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Ten minutes per booking, 7% of cards that cannot be charged and virtual card fees of 2% to 3%. Sonia Mateos put numbers on that process at the Smart Travel News Roadshow in Bilbao.
Almost every hotelier admits that their payment management could be improved and knows which processes should be automated, but when it comes to setting priorities the same two answers appear: “we have always done it this way” and “it is not going that badly either”.
Sonia Mateos, Global Business Development Manager at Neobookings, hears those sentences every week. In her talk at the Bilbao Roadshow she decided to answer them with a calculator in hand.
Five steps, ten minutes
Look up the card details in the OTA extranet or in the channel manager, copy them —sometimes writing them down on paper first—, enter them into the card terminal, type in the amount, wait for confirmation, go back to the PMS and record the payment. All of this takes an average of 10 minutes per booking, and that is when everything goes well. If the card has no funds or is invalid, the whole operation has to be repeated.
A hotel with 10,000 bookings a year spends more than 28,000 euros on this in staff costs. A chain with 45,000 bookings, more than 125,000. And that is not all.
7% of the cards are unusable
Around 7% of the bookings that come through direct sales channels arrive with an invalid or fraudulent card. If nobody checks it in time, that booking spends weeks occupying a room. The hotel finds out on the day of arrival, when it can no longer charge the card or sell that room to anyone else.
4% of total bookings end up uncharged because of no-shows or late cancellations that can no longer be billed and this is money the hotel had already counted as revenue. Shall we keep adding?
825,000 euros in virtual card fees
On top of the above, agency virtual cards have to be taken into account. Processing them costs roughly between 2% and 3%, above what many hotels have negotiated for a standard card.
Sonia proposed a quick calculation to spot this: look at how much you invoice per year through those intermediaries and apply the percentage. In her example, in a chain of around 5,000 rooms, manual processes and virtual card processing added up to close to one million euros a year.
Of that figure, some 825,000 euros corresponded to the processing of those cards alone. With automated operations, that cost can drop below 1% depending on the conditions each hotel has negotiated with its payment provider.
The cancellation policy ends up being decided by the front desk
If every charge has to be made by a person, each new rate complicates the smooth running of the shift. That is why many hotels stick to what they can handle: one non-refundable rate and one flexible rate with its cancellation deadline.
With automated payments there is far more room: validate the card at the time of booking without charging anything, charge seven days before arrival, take the full amount at once or split it across several moments, and set different conditions depending on the product. With this system there is no limitation on offering payment flexibility to the guest.
Nobody should be typing in a guest card
Employees should not have to see or type the full card details of a guest. Tokenisation replaces them with an identifier that can be used to operate without ever handling the card itself.
Charges and refunds are made from the same backoffice and stay attached to the booking. This way the front desk team no longer has to keep in their heads which bookings need charging today and for how much, so they can focus on what matters most: looking after the guest and offering an exceptional experience.
When a card fails
If the system detects an invalid card, it notifies the channel and asks the guest for another payment method. Automatic retries can be scheduled and a payment link can be sent.
When the charge goes through, the booking updates by itself and nobody has to log into the bank to check whether the money has arrived. If in the end there is no way to charge, the booking can be cancelled automatically under the rules the hotel sets.
That way nobody has to chase each incident one by one.
“There is no hotel with staff to spare”, Sonia reminded the audience.
The hours spent typing in cards and checking payments are hours nobody is spending on the guest or on selling more.
Do the maths now
The most expensive processes rarely cause visible problems. They are repeated hundreds of times a day and nobody times them.
Ten minutes to charge a booking looks like very little until you multiply it by 45,000. And a card that nobody validates looks like paperwork until it blocks the last available room and ends in a no-show.
Take your own numbers: bookings per year times ten minutes, and what you invoice through OTAs times the cost of their virtual cards. With those two figures on the table you can already decide whether the project moves up the priority list or not.