Travel Payment Trends: How the Tourism Industry Is Changing
The payments landscape is changing quickly. Especially in the travel and tourism sector, there are more and more opportunities for companies to offer their customers new payment services. In this article, we have summarised the key payment trends in the travel industry.
An unforgettable holiday is the highlight of the year for many people. But due to the corona pandemic, the majority of holidays were cancelled in 2020. And in 2021, many people remained cautious. According to the German Tourism Association’s 2022 report, the number of tourist overnight stays in Germany only recovered slowly last year – from 302 million to 310 million. But the appetite for travel is starting to come back, as the 2022 tourism analysis by the Foundation for Future Studies shows. Around half of the respondents in Germany went on holiday in 2021. However, tourism companies are still facing the challenge of increasing their revenue. Payment can play an important role as customers now have higher expectations of payment in travel than they did a few years ago.
New Demands on Payment in the Travel Industry
The corona pandemic caused uncertainty amongst holidaymakers. And that is reflected in the demands on the travel industry. According to a recent YouGov survey on travel behaviour, health risks are the main concern for customers. Over 40 percent of survey participants said this was an obstacle to travel. Safety and travel restrictions were two other top concerns. These uncertainties lead to a higher demand for assurance.
But the pandemic is not the only factor influencing customer demands in travel. The ways that holidays are planned and booked have also changed. Many customers book flights after seeing ads and offers on social media. The YouGov survey on travel and tourism confirms this trend, especially for younger travellers. 39 percent of 18- to 24-year-olds use social media platforms when planning their holiday. Customers aged 45 and older are also increasingly finding booking sites over social media. As customer feedback shows, usability plays a hugely important role. Travellers of all ages want the booking experience to be as simple and centralised as possible.
Multiple surveys show that there is also a trend towards more spontaneous holiday booking, particularly amongst younger customers. And price remains another key factor in many customers’ planning. But what do all these developments have in common? They all have implications for payments. The payment trends that we currently see in the travel industry aim to address the new customer needs and demands.
Travel Payment Trends: The Rise of Buy Now, Pay Later in Tourism
As more and more holidays are booked digitally, tourism businesses have many opportunities to accommodate the new demands of their customers. A PhocusWire survey of 5,000 travellers shows that buy now, pay later (BNPL) is becoming more important in the travel sector. 68 percent of the respondents said that BNPL would encourage them to spend more on summer travel than if this payment option wasn’t available. And it’s not just the willingness to spend more on a holiday: around half of respondents said they would be more likely to book additional services from airlines if offered a BNPL option at checkout. For airlines struggling with the impact of the pandemic, this presents a good opportunity to increase revenue. For example, they could add travel insurance to the checkout process. Providing these kinds of services with BNPL can make an attractive combination of flexible payment and convenient holiday packages.
Better Customer Experience Through New Payment Processes
Another key topic in travel payments is the customer experience. Customers expect to be able to book their holiday as quickly and easily as possible. Young customers want the option to book their holiday directly on social media platforms when they find the right offer. But the user experience needs to go further than that. Customer feedback shows that, in addition to flights, rental car, and accommodation, travellers also expect to be able to easily add services during their holiday – ideally without having to enter their payment details again.
For this reason, tokenisation and merchant-initiated transactions will become more relevant to the tourism sector. Both enable tourists’ payment details to be securely saved and used for future payments. Tokenisation allows customers to pay much faster, which improves the customer experience. Merchant-initiated transactions make this even easier, as customers only have to authenticate themselves once. Subsequent payments – for hotel services, for example – are then initiated in the background by the tourism company.
Digitising the ‘Last Mile’
The ‘last mile’, which in this case refers to checking in at the airport or at the hotel reception, rarely offers travellers convenient payment methods. But airports and hotels are two good examples of places where people are often in a hurry. Solutions such as QR codes and payment links can provide faster alternatives compared to conventional payment terminals. They enable customers to pay using payment methods they are already familiar with from online shops. This makes the hotel checkout and airport check-in more customer-friendly and improves the overall experience.
How Payment Trends Help Meet New Travel Demands
2020 and 2021 hit travellers and tourism companies hard. Now the signs are finally pointing towards recovery. Nevertheless, the new demands of tourists and the increased expectations on the travel industry are here to stay. Booking and paying for holidays needs to become quicker, easier, and more secure. By embracing payment trends such as BNPL, tokenisation, and merchant-initiated transactions, travel companies can offer their customers more flexibility and a better customer experience. The key is to find solutions that not only fulfil customer demands, but that are also easy to integrate. Then new payment trends can help travel companies to live up to the new expectations.
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