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2020 has undoubtedly been the worst year ever for the travel industry. Hardly anyone, if anyone at all, was ready for such a blow. A year of transition, recovery and resilience begins now. A time of change that will set up a new era in the travel business.

In order to shed some light on what to expect from 2021 from a business perspective, we talked to 5 experts in the travel sector about the trends emerging, with a special focus on B2B payments.

#1 Restore trust and minimize risk

“Probably the most challenging issue the industry will be facing during the transition process is risk mitigation,” explains Voxel President Xavier Ginesta. The fact is that in March 2020, insurance companies started to withdraw a large part of credit from operations in the sector. Trust among the industry players suddenly evaporated. And consequently, the risk of default increased.

Mastercard Business Development Travel VP Chiara Quaia’s opinion is along the same lines. “The uncertainty in the evolution of the pandemic has driven an increase in the demand for secure and reliable forms of payments from both payers and payees”.

Relationships between clients and providers that had been working together for years with the safety-net provided by insurers have been broken. And throughout 2021 the industry will have to find new mechanisms to build the trust needed for B2B clients and suppliers to operate again in the new normal.

#2 Savings and efficiency will be a priority

As a result of the fall in income that the industry has experienced, savings will be a priority throughout 2021. And B2B payments will be one of the most and best optimized processes in the coming years.

“In the area of B2B payments, payment inefficiencies have taken the form of high payment processing costs, breakage, error-prone and expensive manual settlement procedures and, above all, non-payment risks due to the reliance on no longer existing (or severely reduced) credit insurance”, explains Xavier Ginesta.

XanderPay founder and HEDNA Board Member Mike Carlo speaks in the same vein, “We expect to see the move toward right-sizing B2B payments accelerate – cost savings will be a key driver well into the 2020s”.

These savings will not only come from process optimization, but also from the importance given by businesses to currency exchange, in a sector that has been, is and will be global. “There is a clear need for tools to help the financial department avoid currency fluctuations as the business scales internationally. In 2021 we will continue seeing an already apparent trend, FX in the Travel Industry is increasingly important”, explains Marc Padrosa, the Global Industry Leader (Travel) at Kantox.

#3 Digitization and technology will be a must

If the priority of businesses is to generate savings and efficiencies, the focus will have to be on digitization and innovation.

“This is probably the trend that will drive greater innovation and bring longer term benefits and changes to the B2B payment travel ecosystem. (…) Digitisation coupled with automation will bring efficiency in payment processes to the next level, especially in an industry like travel which continues to rely on very manual processes for back office operations”, explains Ms Quaia from Mastercard.

And it is thanks to this crisis that many businesses have realized how important process automation is in terms of cost savings, and they have taken advantage of this year off to see how they can digitize and automate inefficient processes.

In fact, after decades on the back-burner, many travel businesses have decided to digitize and automate their back-office processes with a common goal: to emerge from this crisis strengthened and prepared for a new era.  “Most of the travel companies have invested most of their remaining resources to build an infrastructure that leads to digitising and automating all those processes and tasks previously done manually, from accounting to payments or reconciliation”, says Kantox’s Marc Padrosa.

And those that have not will have to get their skates on, since “Digitization will be the new normal as far as back-office processes are concerned”, Mr Ginesta predicts.

The future is undoubtedly digital.

#4 New methods of payment

The emergence of new methods of payment will be one of the big changes that we will see in the industry, not just in 2021 but over the coming years.

The experts we consulted agree that these new payment methods will coexist with those already in use today, such as VCCs. And technology has allowed the creation of payment methods that meet all the conditions that travel businesses require in a situation such as today’s: cost savings, automation, security and trust.

This is how Logitravel CFO Jesús Pons sets it out: “What I perceive in the short term is possible new methods of payment that facilitate and lower costs in transaction frequency. Whoever manages to merge increased payment frequency with decreased payment and collection costs, with information on the financial status or compliance of the different players, will be well on the way to changing the way we use payment methods in the future.”

To which Marc Padrosa at Kantox adds: “I believe that the current situation will help accelerate the creation of new forms of payment in the industry, which is always a good sign. What we are experiencing are necessary changes, that if it were not for the pandemic, it would take years to occur”.

To address process inefficiencies in B2B transactions in the industry, initiatives have emerged that will be key to the new payment landscape. One example is the Payment Manager, born in the framework of the Open Payment Alliance and developed by Voxel.

And in this vein, at Voxel we have been working for months on programs such as the Early Adopters Program that are successfully fostering the adoption of baVel Payment Manager, the new payment channel for the travel industry.

A solution that is already endorsed by industry experts such as Mastercard: “Solutions like Voxel’s Payment Manager, which offer digitisation and automation of payment processing, reconciliation and invoice generation in one single solution provides the best option for travel agencies and hotels looking to modernise their systems.”

#5 Changes in distribution

Finally, distribution and channels as we have known them will also change. Distribution will evolve towards a model where direct contracting becomes predominant. Mike Carlo from Xanderpay explains: “We believe there will be an acceleration of the trend toward centralized payments, including a great push for direct bookings by the hoteliers”.

This change in distribution will inevitably have an impact on payments. In the words of Jesús Pons from Logitravel “the great change in the distribution channels that travel service providers have used in 2020 will doubtlessly continue to provoke changes in rates offered in 2021, and there will consequently be changes in the advanced amounts and the collection methods used so far, generating more booking transactions than in previous years.”

2021, as well as the entire coming decade, is perceived as a huge challenge by all businesses in the travel industry. Collaboration, technology and the emergence of new players will mark our sector over the coming years. And while it is true that the crisis has been earthshaking for travel, it has also been and is an opportunity to start building the future we want for our sector.

• Mike Carlo, founder at Xanderpay and Board member at HEDNA. 
• Jesús Pons, CFO at Logitravel Group.
• Chiara Quaia, Vice President Market Development Travel Enterprise Partnerships at Mastercard. 
• Marc Padrosa, Global Industry Leader (Travel) at Kantox.
• Xavier Ginesta, Chairman at Voxel. 

The complex distribution chain of the travel industry and the current cancellation and credit policies have contributed to creating scenarios in which the non-payment risk is increasing. In a context of the volatility of the market, exploring new strategies to mitigate the risk of non-payment has become one of the main challenges the travel industry is facing. 

Thereby, the last session of the baVel Digital Summit was focused on the study of the non-payment risk contexts derived from the COVID-19 crisis. The session was held last Wednesday, October 21, and was attended by key players in the sector such as Mastercard, Ixaris, Hotelbeds and Ingenico Payments.

Lack of credit in the market

During the session, the panellists agreed that due to the coronavirus crisis, insurance companies have eliminated the availability of credit in the industry and the risk has increased dramatically.

This caused hotels and travel agencies to redefine their payment terms with the distribution chain: “We are seeing a movement towards charging at the time of booking due to lack of credit, and not as it had been until now at the time of check-out or even months later ”, stated Xavier Ginesta, President of Voxel Group.

In this line, Alex Rodriguez, Lead Product Manager at Hotelbeds, providing a bedbank point of view, one of the intermediaries between hotels and OTAs, highlighted the importance of synchronizing and redefining the payment flows of the industry using technology and innovation.

80% of attendants have experienced difficulties in obtaining credit for their main clients or in maintaining credit terms with their suppliers

Credit cards and pre-paid refundable rates

Facing this situation, the travel industry is opting for pre-paid refundable rates model, where virtual credit cards stand out as the most common and secure form of payment method.

Along these lines, Tiago Coimbra, Head of Hotel Payments at Ixaris, agreed on the increasing use of virtual cards in the industry. According to Ana Arjones, Travel industries Enterprise Partnerships Manager at Mastercard, credit cards offer payment protection once the charge is authorized. “If a pre-paid refundable rate is paid with a credit card at the time of booking, even if it is cancelled or the hotel goes out of business, the client’s refund is guaranteed, as long as the cancellation policies are met,” said Arjones.

More than 75% of attendees have increased the use of VCCs since the start of the pandemic.

On the other hand, after adopting a project that involves the massive use of virtual credit cards, Hotelbeds highlighted the high cost and some operational problems, such as fraud, lack of consistency in payment conditions and compliance with the requirements of invoicing, such as the main limitations of the VCCs.

The Payment Manager: innovation in B2B payments

To try to find a solution, HEDNA and HTNG, with the collaboration of Voxel Group, are leading the Open Payment Alliance (OPA), the new B2B payment standard for the travel industry that aims to address the existing limitations.

The Payment Manager, main OPA’s tool, allows the creation of a single specialized payment channel for the industry, decoupling the payment flow from the booking. The OPA technology aims to address the existing inefficiencies of the B2B payment channel and, furthermore, help rebuild trust between actors thanks to the traceability, automation and optimization of all processes related to payment.

More than 85% of attendees believed that in a period of 5 years Payment Managers will be as popular as Channel Managers in the market.

The event had more than 100 live viewers. You can watch it again here:

Remember that the last session of the baVel Digital Summit “Payment Manager Early Adopters Program” will review the keys of the Open Payment Alliance’s technology. Save your spot: