to a press release, the new offering enhances guest experiences by integrating payment capabilities seamlessly throughout the entire journey, from booking to checkout, with real-time data synchronization across systems. The solution’s API streamlines the development of cloud-based payment tools. This enables easy integration with third-party payment providers, scalable device management and robust fraud protection, while ensuring compliance through automatic software updates. For hospitality firms hesitant to update their payment systems, the Cloud Payment Offering eliminates the need for major technology overhauls, simplifying the integration process into existing technology stacks.

How Real-Time Payments Help Hospitality Balance Sheets

Instant payments benefit not only travelers but also the hospitality firms adopting them. For these businesses, real-time payment systems improve back-end efficiencies and cash flow management, leading to healthier balance sheets and potentially higher profit margins.

Hospitality firms utilizing instant payments report improved financial health.

According to a recent PYMNTS Intelligence study, 82% of small to mid-sized businesses (SMBs) in the hospitality sector that utilize real-time payments as their primary method for sending payments report very or extremely healthy balance sheets. In comparison, only 66% of those relying on non-instant methods show similar levels of financial strength. While 71% of SMBs using push-to-debit as their main payment method also report strong balance sheet health, this is still slightly lower than those utilizing real-time payments, with push-to-credit users trailing further at 65%.

82%

of hospitality SMBs that primarily use real-time rails to send payments have very or extremely healthy balance sheets.

Exploring the data reveals other key benefits for hospitality SMBs utilizing real-time rails. Reduced risk emerged as the primary advantage, cited by 57% of respondents, closely followed by convenience (55%) and speed (52%). In addition, 44% of respondents highlighted better cash flow management as a distinct benefit of instant payments, with 15% ranking it as the most important benefit. Collectively, these factors contribute to significantly improved balance sheet health for travel SMBs.

Deploying Real-Time Rails to Improve Hospitality Payments

Real-time payments are revolutionizing the travel and hospitality industries, addressing evolving customer demands while simultaneously bolstering the financial health of businesses. As travelers increasingly expect seamless and instantaneous experiences, the adoption of real-time payment systems has become crucial for hotels, restaurants and other hospitality businesses.

From the customer perspective, real-time payments offer unparalleled convenience and flexibility. Guests can now settle their bills instantly, eliminating the need for lengthy checkout processes or carrying large amounts of cash. This swift transaction capability extends to various services within the hospitality ecosystem, from room service to spa treatments, enhancing the overall guest experience. The ability to process payments immediately also allows for more dynamic pricing strategies, enabling businesses to offer last-minute deals or adjust rates in real time based on demand.

For hospitality businesses, the benefits of real-time payments encompass much more than customer satisfaction. These systems significantly improve cash flow management, a critical factor in maintaining healthy balance sheets. With instant payment processing, funds become immediately available. This reduces the lag time between service provision and revenue realization. Consequently, the improved liquidity allows hospitality firms to better manage their operating expenses, invest in improvements and handle unexpected costs more effectively.