3 Ways the Right Payments Technology and Strategy Can Drive Revenue for Hotels
How a Unified Commerce Payments System Can Lower Costs, Increase Conversions, Drive Revenue, and Streamline the Digital Guest Experience
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By 2025, the global contactless payments market will rise to $18 billion, with over a quarter of small businesses already seeing an increase in customers using contactless payment methods. Unfortunately, many traditional payment facilitators rely on a fragmented service model, which forces hotels to manually process payments through a series of separate vendors manually, adding wasted time and unnecessary costs to a process that should be straightforward. Consequently, many hoteliers view payments as a necessary and unavoidable cost center when running a business. But it doesn’t have to be this way. In this article, we will explore how hotels can streamline operations, increase conversions, boost revenue, and create a seamless and personalized guest experience by switching to a unified commerce payment system.
Drive Revenue & Increase Conversions By Making Payments Invisible
Customers will always experience a degree of emotional or logistical friction whenever they pay for a product. Forcing customers to take out a card, create a user account, or enter payment information breaks the flow of the guest experience and takes customers out of a buying mood. The more difficult it is to pay for a product, the more likely consumers will cancel the purchase and move on to something else. According to the Baymard Institute, the average online shopping cart abandonment is just under 70%. Common reasons for cart abandonment include compulsory user accounts, complicated check-out processes, and website errors. The fewer steps a customer has to complete to make a purchase, the more likely they are to buy the product.
Unified commerce payment services can significantly reduce payment friction by integrating technologies such as express mobile check-in, contactless payments, and digital wallets. In a unified commerce payment system, all of a hotel's payment data feeds into the same integrated system, allowing the hotel to deliver a range of cross-channel experiences and capture more robust customer insights. But hotels can go even further than this. Once a guest authorizes a hotel to use a particular payment method, the hotel can leverage Merchant Initiated Transactions (MITs) so that guests can complete future payments with just a single click. MITs significantly increase the conversion rate for ancillary purchases such as dinner, spa treatment, or a round of golf and make it easier for guests to book additional stays in the future. MITs can even reduce the impact of no-shows by allowing the hotel to charge a guest for a room even if they do not eventually show up.
Technologies such as tokenization allow hotels to securely store encrypted customer payment data within the PMS, opening the possibility for secure "invisible" payments that run in the background without direct consumer involvement. For example, Amazon recently experimented with “Just Walk Out” technology at two Whole Foods locations. "Just Walk Out" employed a network of sensors and cameras that tracked what customers were purchasing so they could literally walk out of the store without having to interact with a cashier or self-check-out kiosk. Although the experiment has concluded, this type of technology could be easily transplanted to hotel dining and shopping facilities or even in-room smart devices.
Payment tokenization can also increase lifetime customer value, by creating a unique, centralized identifier that can capture and analyze a guest’s preferences and spending habits. This data can be integrated with loyalty programs and CRM systems to generate highly personalized offers and loyalty perks. For example, payment-linking technology streamlines loyalty purchases by allowing customers to link a payment method to a merchant’s loyalty app. Payment linking allows customers to earn loyalty benefits without having to enter additional contact information or change their normal buying habits. And payment-linking technology is catching on with customers, with 81% of shoppers wanting loyalty programs to be linked automatically to their payment cards and 63% of customers saying they would be more likely to choose a retailer with payment-linked loyalty programs. Because customers are more likely to utilize a seamless program that runs invisibly in the background, merchants can build more nuanced and robust profiles of their customer segments, leading to more valuable insights that can boost revenue.
It Should not be Difficult for Your Business to Receive Payments
Receiving payments is the foundation of any business. At the risk of stating the obvious, hotels should not make it more difficult to receive payment for their services. Unfortunately, traditional payment facilitation systems place significant and unnecessary burdens on hotels. Dividing payment facilitation into multiple separate organizations 一 for processing, acquiring, schemes, and interchange 一 forces hotels into a complex, opaque, and expensive billing structure. With fees varying based on the individual provider, the riskiness of the merchant, country-specific regulations, and cross-border transactions, hotels are left not knowing how much they will be charged for processing payments. 一 and often wind up paying considerably more than they think they will.
But distributed payment processing systems can have operational costs as well. Manually processing payments is time-consuming and error-prone and can disrupt the flow of an increasingly digital guest experience. Relying on multiple vendors means relying on multiple separate customer support teams that lack coordination and are incentivized to pass the buck onto another vendor. This can make it a nightmare to solve chargebacks, disputes, or other customer payment issues as hotels waste time and employee bandwidth trying to coordinate between multiple customer support teams.
The solution is for hotels to consolidate each stage of payment facilitation into a single provider that integrates seamlessly with the rest of the hotel’s technology stack. A unified commerce payment system also provides hotels with a single transparent bill and a single point of contact for customer support. A fully integrated payment system can also reduce operational costs by automating payment processes, freeing staff members to focus more on engaging with guests and growing the hotel’s business.
Creating a Seamless Guest Experience Starts By Meeting Customers Where They Are
Great hospitality starts with meeting guests where they are and allowing them to pay wherever and however they want. Many hotels are transitioning to a digital, mobile-first guest journey by allowing guests to research, book, check in, purchase upgrades or amenities, order food, and check out entirely from their mobile device or a guest-facing kiosk. A mobile-first guest journey can dramatically increase personalization and convenience for guests while also boosting a hotel’s ancillary revenue. But all of these advantages are lost without a fully-integrated unified commerce payment system. It makes no sense to have a guest check in through their mobile phone on their drive from the airport only to have them confirm their credit card details with a front desk agent at the hotel.
Hotels should be able to accept payments however their guests prefer, whether in person, through a guest-facing kiosk, or their smartphone. Embedding customized payment links into an email, text message, or QR code allows hotels to make conversions at more points during the guest journey while making it easier for guests to book rooms during the inspiration and planning phases of the pre-stay.
Hotels should also be able to accept whatever type of payment their guests prefer to use, including digital wallets or ‘tap-to-pay’ smartphones. A recent study by McKinsey found that 15% of digital wallet users leave their homes regularly without a physical credit card while mobile wallets will make up the majority of e-commerce translation volume by 2025. Similarly, Buy Now, Pay Later (BNPL) payment schemes are increasing in popularity, with 68% of Gen Z and Millennial travelers saying they would be more likely to travel if they could pay for flights over time. Hotels risk alienating this growing market segment 一 or losing their business entirely! 一 if they do not utilize their customers' preferred payment methods.
Payment Facilitation Should Be More Than Just a Cost Center
Historically, hotels have viewed payment facilitation as a necessary evil, an unavoidable cost center that is little more than a commodity service. But with the right technology, payments can become integral to a hotel's growth and guest engagement strategy. By embracing an end-to-end, fully-integrated unified commerce payment facilitator, hotels can create a more streamlined guest journey, with less friction for payment transactions and higher conversions for bookings, upgrades, and amenities. Eventually, payments will melt invisibly into the background, becoming seamlessly integrated into a highly personalized and monetizable guest journey.
About Stayntouch
Stayntouch delivers a cloud-native and guest-centric hotel property management system (PMS) with a comprehensive library of over 1,100 integrations. Stayntouch's cloud-native PMS empowers independent hotels, hotel groups, and management companies to drive revenue, reduce costs, enhance service, and captivate their guests. In 2022, Stayntouch launched Stayntouch 2.0, a fully integrated technology suite featuring its core cloud-native PMS and guest kiosk solution, a comprehensive chain management module, a seamless booking engine (Stayntouch Booking), a robust payment processing platform (Stayntouch Pay), and a powerful channel manager. Stayntouch 2.0 enables hotels to streamline their operations, maximize and diversify their revenue streams, and deliver an even more enhanced guest experience with the innovation and support of one trusted technology partner. Stayntouch is supported by a team of professionals with deep roots in the hospitality industry and is a trusted partner to industry-leading management companies including Sage Hospitality, HEI Hotels & Resorts, and EOS Hospitality, innovative independent brands such as Village Hotels, Pod Hotels, and First Hotels, and iconic flagship properties such as the TWA Hotel, Showboat Hotel Atlantic City, and Zoku Amsterdam. For more information, visit www.stayntouch.com.
Frewoini Golla
Director of Marketing
Stayntouch