Why Online Payments Increases Hotel Guest Spend

Prior to COVID-19, cash was already on its way out; the pandemic simply accelerated this trend. But as all hoteliers look to implement contactless payment systems, it’s critical that you grasp how these platforms can also work to your advantage insofar as motivating guests to spend more overall.

 We are all trying to build a comfortable environment in our public spaces while still accommodating all the new requirements for viral safety. With the implementation of such measures as plastic barriers at the front desk, queue markers on the ground for socially distanced lineups and mandating all employees (and possibly guests) to wear PPE in the lobbies, this creates an inherent sense of anxiety that will negatively halo onto any transactions.

So, with this in mind, why stop at a touchless tap credit and debit card terminal when you know that these still-physical interactions will induce a subtle sense of unease? Why not go the extra step to make all transactions online?

Just imagine yourself staying at a hotel sometime this autumn where it’s a chore to throw on a mask and gloves just to leave your guestroom. Then, upon arriving at the lobby, it exudes an intensely distressing feeling with all the new social distancing and sanitization measures. You’ll unconsciously want to get in and out as fast as possible, and you likely won’t be in the right frame of mind to consider an upsell or additional amenity purchase introduced by one of the staffers. In other words, these Covid safety protocols are creating an obtrusive point of friction that will inhibit you from maximizing RevPAG (revenue per available guest).

For a quick history lesson on why this is significant, start by looking at the dawn of credit cards themselves in the latter half of the 20^th century. Compared to credit cards, when we hand over physical cash or coins to pay, there is a stronger sense of pain because we see and feel corporeal objects leaving our possession. If we were still dealing in gold and silver ingots, this painful feeling would be even more pronounced than with representative bank notes. This is, in other words, a point of friction. Swiping a card and signing a receipt diminishes this mental impression because we are not giving up anything in the material world before our own eyes; it’s all abstract with a subtraction from our coffers that we must calculate in our heads.

Tap credit cards or phones with NFC-enabled payment apps go a step further by disposing of the swipe and signing actions, further reducing the element of touch and how long our minds linger on any singular payment. Then, of course, the pinnacle of this is online shopping whereby the person-to-person physicality of the interaction has been totally excised from the transaction process, minimizing the pain a customer feels in paying. Just look at Amazon’s stock price to confirm this underlying psychology.

Online shopping and internet-based transactions are as ‘frictionless’ as they get because any points of friction such as touching paper money, tapping some plastic onto an NFC terminal or dealing directly with a hotels staffer have been removed from the psychological equation.

“Besides reducing the workload for accounting, the whole idea behind frictionless payments is that the easier it is for guests to pay the more they end up spending,” said Saar Fabrikant, CEO of b4, a hotel tech supplier which makes an online payment platform called TransForm. “Contactless can mean in-person transactions via a credit card chip or mobile phone, or it can also mean facilitating online payments that guests can complete from the comfort of their homes or guestrooms.”

While hotels must do their post-pandemic due diligence in upgrading their in-person touchless payment options to facilitate the use of NFC payment terminals, moving as many transactions as possible online has clear benefits above anything that’s face-to-face.

In the same vein as why guest messaging apps are vital moving forward, for a guest to receive an email containing a private payment portal is far less stressful with the virus still around than having to interact with a hotel employee even when the necessary precautions are taken. Next, every payment app or POS requires a ton of work to setup the interface and automatically connect it to a property’s accounting systems, whereas a web-based gateway can be agnostic for any software interactions. Lastly and critically, ecommerce makes paying more abstract to thus encourage additional spending by the guest.

For these reasons, as you explore all the many ways to make your guest experience more contactless, it is worth taking a second look at what digital tools you can deploy to heighten the frictionless nature of any and all payments. Consider moving towards an in-person-supported online shopping model to achieve better RevPAG in order to help compensate for a lack of occupancy in the near-term.

The world’s most published writer in hospitality, Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also on several boards for companies focused on hotel technology. His work includes four books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017), “The Hotel Mogel” (2018) and “More Hotel Mogel” (2020). You can reach Larry at larry@hotelmogel.com to discuss hotel business challenges or to book speaking engagements.

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