How Online Payments are redefining the Hotel Reservation Landscape
Right now we are at the beginning of an important transformation phase in online payments, and at D-EDGE our goal is to help hotels foresee new trends and get ready benefit from them. That’s why we are releasing a series of blog posts about the future of payment in the hotel industry. We started last month with the viewpoint of Julien Touraine, Head of Global Sales, and today, our CTO Antoine Buhl goes into the topic in more depth about this hotel industry oddity.
At D-EDGE, we like to play games. One of them is the classic “Spot the odd one out”! Take a minute to reflect on how we purchase the following online: flights; train tickets; clothes; and hotels.
Yes, you’ve got it. the hotel is the odd one out. For some reason, it remains a purchase that we’re not necessarily obliged to pay before consuming the service. It’s often afterwards, at checkout.
But let’s ask ourselves what is so special about this purchase process, compared with similar aspects that we’re all familiar with in the rest of the e-commerce world, or even flight tickets?
Does it not strike you as odd? Imagine, you’re flying away on holiday and then, when the plane lands, the cabin crew approach you just after you disembark, asking for payment? This would seem madness – but this is what we do, every day, when we check out of a hotel. This is something very unique to the hospitality industry.
But if you think about, it actually causes a lot of trouble. I think it’s fair to ask ourselves: does the client really want this? Do they need that option to say: “No thanks, I’m not committing now, I’ll pay after I’ve stayed at the hotel.”
If today you book on Airbnb, for example, for a week, two weeks, three weeks in a villa, you will pay the full amount of your stay before setting foot in the villa. The traditional hotel method is not a practice these Airbnb users are used to.
They are used to similar situations in the e-commerce world. And so, that’s one of the reasons online payment in hospitality is going to evolve over the coming years – and so to reservations. And at D-EDGE we’ve already seen a number of our hotel customers opt to state that some offers and reservations must be prepaid.
They are simple offers, but all are prepaid. And it works. It works really well. So yes, some OTAs have made the decision to value the idea that a reservation is more easily converted or purchased by the customer if “FREE CANCELLATION” is splashed everywhere in flashing green typeface. Yes, it will create slightly more bookings, but at the price of a insane cancellation rate. The biggest OTAs using this kind of arguments may have a cancellation rate up the 50%!
Promoting simple and clear prepaid bookings is a strong trend to which you are strongly encouraged to participate.
Isn’t it time for a change?
Antoine Buhl – Chief Technology Officer – D-EDGE
Antoine became an entrepreneur after finishing his studies, and helped set up various start-up companies, including Hypnotizer (video streaming) and PixVillage (peer-to-peer photo sharing). He joined D-EDGE to develop both platforms and products. Antoine is passionate about building innovative apps, and the processes that lead up to their success.
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