As costs created by out-dated payment systems and payment methods that fail to keep up with technology usage in other areas,The travel industry faces "being left behind," says eNett International, based on new research findings from 1,500 travel industry respondents from across the globe.
eNett believes the results show the sector needs more focus on "the transformational power of more innovative payment methods." Otherwise, eNett says travel agents, wholesalers and tour operators will continue to face challenges that impact their ability to compete.
Anthony Hynes, managing director and CEO of eNett International said: “The travel industry continues to face a tough climate. A business’s ability to deliver and succeed in this environment will be dictated by how well-placed it is to control costs, minimize risk, utilize its data and ultimately enhance revenue.
The research was undertaken by PhoCusWright; the full set of findings will be revealed in a series of upcoming eNett and MasterCard whitepapers under the theme of “The Future of Travel Payments,” which will provide new insight into travel payment trends, challenges and opportunities.
The research highlights the need for the industry to look beyond standard payment fees and take a wider view of the costs including: manual processing; reconciliation and reporting; foreign exchange; delayed cash-flow; fraud; and supplier default.
Those hidden costs are creating an unnecessary burden at a time when travel suppliers are already under relentless pressure to cut costs and increase margins, says eNett.
One such example involves the cost of reconciliation. Agencies turning over between $1 million and $5 million in business typically require one part-time staff member to manage reconciliation, fraud, chargebacks and related functions.
For larger companies with more than $1 billion in bookings, the survey found that agencies need an average of 16 full-time employees to manage payments.
Similarly, the research has shed light on how agents are losing with unpaid commissions. Forty percent of the respondents said this was a problem for them. Many of those affected use a settlement service to recover lost hotel commissions, but this comes at a cost of 10 percent to 15 percent.
Agents, though, are starting to make changes which could help create major efficiencies and strengthen their competitive position. They involve discovering the cruise cost of payments, learning how to reduce exposure to credit card fraud, surcharges and foreign exchange and seeing how to improve efficiency with payment processing that's integrated with the GDS.
For more information, visit www.enett.com/insights.