During the Covid-19 pandemic, the travel sector was one of the largest hit sectors in the world economy. As the economy throughout the world shut down, travel was only possible under the most stringent conditions. Apart from travel, accommodations, online travel agencies and airlines suffered a major blow.
With the large-scale production of vaccines, the travel industry paved its way to recovery. But despite a steady and robust recovery, hotel payment processing challenges remain one the biggest challenges. According to Forbes, more than 50% of credit card fraud happens during hotel payments, with a loss of $3 billion annually. In 2018, around 82% of organizations reported payment fraud incidents.
In this blog, we will examine the 5 major hotel payment processing challenges and discuss how to overcome them.
Top 5 Hotel Payment Processing Challenges
Mentioned below are the top 5 challenges with hotel payments. We have listed the major challenges during hotel payments and how to overcome them..
Challenge #1: Inconsistent Payment Methods
Challenge: The first and foremost hotel payment processing challenge is dealing with inconsistent payment methods. There are various payment methods and different hotels accept various payment methods. Some of the challenges with hotel payments include credit cards, virtual cards, direct billing, credit card authorization forms, and sometimes even third-party payment solutions. Tracking expenses can be confusing if you’re a business traveler or a travel manager. Moreover, it becomes all the more difficult when employees are reimbursed for expenses.
Solution: To avoid such complexities, companies must always confirm with hotels the mode of payment. You must confirm the hotel payment methods during the inquiry and booking process. Companies can leverage a centralized travel management system to store and manage different payment options. This helps ensure you’re prepared regardless of the hotel’s policies. Moreover, you can even implement corporate credit cards, which can be used anywhere and everywhere. This will help streamline your expense management process. It will also be easier for you to simplify the reimbursement process.
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Top 10 Corporate Credit Cards for Small Businesses
Challenge #2: Difficulties During Reconciliation
Challenge: Expense reconciliation is another one of the major hotel payment processing challenges. During business travel, employees must collect receipts of all the expenses. They must then reconcile and submit them for reimbursement. This leads to a lot of paperwork which can increase the work burden for HR and finance departments. They must track every expense receipt meticulously and cross-check with bank statements. During this process, there are chances that the receipts can get misplaced or lost. Sometimes, there are also complexities related to booking cancellation at the last minute. Moreover, you should also match the refund transactions with card statements. Reconciliation of hotel payments with your card statements can be a tiring, cumbersome, and time-consuming process.
Solution: Companies can avoid these problems by leveraging one-time virtual cards for every booking. This helps in reconciliation, as every card is meant for a specific booking, reducing the burden of manual reconciliation. With such cards, the finance department need not worry about misplaced receipts, as all the data will be correctly captured. The whole process of reconciliation will be simplified, which in turn, saves a lot of time and effort.
Challenge #3: Fraud and Security Concerns
Challenge: There is no denying the fact that security is of utmost concern when it comes to hotel payments in business travel. It is one of the top challenges with hotel payments. Without a proper secure mode of payment, there can be risks of fraud and security breaches. These include unauthorized charges, credit card information theft, data encryption, phishing, attacks on the apps, etc. If there is no secure method of payment, then it can compromise both personal and business information. When such information is leaked, it can affect your company’s bottom line. Moreover, this risk is exacerbated when traveling internationally or dealing with unfamiliar hotels.
Solution: You can overcome such problems by investing in secure payment methods. Virtual credit cards, which generate unique card numbers for each transaction, can greatly reduce the risk of fraud. This will help limit the exposure as each card has a smaller limit (equal to or slightly higher than the hotel booking amount) vs. having a large limit in case of a normal corporate card with $20000-30000 monthly limit getting passed to hotels. This ensures all the transactions are conducted over secure, encrypted channels. Additionally, you should also be careful in choosing the right hotel. A reputable hotel with strong security protocols can help you safeguard your payment information. This way, no information will be compromised.
Challenge #4: Currency Fluctuations and Exchange Rates
Challenge: Employees who travel often to international destinations must deal with different currencies. Currency changes and fluctuating exchange rates present a new layer of complexity in hotel payment processing challenges. Every hotel’s cost varies in different locations. Hence, having the correct currency to make such payments is important. From the time of business travel booking to the time of payment, there can be many currency fluctuations, leading to unexpected expenses and cost leakages.
Solution: To manage such challenges, companies must use payment methods that lock in exchange rates at the time of booking. One such solution is corporate credit cards. These cards offer favorable exchange rates and minimal foreign transaction fees.
Challenge #5: Complex Billing Arrangements
Challenge: An important but the most neglected hotel payment processing challenge is billing. Business travelers often encounter complex billing arrangements. These include splitting bills for personal and business expenses, directly billing to the company, or third-party payments. Managing all these arrangements can be quite daunting as they have to ensure there are no errors. They should also ensure there are no misunderstandings or wrong billings being made. Business travelers already have so much on their plate, and any slight inconvenience can be overwhelming.
Solution: Companies can overcome these problems by establishing clear policies. Once that is done, it must be clearly communicated to employees and hotel partners. You can use pre-authorization forms, where everything about billing arrangements must be mentioned. You should ensure the hotels and the employees acknowledge this before the stay. By implementing a centralized billing system, you can ensure that all the expenses are funneled through a single point. Hence, simplifying the whole expense and billing process.
Bid Goodbye to Hotel Payment Processing Challenges
Companies worldwide are struggling with hotel payment processing challenges. However, implementing the above-mentioned solutions can overcome the challenges in hotel payment seamless. Ensuring a smooth hotel payment experience can lead to more productive and stress-free business travel.
The best way to ensure the right hotel payments without any hassle is by leveraging itilite. itilite is a SaaS-based corporate travel management company that simplifies business travel for employees and companies. The itilite virtual one-time cards for hotel booking reduce risk, eliminate the credit card authorization process, and helps easily centralize hotel payments. The card helps you with hotel payments without compromising on data. Moreover, itilite software deploys state-of-the-art robust security infrastructure with certifications in GDPR, SOC2, ISO 27001:2013, Level 1 PCI DSS, and more.
Book a free demo with itilite to experience the robust security features yourself!
