What new travel consumers want and how to give it to them
The travel industry is pivoting to contactless experiences to win customer confidence — and merchants need to play their part by offering seamless and flexible payments
The travel industry was among the sectors hit hardest by the pandemic. International passenger dropped 76 per cent in 2020 compared to the year before, according to the air transport body IATA1. The UN World Travel Organisation estimated that the decline in tourist arrivals in the first 10 months of 2020 translated into a loss of $935bn in export revenues2.
Then, as vaccines arrived, travellers were faced by a potentially daunting array of regulations and restrictions — documentation such as proof of vaccination, passenger locator forms, testing requirements and quarantine rules.
The return of business travel to pre-pandemic heights remains a matter of some debate thanks to remote working and video conferencing. But as borders open, vaccination rates increase and people look towards the new year, the picture looks rosier for leisure travel — although we are not out of the woods yet.
Digital first travel payment solutions
The travel industry’s advantage is that it was a relatively early adopter of digital technology. That puts it in a good position to build confidence and reassurance by offering a socially distanced, contactless customer journey.
“Travel providers like airlines are increasingly focused on delivering a frictionless payments experience throughout the entire journey — from booking to destination,” says Jean-Christophe Lacour, Head of Merchant Services, Payments at travel tech company Amadeus. “We’re moving to a world, where people expect one-click payment from their mobile.” He adds that Amadeus’s research4 found the switch to digital payments had accelerated by four years during the first 12 months of the pandemic across travel as passengers avoided cash.
Inflexible legacy technologies are keeping many companies from creating a frictionless payment experience, believes Cameron McLean, PayPal’s Senior Vice President, Europe and Australia Enterprise. “It is one of the key things customers demand today, not only when they pay for their travel, but also when they need to be reimbursed — be it a cancelled flight or lost baggage.”
Price is no longer the main factor in travel decisions, according to a study by the Expedia Group. Instead, financial security (including the chance of getting a refund) and safety ranked as top priorities in its research among 8,000 travellers in eight countries5. “The decision making process is much more complex now,” says McLean. “Most importantly, [customers] want their money and data to be safe.”
To increase conversion rates, travel merchants will need to make flexibility a watchword. “We must adapt to customers’ payment preferences,” says Tiago Phillimore, Director eCommerce & Digital Experience at TAP Air Portugal, “through [offering payment by] instalments, for example, but also by making transactions as seamless as possible — requesting as little data as possible.” Tiago Phillimore also notes the understandable trend to bookings made at short notice, with travellers adopting a wait-and-see approach. “Customers are buying with a lot less anticipation.”
Trends in touchless travel
The march of touchless technology is unstoppable. The annual Air Transport IT Insights survey from SITA7, the air transport industry’s communications and IT specialist, found that 84 per cent of airlines and 89 per cent of airports are prioritising a completely touchless check-in process.
Airlines are also looking at various customer services
becoming contactless, including automated lounge access and
mobile lost bag reporting9. Passengers on United in
the U.S. can also use the PayPal app to make touch-free
inflight purchases, with or without Wi-Fi.
The touchless travel experience extends to airport
shopping and dining. Munich Airport became the first airport
in Europe to introduce PayPal QR Code — a mobile and
cash-free payment system — in the 41 stores operated by
eurotrade, the airport’s wholly owned retail
subsidiary. Customers can shop without touching cash or card
readers with the touch-free PayPal QR Code and their
smartphone.
Similarly, Amsterdam’s Schiphol Airport launched a contactless food ordering service that allows passengers to use QR codes to pre-order food and drinks at the airport’s food and beverage outlets after security control.
In addition to satisfying the demand for safety and flexibility, travel businesses will need to integrate enhanced payment solutions that provide customers with choice and address evolving customer behaviour, whether that is wallet, credit and debit cards, mobile payments or buy-now-pay-later solutions. That will mean building strong relationships with payment providers.
“Competition for travellers is intense and will remain
so. That means providers really do need to invest in a smooth
search, shopping and booking experience across all
channels,” says Lacour of Amadeus. “Being able
to accept a wide range of modern alternative payment methods,
including and beyond cards, is a great way to boost conversion
and ensure that the needs of travellers are met.”
Dealing with payment is a crucial element in the
customer experience, and it will play a key role in the
recovery of travel merchants. It is no small challenge, but
one that must be grasped today to ensure future industry
growth.
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1
IATA World Air Transport Statistics (WATS) 2020
2 UNWTO World Tourism Barometer, Dec 2020
3 Tui as reported in Oct 2021
4
COVID-19 accelerates digital payment shift by four years.
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5 Expedia Group, The Traveler Value Index 2021
6
Expedia Group, The Traveler Value Index 2021
7 SITA,
2020 Air Transport IT Insights
8 SITA, 2020 Air Transport IT Insights
9 SITA, 2020 Air Transport IT Insights