Do you manage financial operations at a hotel, OTA, airline or any other e-commerce site that sells travel?
If so, you are very familiar with the complexities of the hotel distribution reservation network.
NB: This article is written by Deena Jones, senior product manager at WEX.
Regardless of the reservation channel, there is no difference in the settlement process in the PMS systems for a virtual credit card versus as a physical plastic card used by leisure guest on a brand.com site.
In order to understand the issues better, WEX conducted market research on transaction and authorization data with a worldwide hotel chain and one of the largest online travel agencies in North America.
The findings revealed that the majority of the challenges are due to improper settlement processes within the property management systems.
The study on authorization data trends across the WEX OTA portfolio of clients identified an integration issue in the reservation distribution network and a worldwide hospitality chain.
Trend
Over a 3 day period, over 41,000 decline authorization attempts received by properties from one worldwide hotel chain company.
Analysis
Based on the timing of the decline attempts, and reservation future arrival dates, it was suspected that these declines were a result of an automated job procedure initiated in the property management system.
Working together with the online distribution department of the worldwide hotel chain, it was identified that the reservations were being inserted with a guarantee rule of FULL PRE PAY instead of GCC (guarantee credit card).
Thus, the PMS night audit procedure checked for a credit balance on the reservation without success and then tried to authorize card for payment. Due to controls of effective date applied to card from OTA these authorizations were appropriately declined.
Solution
Change settings in the Property Management System so that the reservations were not getting inserted as FULL PRE PAY for OTA reservations.
Result
Reduction in False /Positive Alerts to OTA’s on decline authorizations from hotel suppliers. Significant reduction in unnecessary authorization attempts to their Merchant Acquirer.
Here are some best practice guidelines for hotel suppliers:
- Ensure Pre-Authorization and Transaction Settlement are based on GTD Type and Deposit/Cancel Rule associated to the reservation. This will avoid unnecessary Pre-Authorization declines from automated background jobs in many Property Management Systems.
- Ensure Pre-Authorization code is submitted with subsequent settlement transaction.
- Create two folios – One for Company Charges; and the other for Guest incidentals.
- Partial payments and/or refunds can be transacted as long as they do not exceed the total authorized amount.
- Settlement transaction must be in the property’s default currency.
WEX Travel is a solution that utilizes single use virtual card technology to enable payments to suppliers in the travel industry. It provides efficiencies to both hotel suppliers and buyers.
Hotel supplier benefits
- Faster Receipt of Payment - Many payment terms are Net 30 which means that, depending on the billing cycle, hotels may not receive payment until 60 days after check-out. Virtual cards are settled as standard card transactions, thereby significantly improving hotel cash flow.
- Reduction of Payroll Expenses- Generating, distributing, and ensuring that an invoice is correct is costly. Suppliers need to ensure that they’ve invoiced for correct rates, correct incidentals were included, etc. Virtual Cards eliminate the invoicing process and overhead associated with managing accounts receivable.
- No additional hardware/software- Suppliers that already accept any form of card payment do not need to learn any new processes. No difference between processing a virtual card versus a physical plastic card from a consumer.
- Guaranteed Payment – Credit Card transactions are screened as they are processed to reduce the risk of fraud.
Key benefits for buyers- Automate — The process of issuing and reconciling payments can be time consuming and resource intensive. WEX Travel allows you to streamline and automate the process, reducing Accounts Payable efforts.
- Control — WEX Travel offers a wide range of configurable authorization controls such as exact transaction value limits, payment effective and expiration dates for authorization, and Merchant Category Code restrictions. Since a card is used just once per transaction, you maintain the highest level of control to help prevent misuse, eliminate overspend and unapproved transactions.
- Information — As part of the payment process WEX Travel captures key reference data that you define such as booking ID, travel dates, traveler name, itinerary number and contracted rate. Appending information to the payment transaction is key to automatically reconciling payments and identifying exceptions that require further analysis.
NB: This article is written by Deena Jones, senior product manager at WEX. It appears here as part of
Tnooz’s sponsored content initiative.
NB2: View the webinar Simplifying acceptance of virtual credit cards for travel sellers
NB3: WEX continues to drive virtual card payment efficiencies through the continued analysis of data and leveraging our clients’ relationships with the suppliers to address any challenges. Active participation in hotel technology organizations such as HEDNA and HTNG keeps us abreast of technology changes and advances in the travel vertical.
With the increased acceptance of the virtual card payments across the hotel supply chain these organizations have recognized a need to establish a standardization of Virtual Card processing across all issuers, buyers, suppliers, and credit card networks. HTNG is currently ramping up their Virtual Card Payment workgroup and if you are interested in participation please contact workgroups@htng.org
NB4:Travel currency image via Shutterstock.