Paying for hotel accommodation at the front desk is a thing of the past...

..... so, what are the alternatives?

You know the feeling when you've paid for a trip months in advance and, when it's time to go, it feels like you're getting it for free? Your hotel guests have this too! So, it's not surprising that there are many alternatives to prepaying for an overnight stay in the hotel industry today. Industry suppliers, such as OTAs and companies offering PMSs and Booking Engines, all promise to have the perfect solution. But which solution is the most advantageous, and how do you, as a hotelier, stay in control of the payment policy?

The ideal payment policy

The overall process is pretty simple. Reservations are made and somewhere in the same process, payment must be made for the booking. As a hotel, you can choose to have a guest pay in full upfront. But you can also opt for a more flexible payment policy where you let the guest make a deposit or determine whether they pay at check-in or check-out. Which payment policy best suits your hotel depends on the type of hotel, the booking method and, of course, your guests' preferences.

For each payment policy, there are vendors who offer you a solution (for their own share) to support you as a hotelier with transactions. They have the best understanding of how payment companies work, where transaction fees go and have knowledge about payments in general. Because these vendors relieve you of the payment process, it saves a lot of manual work in the operation. This can be important with the current staff shortages in the hospitality industry. The bit of margin you give up with an OTA, for example, may cost you less in the end than if you handle the payments yourself.

Prepayments and margins is, of course, the best-known OTA and has a fully rolled-out prepayment program. As the largest player in the market, they obviously don't handle these payments without a price. However, you as a hotelier are assured of the revenue and it saves you time on processing another payment during the guests stay.

"Four in ten (40%) reservations in Q1/2022 were processed through the OTA's payment platform, this is a 48% increase over last year (Q1/2021 accounted for 27%) and twice as many as four years ago (2018) when it was only 20%." 

More and more innovative players from the payments industry are finding their way into Hospitality. The experience for the hotel guest, as well as cost-effective payment options for hoteliers, will be the biggest drivers of innovation in the coming years. Recently, OTAs have controlled the booking market, but how far will this power continue to evolve? Will there come a time when hoteliers take back control?

SmartHOTEL is happy to think with you about your payment processes. Sign up now for a Free Payment Scan. Through a video call of maximum 20 minutes, we will discuss your (desired) situation and which concrete steps are needed to get there. 

By Fiona Cooper | October 17, 2022

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