Travel Operators Focus on Payments to Recoup Pandemic-Related Losses

As we get a clearer idea of the extent of travel and tourism disruption from the pandemic, companies are zeroing in on payments management to get the sector moving again.

Noting that travelers canceled nearly 25% of bookings with U.S. travel and tourism companies with $100 million and $1 billion in annual revenue — and rescheduled an additional 20% of trips — The Smart Receivables Playbook, done in collaboration with Flywire, states that “the sudden loss of revenue and uncertainty of future cash flows has put intense pressure on travel and tourism firms’ finance divisions to improve AR processes.”

See the study: The Smart Receivables Playbook

Bringing greater efficiency to travel payments can help recoup pandemic-era losses and make travel payments more efficient.

The study found that travel businesses in the sector average a spend of 3.2% of annual revenues on payments-related costs, “substantially more than their counterparts in the technology (2.7%) and education (2.6%) sectors,” with 19% of travel and tourism firms reportedly spending more than 4% of their revenues on payments-related costs.

Suppliers Crave Better Cash Management

With nearly 60% of travel-related companies saying they’re unhappy with current payment management solutions and approaches, The Smart Receivables Playbook gets into deep detail as to specific areas where frictions must be removed from travel payments.

The study found “payments-related questions from customers as the most common complaint, indicated by 32% of respondents, as well as the difficulty of managing multiple vendor relationships (cited by 26%) and excessive time needed to introduce new features to market (24%).” All are labor-intensive and costly, “highlighting the value of effective payment systems that streamline related processes.”

B2B payments are especially nettlesome, with Playbook data finding that 62% of businesses in the sector identify B2B payouts as a “somewhat” significant pain point, with one-fifth characterizing them as a “very” or “extremely” significant issue.

This is sending many travel and tourism businesses solution shopping. Per the study: “The B2B payout headache makes a large share of travel and tourism businesses interested in switching payment processors,” with 62% of respondents “somewhat” likely to change to a new payment processor if the provider would make payouts easy and convenient, “and 23% would be very or extremely likely to do so.”

See the study: The Smart Receivables Playbook

Partnering Against Pain Points

Platform aggregators continue to fill an important role in simplifying travel payments for businesses as well as consumers, as “third-party digital aggregators can also help reduce the credit risks that businesses in the accommodations industry assume when booking customers.”

As the study states, “It takes time for a company to determine how best to manage its costs. This means that individual businesses must have flexible payment infrastructures that allow them to adapt their processes to payment needs that can evolve over time.”

One of several instructive case studies in the report features John Forrest, president and general manager of British Columbia-based travel business Northern Escape Heli-Skiing. With cross-border payment friction and cost a key pain point, the company turned to an integrated payments solution from Flywire. This has nixed hours of phone work with banks and routing information, allowing travelers to book and pay seamlessly online.

“When you push the ‘book now’ button on our website, you automatically get [an] invoice, and then you are given an option for how to pay it,” Forrest said.

See the study: The Smart Receivables Playbook