Denver – Despite its headaches, travel management pros who use virtual payment say it’s too beneficial to pass up. Speakers here during the Global Business Travel Association convention last month raised, and attempted to answer, the many questions.
Virtual payment is a popular option for travelers without corporate cards. It cuts accounting reconciliation times and protects against fraud. Various controls allow managers to authorize each single-use card’s spending limit, dates and vendors.
Al Mazzola, director of travel services for Sykes Enterprises, said his monthly hotel reconciliation workload used to be three or four days. All charges went on his card, resulting in giant monthly statements. “All I’d see is Holiday Inn Chicago or Marriott somewhere,” he said. “We had no idea who the traveler was.” That meant lots of calls to hotels to get folios. After implementing virtual payment, that task now takes 90 minutes.
“I love the virtual pay system; I would never go backwards,” Mazzola said. “But I certainly feel the pains of it.”
Virtual payment for transient business travel still is pretty new. Reliance on faxes would be comical if it wasn’t so annoying. All the systems in the chain — GDSs, hotel property management systems and others — aren’t yet on the same page. Hotel staff don’t always know how to handle arriving guests paying with virtual cards. Turnover doesn’t help.
“How frustrating is it when you get a phone call from a client or employee standing at front desk of a hotel and they are not allowed to check in?” Mazzola said. “It seems like a lot of responsibility is put back on travel managers.”
Speaking from the audience during another session, Mazzola asked hoteliers, “What’s the hold up? Two major hotel chains have come out with instructions and policies for all their owners and franchisees and we have no problem with acceptance, yet many hotels out there can’t do the same thing.”
Others speaking from the audience said they also love fast reconciliation but dread giving time back talking to hotel desk clerks.
Choice Hotels International developed a virtual payment solution without faxes. At check-in, front desk staffers see the type of payment and instructions. “If we have a transaction failure on a virtual card, nine times out of 10 it’s because that hotel hasn’t yet seen a virtual card transaction,” said global sales vice president Tim Oldfield. “Training needs to continue.”
That’s what Sutherland Global Services realized. The company has been using virtual payment through Conferma for about a year for travelers with hotel stays of at least seven days. Global head of travel Joseph Monaghan said the initial success rate was about 50 percent. “I’ll take responsibility for that because we didn’t really communicate to hotels like we should,” he said. Now, the process almost always works, monthly reconciliation fell from a week to an hour and there’s been no fraud detected. The previous central bill setup, he said, suffered fraud every few months.
Hotels don’t want archaic faxes involved in virtual card transactions any more than their clients. But they are PCI-compliant. “They are analog and not digital, and you can’t hack a fax,” explained Conferma North America general manager Luis Yofe.
There are snags. Fax numbers often are incorrect. When they are correct, authorization forms get sent over. Companies like Riot Games developed a form specific to them. In some cases, though, hotel chains insist on using their own. “Marriott doesn’t work with us,” said Riot Games’ travel manager Sean Parham. “They always want their form.”
Christopherson Business Travel client consulting services manager Greg Ross said his company uses an automated faxing system via online booking tools and the GDS. In cases where chains require their own forms, he said, “we can send out a fax 20 times, but it means nothing.”
Process Not Present
In any industry, a “card-not-present” transaction is just that; a physical credit or debit card is not presented when the transaction occurs. In lodging, that includes single-use virtual card transactions. Because virtual payment has worked well in other parts of the travel business, buyers wonder why not theirs.
“Hotels have been accepting these type of one-and-done cards for years,” said Choice global account director Diane Lovett. “Online travel agencies have used them forever. In the corporate space, there is no single identifier like there is for the OTAs. Nothing is uniform.”
In a follow-up conversation, Best Western Hotels & Resorts director of travel industry relationships Sandra Taylor explained: “Leisure bookings for most hotel brands are limited to specific rate plan codes that are synonymous with virtual card payment. It is very easy to isolate leisure bookings by the rate plans. Corporate travelers have access to all published rates in self booking tools — BAR rates, rack rates, AAA rates — and also their TMCs’ rates and their own negotiated rates. We can’t isolate to just one set rate that would always be a virtual card.”
As leisure-oriented rates bleed into corporate travel, travel managers wonder about apparent discrepancies. Prepaid rates are one thing, but “certain hotel chains have come out with nonrefundable, non-cancellable reservations, and if you cancel you get charged anyway,” Mazzola said. “If that can happen, then why is [virtual payment] such a mountain to climb?”
Riot Games’ Parham reiterated his confusion regarding Las Vegas, where all hotel stays require a deposit. “What’s the difference?” he asked. “Why can’t GDSs and banks get together and decide that we have a specific code we put in, maybe ‘VCC,’ and you charge that card and we don’t have to send you a fax? If it’s so easy for a deposit why can’t we make it simple for virtual?”
What about online check-in? That occurs all the time without guests standing at front desks and presenting credit cards. Why does that work but virtual payment doesn’t always?
In response, Doreen Burse, Marriott International vice president of global sales and corporate accounts, said online check-in oftentimes is connected to the loyalty program and travelers tie individual cards to their memberships. “But we have explored that too, as a sales organization, asking, ‘Well, wait a minute, you can do this here … How do we bridge that gap?’ ” she said.
A big challenge is the hotel industry’s fragmentation. That means lots of different systems.
“We are making combinations that nature never intended: card-not-present transactions transmitted through a GDS to guarantee a hotel and pay for it,” said Conferma’s Yofe. “The ecosystem needs to come up with and accept standards. Nobody has the power that IATA has [in the airline industry] to impose standards and a deadline.”
Though not a rulemaking agency, Hotel Technology Next Generation has done some work in this area. It published technical specifications in spring 2015. In October, it jointly issued a handbook with Hotel Electronic Distribution Network Association.
The specs are meant to end the faxing and provide consistency regardless of which property management systems hotels use. For the specifications to have any legs, GDSs must play along.
Last week, an Amadeus official said the company is “fully ready to implement” HTNG’s standard but hasn’t seen the industry rally behind it. “Indeed there is now a separate standard-setting exercise launched earlier this year by HEDNA,” the official added. “We are fully active on both forums and would encourage other industry participants to get involved – especially hotel groups.” Like others, Amadeus also offers its own virtual payment solution.
An official at HEDNA did not reply to inquiries.
A Sabre spokesperson said the company continues supporting HTNG messaging standards. It’s developing new solutions based on them “that will seamlessly integrate into the agencies’ existing workflow,” according to the spokesperson. “We are working with hotel partners around delivery timeframe.”
Travelport’s eNett unit furnishes virtual payment. The company developed its own structured codes before HTNG issued guidelines. “Travelport is aligned to the HTNG virtual card principles and, whilst recognizing differences in technology, hopes that the other GDSs will also adopt them,” according to a spokesperson.
Asked about progress since October, HTNG COO David Sjolander last week said, “There are other changes in payments, but not specifically around virtual cards.”
Best Western’s Taylor said so-called “switch” companies like Dhisco (formerly Pegasus, and Thisco before that) adapting HNTG’s specs “will increase speed to market for many hotel brands.”
Show Them You ‘Mean Business’
Buyers might try to educate hotels during pre-bid meetings and address virtual cards in contracts. Testing also is important, at least with heavily used hotels. Another tactic is to call hotels before travelers arrive to make sure relevant faxes are on hand and match up. Travelers could be urged to carry printed authorizations. Buyers sometimes need TMCs to step in and call the hotel.
Some companies bent on using virtual payment for lodging may ditch properties that don’t cooperate. Christopherson’s Ross said one virtual card-using client “is to the point now that if a hotel won’t accept the fax, she’ll go down the road to one that will.”
Mazzola said his “best advice” is to “put pressure on the hotels, speak to individual properties and put a stop-sell on those properties if you need to so they know you mean business and they need to do something to correct the problem.”
An audience member challenged him “to be fair” by acknowledging the need to “engage the entire pipeline,” including GDSs and other tech intermediaries.
“No doubt, yes,” Mazzola replied. “But until the technology is there, what are you going to do if the front desk says, ‘We have no payment, no room for you’?”
At Choice, to stave off any lingering problems, the hotel company is looking to provide an 800 number for travelers. “If there is an issue at the property, typically the traveler calls the travel office and the travel office reaches out to our inside account management team or possibly the seller and there is a delay,” Oldfield explained. “We are equipping our central reservations office with an ability to walk the hotel through that.”
None of the other big chains have announced any initiative like Choice’s. Some prefer an industrywide approach using the HTNG standards. “It’s not that hotels don’t want to do it, but we also don’t want to take a Band-Aid approach. We want to do it right,” Taylor said. “If there had been collaboration with the industry first, this probably would be a moot point. Hoteliers want to solve for this as much if not more than anybody else.”
Marriott’s Burse agreed, saying customized solutions for a single lodging chain are “probably not sustainable. This is an industry need that has risen to a higher priority.”
Earning more sales by easing the process is important. Burse said the “bigger strategic issue” is not falling down when a traveler who booked with a virtual card is trying the brand for the first time.
Some point to the promise of mobile apps from solution providers. Travelers equipped with them can show front desk staff images of the virtual card. In some cases, if need be, they can use the app to request another faxed authorization.
Monaghan said using Conferma’s app has cut down on problems for Sutherland.