For many hotels, getting payments right is just another cost, system to integrate, or added complexity to manage. But when done correctly, payments can go beyond simply being used for transactions to better connect the dots between who your guests are and the experiences and services you provide.
The payment landscape was already shifting before the pandemic, but the last 18 months have only given rise to new payment habits, platforms, and technologies.
For some hotels, technologies like mobile wallets, contactless payment, local payment methods, alternative payment options like buy-now-pay-later, and peer-to-peer payments can be challenging to navigate. But getting payments right now can unlock new opportunities for hotels to grow revenue, both in the short and long term — and this is especially important knowing the challenges that hotels have faced this last year and a half.
Adyen recently published a new guide outlining how hotels should be thinking about payments to go beyond being simply transactional. Prioritizing payments can help hotels offer seamless and personalized guest journeys, streamline processes and operations, assist with shifting regulations and compliance guidelines, gain customer insights through guest data, and help drive business growth. SkiftX spoke with Mark Rademaker, global head of hospitality at Adyen, to learn more.
SkiftX: The pandemic fueled adoption of new digital payment methods and behaviors for both hotels and guests. What are some of those newer payment methods that are here to stay?
Mark Rademaker: Contactless payment and local payment methods are definitely here for the long haul, and we have seen strong growth in payments via digital wallets and local debit schemes. Hotels have traditionally focused on providing payment method options based on readily available options in the local market instead of what guests actually prefer — but buying behavior varies from market to market. The ability to accept popular local and global payment options needs to be considered the same way “best available rate” is considered. It should be part of the revenue strategy — and it’s vital that hotels work with a payments partner that can help effect this easily.
SkiftX: Delivering frictionless experiences and more personalized services are a big reason why hotels would upgrade their payment processes. Can you give an example of what this looks like in reality?
Rademaker: Before the Covid-19 pandemic, hotels dictated the guest journey. Today, consumers are increasingly demanding experiences that seamlessly link online to offline. Take check-ins, for example: Hotels have always been keen to reduce friction at the point of check-in, sometimes via express lanes for loyalty guests, as well as in-room or lounge check-in.
Now, they can leverage technology to make check-ins more frictionless through self check-in kiosks or digital check-in platforms that allow guests to check in via their mobile devices even before they arrive at the hotel property. With tokenization, guests can also securely authorize card payments during mobile check-in, making the process contactless and more seamless.
Digitizing the guest journey does not need to come at the expense of the guest experience. In fact, it’s quite the opposite, since frictionless payments can reduce the amount of time spent on manual tasks, freeing up even more time for staff to better engage guests.
One real life example of this can be seen at Raffles Hotel Singapore. Delivering bespoke and authentic services is core to the legendary Raffles experience, and it recognized that payments are key to enabling frictionless and personalized services. Through Adyen, Raffles Hotel Singapore powered its unified commerce offering, providing simpler, faster, and more customer-centric payment experiences across all sales channel touchpoints, both online to offline — including suite reservations, its restaurants and bars, and at Raffles Spa and Raffles Boutique. Imagine that your guest could arrive at your hotel, check in, dine, shop, or indulge — and never have to touch a payment terminal throughout their entire stay.
SkiftX: What do you envision being important in payment tech five years from now?
Rademaker: Many brands in retail and food and beverage now understand the importance of payments insights. Adyen provides many businesses in these industries with a wealth of information so they can better understand their customer’s habits and trends to optimize revenue and build loyalty.
We see this trend of leveraging transaction data to uncover insights and create opportunities extending to the hotel industry over the next few years, as more hotels recognize the power of unified commerce to connect the dots between their various sites and touchpoints. The more you know about your guests, the better the decisions you can make for your hotel brand and the better experiences you can deliver to your guests.
For example, this could mean linking folio data to payments data to gain a complete view of how guests are spending at their hotel, to understanding information such as issuing banks or preferred payment methods to determine partnerships and promotions.
SkiftX: How does an integrated payments solution help streamline operations on the backend of the property? How does this help employees do their jobs better?
Rademaker: Many hotels use a bank acquirer or a payment processor acquirer without a proper payments integration. This increases the requirement of manual reconciliation and tedious processes like night audits, shutting down terminals, or tallying bank settlements with your sales revenue.
The workload of the finance team can be drastically reduced by shifting from standalone payment terminals to a fully integrated payment solution like Adyen. Some of our hotel partners have indicated that they save eight to 10 hours of manual reconciliation — including reconciliation across channels and geographies — freeing up front desk operations to perform other tasks that enhance guest engagement.
SkiftX: Preferred payment methods differ among travelers from different countries. For example, Alipay and WeChat Pay are preferred in China, Paytm is preferred in India, and GoPay by Gojek is preferred in Indonesia. What are the challenges around this for hotels, and how can they get around these challenges?
Rademaker: Buying behavior and payment preferences are highly nuanced and local. We’ve seen online travel agencies do a good job in adding and offering up to a dozen local payment methods. However, often a guest will book with their preferred local payment method through the OTA and then aren’t able to continue paying with that same preferred method once they arrive on property. This creates a disconnect within the guest experience and is something that needs to change.
Integrating Adyen’s single platform provides hotels with the ability to offer the major local payment methods and removes the complexity of adding them to their system. This means that hotels no longer need to look for local partners when including new payment methods, removing the need to have additional payment terminals at the front desk. Everything is managed from the same platform, with a single integration and a single contract, whether it’s a traveler from the U.S. paying with his credit card or a traveler from China using Alipay.
SkiftX: Data breaches and compliance are major issues in the hotel industry. What steps can hotels take to reduce data exposure?
Rademaker: Data security is paramount to building trust. Hotels work with many external parties, systems, and distribution channels to support guest bookings. This can be extremely challenging and complex, and the burden of managing so many different payment systems often falls on the hotel. With the added complexities that come along with the EU’s Payment Services Directive 2 and other regulations that work to improve payment security, hotels need to get ahead of fighting fraud and securing their guest payments and meet industry compliance.
Having one platform that covers all your payment methods — rather than multiple providers — will significantly reduce the potential for data breaches, leaving any risk to the payment provider. Additionally, working with a partner that meets the Payment Card Industry Data Security Standard (PCI DSS) reduces the time and the resources needed to maintain industry compliance.
Another way to reduce data exposure is through card tokenization. Here, a guest’s card details are captured during the online booking or at check-in, and the data is then encrypted and replaced with a secure token that can then be used for all subsequent purchases. With the need to introduce more contactless ways of payments, hotels can also send secure payment links to guests so as not to reveal card data on the phone or via email.
SkiftX: How does this translate to driving customer loyalty and developing the right ancillary products and services?
Rademaker: The pandemic had a huge impact on room revenues. Many hotels had to turn their focus to local guests and pivot to promoting staycations and selling experiences through their e-commerce storefronts. This trend will likely become a permanent part of the revenue mix for hotels, so it is important that they harness payment insights to understand what worked, how to improve these experiences, and inform loyalty programs and promotions.
Ancillary products and services do not need to be limited to upselling on the hotel’s premises. It is not uncommon for travelers to ask for restaurant or tour recommendations and bookings, with the guest then making the payment directly to the hotel or tour provider. What if payments could be done through the hotel at a nominal fee? While potential revenue from this channel could be small, it could also provide the hotel with key information on guest behavior and preferences on and off premise to build new services.
SkiftX: What should a hotel look for in a partner if they want to prioritize payments to future-proof its business?
Rademaker: Too often we see that in many hotels, the decision around payments sits with the finance team. This can lead to payments being viewed solely as a cost, another system to integrate, or an added complexity to manage. This needs to fundamentally change in order to move away from price-centered discussions and unlock the value of payments as a strategic business enabler.
We know hotels work with multiple suppliers and systems, and many hotels are looking for ways to address challenges, including integrating both legacy and new infrastructures. Finding a solution that smoothly integrates across a hotel’s entire tech stack will help with streamlining processes and costs. At Adyen, we have integrations with leading hospitality technology partners such as Agilysis, Infor, Oracle Hospitality, and Shiji.
Hotels should also select a payments provider that does both processing and acquiring across all channels. A single payment stack has proven to improve transaction performance and helps to identify areas to improve.
Payments move quickly, and demands of guests are ever-changing. The successful hotel understands the value of a strong payments partner who is able to deliver a next-level payment experience today, and can also be flexible to quickly adopt new channels and integrations in the future.