Days of paying for your hotel stay at reception at checkout seem to be over. And all suppliers from the industry; OTA’s, PMS’s and Booking Engines promise to have the perfect solution for hoteliers. Most relevant question for hotels these days is what is up with payments and how can you as a hotelier ensure you remain in charge of your payment policies and make them work for you?
Zooming out the process is fairly simple. Reservations are made and payment for the “service” or room needs to be made somewhere during the process. Some hotels go for full prepayment others offer more flexible payment policies which are paid at check in/out. What payment policies are good for your hotel really depend on the type of hotel, but also booking source and preference of guests. Btw. not to be mistaken by cancellation policies which are a whole different ball game.
But whatever payment strategy hotels will choose most suppliers have off the shelf solutions ready to support hoteliers in the payment operations. Understanding how the payment companies work, where transaction costs go, and becoming educated on payments in general will be of great help for hotels that are justly cautious about losing another 3 or 4% margin on their income streams.
If full prepayment is for example chosen the booking source is of essence in how the prepayment is handled. For the hotel operations hoteliers should always be looking for ways to streamline operations with the minimal amount of manual work involved. If reservation is received via Booking for example, it will be the OTA that offers several services to handle the guests payments. Not without a price of course but you as a hotelier are sure of the revenue and will have no payment handling at the property itself.
Booking.com recently rolling out a prepayment program and turning more and more into a merchant itself is just one example of supplier that is also getting into the payment processing business:
Four out of ten (40%) Booking.com reservations in Q1/2022 were processed through the OTA’s payment platform, an 48% increment compared to the last year (Q1/2021 accounted for 27%) and twice as much as just four years ago (2018) when the number was 20%.
–Pablo Delgado on Mirai, June 2, 2022
It looks like the more innovative players from the payments industry are making their way into hospitality. Flawless guest experience and hoteliers finding creative and cost effective ways to handle their payments will be the drivers for innovation in the coming years. It just happened that OTA’s suddenly owned the booking market…..will history repeat and will this happen with payment middlemen again or did the industry learn its lesson?
About Nelson
Born out of the desire to ease the burden on small hoteliers, Nelson is more than just software. It's a comprehensive property management system designed to empower you to run your business efficiently and effectively. We understand the unique challenges faced by small hotels, and our all-in-one platform streamlines daily tasks, maximizes bookings, and simplifies guest communication, allowing you to focus on what matters most - delivering exceptional hospitality.