Travel Payments

Travel’s Long Journey Back To Normal

While there are very few industries that have not been affected by the COVID-19 outbreak in some way,  travel as a vertical has been hit uniquely hard.

Consumers everywhere are paying heed to government #stayathome edicts, virtually grinding all travel — international, domestic, business and leisure — to a near-screeching halt. Layer over that a planet full of unhappy consumers who were scheduled to travel for spring and who have canceled en masse and one has a near-perfect storm of events to upend the entire industry in the cooler.

“It’s been really unbelievable the amount of stress that’s put on the system. It was not designed for mass cancellations in every segment across the board, in every region in the country and in every nation in the world,” American Society of Travel Advisors  Executive Vice President of Advocacy Eben Peck noted in a recent digital roundtable discussion of the future of the travel industry with  Karen Webster, Flywire Industry Director of Travel Colin Smyth and  Homelike CEO Dustin Figge, noting that at this point almost every player touching any part of the industry is trying to manage the ins-and-outs of the crisis day to day — from processing refunds to dealing with chargebacks coming in waves.

Triage mode is the order of the day, the panel agreed — as airlines, hotels, home-sharing firms, hosts and travel agents are scrambling to respond to a wholly unprecedented situation with no pre-written rules to apply. Some, the panel noted, are doing amazingly well in this regard — and going above and beyond in terms of the efforts being made. There are travel agents who are helping travelers secure refunds who didn’t originally make the booking with them. Others have not, and had to be explicitly reminded by regulators that while they were free to offer consumers vouchers for future travel for canceled trips — they are legally required to pay refunds in the event the consumer doesn’t want the voucher.

But whether soaring or struggling with the present crisis, the bigger question the industry as a whole is asking is what the future will look like when this moment has passed and when exactly that passage will happen.

“This has been super devastating for a lot of businesses and the travel industry has been hit incredibly hard, particularly on the supply side. But we are also seeing a lot of very positive changes happening now in a very, very short period of time. And I think there something positive that can come out of this crisis,” Homelike’s Dustin Figge noted.

The Emerging Push Toward Improvements 

While there is not much good to be said for an industry-wide shut down that has essentially grounded much of the travel for the first quarter of the year, it does have the undeniable advantage, the panel agreed, of creating a lot of time to think about how they can do better — both when the next crisis inevitably hits and in their day-to-day operations.

“We are having conversations … with clients and partners that under more normal circumstances we probably wouldn’t be able to get an hour in the past. Today, they are ready to listen and have brainstorming sessions about derisking the business or how to take 2021 projects and turn them into 2020 projects now,” Flywire’s Colin Smyth said.

Getting through the next six to eight weeks, he noted, is critically important to these businesses. And why, Smyth said, there have been so many rapid adoptions of things leisure and business travelers have long been asking for — such as more expansive refund policies that allow consumers to decide to cancel without penalty within 48 hours of a trip; and more flexible and customizable booking options. The actions, combined with things like federal bailout funds, are a few of the short-term solutions that might buy travel firms some breathing room to get through the peak of the industry crisis.

But, Figge noted, these short-term fixes are just that — short term — and the smart players, the ones that are going to survive and thrive in the aftermath, are starting to turn their thoughts to the longer-term solutions now.

“Instead of trying out a huge pivot that will last for a few weeks and then be done, we are rather trying to make small changes. I think if there’s one good thing about [the pandemic], it’s a chance for acceleration of the adoption of technology and products in travel if we are smart about taking advantage of the opportunity of a crisis.”

What is the best way to do that and when will taking the opportunity visibly payoff? Both, the panel noted, are too hard to call just yet.

The Coming Change 

That travel will be a fundamentally different vertical at the end of the COVID-19 pandemic then it was at the outset is, at this point, unquestionable, the panel agreed. Whatever comes next and goes by the name of “normal” will likely look a good deal different than the normal we knew pre-2020. And while the panel agreed there is no single surefire path for travel firms to follow to get back on track, what all the firms that come out of this crisis not only surviving but positioned to thrive will have in common will be the consumer. Specifically, they noted, how protected they made the consumer feel, how helped, how special and how safe. The customers who managed to easily cancel their trips, rearrange their travel or shift their preferences because they had good support from a business will return to that business when it is time to travel again.

The customer who spent 6 hours on hold and engaged in a multi-person argument trying to secure a refund? They won’t be back.

And as the travel industry comes out of the deep freeze, the panel said, that trust is going to be critical because it is going to be the thing that makes the thaw start to happen slowly but surely across consumers. It is unlikely that, short of a vaccine being developed, a light is simply going to go on in the next several weeks and consumers will wholeheartedly jump back into things with leisure and business travel as if COVID-19 never happened.

It won’t be a wave of consumers so much as a lot of consumers slowly wading back into the waters and getting comfortable on airplanes, on beaches, in hotels and in crowds. It won’t happen overnight, but the panel agreed it doesn’t have to. The travel industry, they noted, will survive this, and the players that build the safest and most secure onramps for their customers might even thrive.

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LIVE PYMNTS ROUNDTABLE: MODERNIZING & SCALING FOR THE NEW NORMAL

The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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