The demand for a safe, frictionless, and contact-free shopping experience has seen ecommerce explode in the last year. So much so that it recorded the highest growth rate in five years as home-bound consumers sought alternatives to shuttered brick-and-mortar stores. Now that restrictions are easing, there is some movement away from ecommerce and back to physical retail, with an estimated 15.3% of all retail trade in Europe coming from ecommerce in 2021 versus 16.2% in 2020. In short, it seems as even though ecommerce has benefited from lockdowns, the high street is returning.
The story is very different for the continent’s travel and hospitality players, which can range from multinational hotel chains to family-run cafes, restaurants and bars. These businesses have been amongst the worst affected sectors because it is an in-person experience and there is no ‘mail order’ equivalent of a hotel room or a night out with your friends.
What’s next?
Following the easing of lockdown restrictions in spring 2021, there is now a strong demand for vacations, with many craving a break after two challenging years. However, with many popular destinations both within and outside of Europe still affected by regulations, many Europeans are choosing ‘staycations’ rather than foreign travel. Across Europe, Worldline’s payment data shows that in general, travel agents who offer domestic tourism are performing better than those who focus on international travel.
In summer 2021 we have seen a good recovery in the number of transactions on leisure and tourism hospitality destinations and a 15% increase in average transaction value when we compare it with the same period last year. At the same time, in the travel industry, there was a 23% increase in the number of transactions yet a 64% drop in average transaction value as foreign travel decreased in favour of local experiences.
But there is no timetable for turning back to normal and factors such as travel regulations or vaccination rates are beyond the control of businesses. So, what can companies working in travel and hospitality do to maximise their profits in the upcoming months?
Rebuilding revenue
The trajectory of the hospitality sector over the last decade has been to consolidate on online platforms. Booking and delivery platforms provided a way for customers to find hospitality companies in a single, convenient place and have largely replaced ordering food or booking rooms directly from businesses. However, these companies take a cut from any bookings or orders made on their platforms – as much as 35% - meaning that at a time when the hospitality sector is already in difficult straits, they are paying a third of their revenue just to get customers.
Middle-men companies are so ubiquitous that few hospitality businesses have their own ordering systems on their own websites. This could begin to change as more companies discover that it is possible for companies to host their commission-free booking systems on their own websites and have as many customers as would be coming through comparison websites and delivery apps. Google already shows search results for hotels or restaurants in an area in a manner that is very similar to hotel comparison websites, but which allows potential customers to go directly to a venue’s website rather than through sites that take a percentage of their profit. Having a mobile-friendly website, a strong social media presence and SEO-optimised content can put a hospitality businesses’ website above those that exist to funnel people to booking and delivery apps.
Digitalise services and payments
As is the case for much of the economy, the digitalisation of services and payments is going to be paramount in reviving the travel and hospitality industry. Most hotels already have a presence on holiday comparison websites that allows travellers to find them easily and opens the doors to a steady stream of new bookings without having to invest in additional marketing or maintaining their own online booking system. Hotels should look to move more operations online, including digital check-ins, room service ordered and paid for by an app, and communicating with hotel staff via instant messaging to ask for cleaning or wake-up calls. This will improve the experience customers have but will also offer hoteliers a rich source of data points that can be harnessed to make adaptations in their establishment and drive profits. Digital payments are key here, connecting the data to the company’s revenue.
For restaurants, online ordering has become common, perhaps even ubiquitous. As it reduces the workload for service staff, digitalisation is something that ideally should continue, perhaps being incentivised through discounts on online orders. A mix of both physical and digital will allow the industry to save money in the short term as the pandemic begins to fade and may change the way customers interact with food service in the long term.
Adapt to a changing landscape for long-term success
Worldline’s partnership with eviivo means that hotels, B&Bs and vacation rentals have a much greater ability to host their websites and manage their own commission-free bookings, while also being assured that digital payments will be processed securely thanks to Worldline’s expertise. Sandip Gadhia, CFO at eviivo, says that ‘advancing digital operations enables hotels to streamline operations and invest staff resources into other areas of the business to help it grow. And more importantly, this provides guests with a frictionless and more hygienic experience. We see an increased emphasis on this following the psychological shift we have all had to make as a result of the pandemic and more demand for fully integrated digital payment solutions.’
If you require more in-depth advice on your payment setup, get in touch with our experts today.
About Rohit Anhal
Rohit Anhal is the International Partnerships and Business Development Lead at Worldline, driving Commercial Partnerships. He has been working in the payments industry for 22 years in functions ranging from Independent Software Vendors, PSPs and acquirers. Rohit’s career with Ingenico started in 2017 when he was a Key Account Manager, managing strategic accounts in the UK. In his current role, he is working with the Nordics, US and UK regions, bringing on board new merchants and partners who are looking to expand their footprint across Europe with integrated payments. He also manages strategic partners and supports the wider Regional Business Channel teams. Outside e-payments, Rohit is passionate about the automotive industry, being a self-proclaimed car fanatic. He also loves playing golf in his spare time.
About Worldline
Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry and #4 player worldwide. With its global reach and its commitment to innovation, Worldline is the technology partner of choice for merchants, banks and third-party acquirers as well as public transport operators, government agencies and industrial companies in all sectors. Powered by over 20,000 employees in more than 50 countries, Worldline provides its clients with sustainable, trusted and secure solutions across the payment value chain, fostering their business growth wherever they are.
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