Payments in hospitality and travel: new payment orchestration trends

A fast-moving and international sector like the one of hospitality and travel (also called Ho.re.ca. as it includes hotels, restaurants and cafès/ catering) cannot underestimate the importance of an optimised payment infrastructure and secure payments for their business. Investments in the sector are being made and with an increasing number of deals, bookings and reservations happening online, the check-out experience needs to be smooth, secure and familiar to the customer (both for B2B and B2C).

Newer trends like payment orchestration are being implemented to answer to the needs of hotels, restaurants and catering companies when it comes to an improved payment experience. Let’s discover how and what the advantages of adopting an orchestration layer are for this sector.

Ho.Re.Ca. and travel: market growth and challenges

The hospitality market has been growing exponentially both globally and in the UK. Only the UK's restaurant industry has a market size of 17.8 billion pounds, with over 90k licensed food and drink premises in Great Britain, 859k restaurant and café workers¹ and a fast-food market size of 22 billion pounds².

Travel accommodation is also a major sector in the tourism industry. UK households spend over 20 billion British pounds on accommodation services each year, both in the UK and abroad. While the overall accommodation industry revenue in the UK reached almost 33 billion pounds.³

From an international perspective, the global hospitality market amounted to over 4.7 trillion U.S. dollars in 2023 with a forecast to grow to around 5.5 trillion U.S. dollars in 2024 and 11.6 in 2029.⁴

The global hotel market size reached around 1.3 trillion U.S. dollars in 2023 with a prediction to grow to around 2.9 trillion U.S. dollars by 2032 with a compound annual growth rate (CAGR) of 9.14% between 2024 and 2032.⁵

In a market that is in quick expansion, businesses in these sectors are facing complications when it comes to payment management. From being able to accommodate a varied client base, to ensuring a high acceptance rate when it comes to transactions, the challenges are many and can result in losing customers or adding friction to the process.

Let’s look at the main challenges:

• Compliance with often changing regulations
  Regulations can be complex and change ever so often, which can be stressful and need resources to comply. However, when leveraged, new regulations can bring a competitive advantage to businesses.
• Manual or expensive reconciliation of finances
  When it comes to manual reconciliation, both for large and small companies it can be expensive, time consuming and an error-prone task. Most companies are now turning to automatic reconciliation to avoid these issues.
• Ensuring a secure payment process, avoiding fraud
  Fraud is always around the corner and putting in place the right systems in order to allow for a secure check-out is a must both for customers and businesses themselves.
• Accepting multiple payment methods to accommodate their clientele
  One of the challenges that can actually be an advantage to businesses by providing customers with the way they prefer to pay.

The cross-border needs of the hospitality industry

Both for the hotel and food and beverage industry consumers’ nationalities are growing in diversity. Cheaper travel opportunities and offers coupled with a mainstream use of internet and social media have cut distances around the world and put spots on the map turning them into tourist destinations in no time.

What this means to businesses that compete over tourists during peak season is that standing out online and managing the buying journey of their potential clients can both make the difference between losing or gaining a customer. Smooth check-outs, integrated solutions like insurance, taxi or entertainment booking, and allowing the customer to pay in their preferred way are all examples of what gives businesses a competitive advantage. As travellers come with their payment habits that can vary majorly across different countries, it becomes pivotal to make sure that multiple payment methods are offered and especially the ones that are more used by the target customers. That’s when the saying “know your audience!” comes to play.

Moreover, restaurants and bars need a fast and easy check-out both in store and online: many businesses now choose to maximise customer satisfaction by allowing for clients to pay online at the end of their dining experience, this way avoiding long queues and being able to pay in their language and with different method options.

Payment orchestration for the hotel and restaurant sectors

In order to provide a smooth secure and quick check-out that responds to these increasingly nuanced needs, businesses need to adopt the right payment management solutions. That’s when payment orchestration comes to play.

Payment orchestration, which we analysed and described more in depth in our whitepaper on the topic, can be simply explained as a solution that optimises payment processes by routing transactions to the better provider and acquirer at the time of the transaction. This way in case of technical issues with a specific provider, the payment can still go through via a different route. Moreover, for businesses with an international clientele, choosing the best acquirer according to the specific country can be cost saving and ensure a higher approval rate. This translates into a smoother check-out for customers and in advantages for the business.

More specifically, among the many advantages to adopting an orchestration layer for hospitality businesses and their customers are:

• A quicker and frictionless check-out
  This can translate into higher revenues, better customer retention and loyalty.
• More flexibility in terms of payment methods
  Allowing for more choice in payment methods at check-out can broaden the customer base and increase customer satisfaction
• Cost savings
  Cut on acquiring fees by choosing the best provider according to the region.
• Secure payments
  Orchestrating the right fraud solutions will ensure a high conversion rate and minimise payment fraud.
• Automatic reconciliation
  As we discussed the benefits in terms of time and resource savings, a payment orchestration solution allows for simpler automatic reconciliation.

Finally, payment orchestration can answer to the many payment needs of businesses that operate in the world of hospitality, which is an ever-growing sector that becomes more international every day with an increasing need to cater to very different audiences. Download our whitepaper on payment orchestration to find out more or have a look at our Fabrick Payment Orchestra solution.