The travel snapback is here, but travel companies and aggregator sites aren’t ready to handle the deluge in bookings and surging payment volumes.
That’s not to mention the rising demands for rebates, as well as the cancellations and refunds that can mount when trips go wrong or life intervenes — or pandemics spike.
Consumers and business travelers (the road warriors), especially, demand the same exceptional experience across digital and in-person interactions that they see in other walks of life. However, vendors are struggling to manage the complex payment processes they demand, which has negative ripple effects on the merchant aggregators serving the various agencies, airlines and other touchpoints that make up the travel ecosystem.
Spreedly CEO Justin Benson and TruTrip Head of Strategy Susnata Banerjee told PYMNTS’ Karen Webster that payments orchestration platforms hold the key to enabling merchant aggregators delivering a seamless checkout experience.
That’s no easy task. Among the friction points are individual brands that operate in silos, exclusively selling flights or facilitating hotel bookings. They have to partner with other similar vendors offering different pieces of the “travel pie” to give that consolidated experience, and the technical integrations are a hurdle as they work with aggregators.
That’s because the aggregator platforms are overwhelmed with the costs, time and effort needed to make these integrations a reality. The average eCommerce storefront can require 25 different application programming interfaces (APIs).
Moving Beyond Bunker Mode
Benson noted that through the past few years, with steep pandemic-spurred hits to their top lines, many providers went into “bunker mode — they had to survive.”
While conserving resources, particularly cash, there was no room to invest in the tech upgrades and overhauls that would have brought their systems fully into the digital age, poised to meet customer expectations.
Both Banerjee and Benson noted that business travelers have traditionally been more digitally-inclined while on the road. Banerjee remarked that his own firm, operating as a travel aggregator, said customers demand that “there is a need for more value for the money — and there is a need for flexibility.”
One of the largest pain points within business travel, Banerjee said, ties into refunds. Now, with travel demand above pre-pandemic levels, the perfect storm is here.
See also: From Cruise Lines to Airlines to Tan Lines, the Travel Recovery Is On
Firms find themselves short staffed, and there are not that many planes flying (compared to previous years) — and the demand for refunds will almost certainly be higher in the months ahead. Shifting mask mandates may make some would-be flyers skittish, opting instead to cancel trips that had previously been booked (and paid for) with enthusiasm. The cancellations wind up sending shockwaves through the system.
“That process can be incredibly painful, given how many intermediaries there are,” Banerjee said, as documents must be submitted, approved and there’s a slew of providers to navigate before funds are disbursed.
The chain of progression and the intricate web of interaction in the travel industry differs markedly from, say, consumer-facing eCommerce, Banerjee said.
Paying For It All
Booking, reserving and paying for various parts of the journey — the planes, the trains, the hotels — has typically been tied to the (plastic) credit card.
Technology plays a role in streamlining the link to the cards, where as Banerjee said, virtual options can make it easier for consumers and suppliers to interact (and there’s a cash back benefit, too).
There are still economic motivations in using the cards, Benson said, as there are “distinct flows” on how they are authorized, how much can be made available (while buy now, pay later is proving to be attractive to consumers).
Dealing With the Laggards
However, as Banerjee said, the travel sector has always been a bit of a laggard when it comes to embracing alternative forms of payment — it may be a while before crypto really makes any inroads, for example. He said that’s partly a function of the complex value chamber that has to be influenced.
“And,” he added, “travel has always been seen as a riskier space — with the history of some airlines or travel operators going bust.”
Fixing the legacy systems would be a massive technical lift. It’s the aggregators that can accommodate the business travelers in new ways without having to deal with downstream legacy inefficiencies. Business travelers, in particular, put a premium on time management and being able to conduct a variety of activities through a single touchpoint.
Read more: How COVID Made Hotels Rethink Business Travel
Benson said that having to do this all in-house would be a recipe for disaster for most players. With payment volumes growing by as much as 70% over the course of just a few quarters, it’s easier than ever for fraud to get “tucked” in the midst.
“Working with the merchant aggregators allows you to understand the end consumers and capture their business, too,” Benson said.
Banerjee said the aggregators themselves must be able to build flexibility into their systems — enough to contend with payment issues, from refunds to chargebacks. They must also be flexible enough to offer a customer-facing experience that allows them to book rooms that can be cancelled on the same day or choose from different trip insurance options.
Against that backdrop, Banerjee said, “We’ve seen our concierge services take off in terms of demand.”
For the companies themselves, there needs to be hyper-vigilance around fraud. After all, with the massive uptick in travel and payment volumes, it’s a challenge to pick out “abnormal” behavior when the digital shift and rebound have been so recent — and no one wants false positives in the mix.
Payments orchestrators, Benson said, can help travel aggregators manage the significant increase in transactions (as measured in value) and processing volumes.
As Benson told Webster, “The systems that are coming back on line are facing surges they have not seen in quite some time — and so we can help sort out that infrastructure, availability and how to deal with those surges.”
Looking ahead, Banerjee said we’ll see new baselines for the travel industry after the initial summer rush — and perhaps those volumes may be skewed to, say, 80% of pre-pandemic volumes. Benson said the airlines, in particular, will have to invest more in upgrading their operations. After all, companies can resort to Zoom for their meetings — so the traditional carriers are now competing against the digital options and alternatives.
Of the aggregators and the airlines, of the OTAs and the other providers, Benson said, “You’re going to have to ‘lift’ your game to make the whole experience more pleasurable and less problematic.”
Related: 24% of Travel, Tourism CFOs Say Slow Payment Is a Top Challenge