Travel today is much more than backpacks and hostels (those were the days), beaches or amusement parks and free buffet breakfasts at the hotel (along with sunburn).
As more consumers turn to luxury and adventure travel experiences, payments are along for the ride.
Indeed, the future growth of that part of the travel industry depends so much on payments.
That was the main message of a recent discussion between Colin Smyth, head of travel at Flywire, and Karen Webster of PYMNTS.
“What we see is that [adventure travel] experiences in general are increasing dramatically,” Smyth said — a statement that can apply not only to travel but to commerce and even payments more generally.
Factors driving the rise of adventure travel experiences include (but are not limited to) the exhibition-like influence of Instagram and the ongoing and increasing dedication to healthier lifestyles. (Couch potatoes, for instance, are unlikely to jump from a helicopter in order to ski.) As well, people with ample disposable income are always looking for ways to spend it.
But travel that is deemed adventurous presents its own payments-related challenges.
Big Challenges
One of the biggest challenges is the tendency of many adventure (and luxury) travelers to share their adventures as part of a group. More and more consumers are getting used to doing P2P payments — one way to split tabs — but travel experiences are a much different beast than are group dinners in restaurants. And the travel industry is still working to catch up with those changing consumer desires.
“More and more, OTAs [online travel agencies] are moving into that group opportunity,” Smyth said. “Consumers and guests are looking for seamless payments.”
He mentioned Uber as the ideal example and trend-setter for seamless payments. He also said travel operators and OTAs — both of them vying for more control of travel consumers and the revenue they produce — have to get creative with payment methods and options, even if that means just offering installment plans.
For OTAs and tour operators, taking payment up front is one thing. Disbursing 70 percent to 80 percent of those funds to multiple entities over time in different currencies is entirely another.
Local currency issues create challenges for OTAs as well as locally-based adventure tour operators. Such businesses, Smyth noted, pay their workers and suppliers in local currency, and that is how those travel operators would prefer to be paid themselves.
“Now these [operators] are forced into navigating the complexity of payments, and they don’t want to be,” Smyth said, describing the opportunity for companies such as Flywire. “It will only get harder.”
Big Opportunity
Those opportunities are significant.
According to fresh PYMNTS research — the new Luxury Travel Study, done in collaboration with Flywire — 59.7 percent of adventure vacation travelers and 56.7 percent of luxury vacation travelers said they would take more trips if they had access to innovative payment solutions that enabled multiple participants to contribute funds, make recurring payments or track payments, among other features. Not only that, but 45 percent of adventure travelers believe innovative payment solutions would make it easier to pay for vacations.
Such findings show how important payments are in helping to spark further growth in the $1.1 trillion luxury travel market. Besides payment options that enable multiple participants to contribute (for those group trips), travel consumers are also looking for features and tools such as automated recurring payments, tracking capabilities and desktop- and mobile-friendly interfaces.
Control Issues
Payments are not the only force for growth. High-end travelers, even the more adventurous ones, tend to want more pampering — and that’s a customer service opportunity for operators and digital companies to offer services (and upsells), such as figuring out a customer’s favorite wine. All that — along with better payments — can pay major dividends for businesses operating in this space.
“Operators want more control over their customers,” Smyth told Webster. “They want to have as much of a relationship with the guest as possible. They want to know what your likes and wants and needs are prior to the trip.”
Indeed, the issue of control is a big one that does involve payments. By offering more payment options, and better payments in general, travel operators can gain more control over their customers instead of sharing that control with online travel agencies.
Payments, of course, can be an important part of all of that, a way to make sure the adventure is a pleasant part of the trip, and that clunky transactions don’t add their own drama to the experience.
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