Why Increasing Choice for Travel Agencies Has Never Been More Important

Author: Michael Butler, Senior Vice President, Commercial Cards, Citi

Think global, act local, is one of the key strategies that online travel agencies (OTAs) and other travel intermediaries should adopt as they respond to a changing travel landscape.

The payments ecosystem for OTAs has transformed in recent years, prompting the need for travel businesses to ensure they have systems that scale globally, while being able to serve local partners, according to a panel of experts that Citi invited to join a recent webinar on travel payment trends.

As we opened the session, Paul van Alfen of Up In the Air Consultancy, shared his view on the evolving nature of travel payments and how travel businesses need to use “a 360 degree view on the whole payment process”, focusing on assessment, opportunity, solutions and delivery as the high level strategies to target in order to adapt, grow and ultimately succeed.

“Travel is a very complex environment, which we need to navigate as participants of an ecosystem,” van Alfen said. “Travel intermediaries and travel agencies play a very important role in the middle, they accept payments for bookings on behalf of their suppliers, but they also have to pay out.”

Being at the center of this ecosystem means OTAs have a need for adaptability and flexibility, which is why Citi has evolved its offering to provide a variety of products to help travel intermediaries meet all their needs. Travel intermediaries need access to the right products in the right currencies and being able to pay a supplier with their preferred products, in their preferred currency, is key to taking advantage of things like reduced foreign exchange rates.

The Travel Agency Card is Citi’s latest wholesale virtual card product and offers access to 21 global currencies and Mastercard product codes, MBS, MBA, MBG, MBH, MBI and MBJ, all via a single contract and credit line.?Built in partnership with Mastercard, the product is designed to secure, streamline and automate global travel payments, and complements Citi’s extensive local virtual card issuance capabilities in 46 countries and 30+ currencies globally, including regulated markets such as Brazil, India and South Africa, all of which are accessed via Citi’s global proprietary API.

Through a combination of centrally issued wholesale and local in-country issued virtual card products, global currency footprint and OTA credit offering, Citi is well positioned to support OTA’s wishing to maximize virtual card payment acceptance to drive growth.

Sofoklis Limniotis, head of digital payments and e-platforms at Hotelbeds Group reiterated the importance of credit to travel intermediaries.

“I cannot stress enough the importance of running our program with a healthy credit line associated with it. As a B2B intermediary, the payment flows are not connected end to end with each other… it’s not a matter of anything but working capital.” He added, “As we move into more flexible payment methods, it gets more and more important.”

Limniotis pointed to the success of the Mastercard Wholesale Program (MWP), which allowed Hotelbeds to expand acceptance across businesses, lowering costs and being able to localize their proposition. He said that payment innovation was becoming a core strategy for travel businesses: “We’re all witnessing the emergence of new technologies, consumer behaviour changing on a constant basis, and due to the pandemic all these trends are accelerating. It is a fact that the overall ecosystem, particularly in the hospitality industry is more interconnected than ever, but presents more opportunities than ever. We have to take payment innovation as part of the core strategy of our business.”

He added: “From one side, we’re trying to understand the demands of our partners, and on the other side we’re managing how to organize ourselves internally, to make it as seamless as possible and as scalable and simple as possible for us on a daily basis. We’re really relying our strategy on payment set ups that are end to end, that offer a very clear solution to the dynamic set up of the industry.”

Citi partnered with Mastercard to embed virtual cards into the heart of the Travel Agency Card by Citi, it’s a proven technology that enables travel intermediaries to support global portfolios, flexible pricing and extend credit lines – when liquidity has never been important. Commenting on the technology during the webinar Kevin White, vice president Travel Industries, Mastercard said; “We’re seeing a real uptake of the merchant of record method of payment for travel agencies, and virtual card technology is key to ensuring its adoption and ultimate success by offering extended credit while delivering enhance flexibility and control over commercial payments.”

Nicholas Ware, head of product management, Payout services at Outpayce from Amadeus, agreed that businesses have to adapt as the landscape changes: “We’ve always been focused on giving travel sellers choice, the ability to choose the right product that will allow them to pay their suppliers correctly, and giving them access to different issuers and different products.”

He also spoke about the growing trend of OTAs becoming merchants of record, and the additional complexity this adds to the ecosystem. “From an OTA perspective, it gives them more control over customer experience and that’s crucial these days. But then how do you then pay your suppliers if you’re not passing the customer card onto them? It adds complexity, they need to start using the right product to pay the supplier. It’s super important, lots of OTAs are investing in tech and fintech, and payments is a key part of that investment.”

After a strong debate, the webinar was rounded off by Mastercard’s Kevin White who encouraged participants ?to focus on the four high level strategies that van Alfen had highlighted at the opening — assessment, opportunity, solutions and delivery. And that by taking the time to reassess the payment practices at the core of operations, travel intermediaries can ensure that payments are playing their part in accelerating ambitions and realizing maximum sustainable growth through 2023 and beyond.

You can connect with Michael Butler of Citi directly on LinkedIn here.

To hear more insights on how the changing payments landscape will impact travel intermediaries, and how they can take advantage of those changes, watch the full panel here