Universal Air Travel Plan is ramping up its efforts to
secure more hotels as merchants in its centralized payment network, embarking
on a plan to use merchant acquirers to supplement individual direct deals with
hotel chains.
The airline-owned corporate payment system this year secured La Quinta as its first merchant in the hotel space, thanks in part to efforts
by mutual client Walmart. "What we need to do and what we're working on is
to have ubiquitous acceptance," said UATP president and CEO Ralph Kaiser. "It's
great that La Quinta is in the field, but it's weird to tell your customer, go
ahead and use this on one chain, but otherwise you can't. They're used to
having a card with acceptance everywhere."
While Kaiser said UATP would continue to directly discuss
acceptance with major hotel chains like Hilton, Marriott and Starwood, he said
using merchant acquirers—with which the payment company already has entered
discussions—would more quickly fill the gaps in acceptance in the fragmented
hotel industry.
"I would prefer to use direct connects with big chains,"
Kaiser said, "but there is so much franchising in the hotel industry, so
it would be like if we signed a deal with Delta and had to go each one of their
cities and negotiate a separate agreement. It just makes a lot more sense to do
acquiring." Kaiser said it's on his agenda to secure a merchant acquirer
agreement by the end of the year.
The UATP network long has prided itself on being a low-cost
payment option, dealing directly with airlines and offering minimal merchant
fees. Using merchant acquirers puts another party in the chain and another hand
in the pot, but Kaiser said UATP still could preserve its economic value proposition
to users. Kaiser noted UATP has gone the merchant acquirer route to gain travel
agency acceptance.
Kaiser said UATP would need to bring value to corporate
clients to use UATP for hotel payment, be that better economics or better
reporting.
Though some companies like Walmart have embraced the
concept, David Hillman, principal of corporate travel management consultancy
Consulting Strategies, said the applicability of centralized hotel payment is
limited in the corporate market, and other options already exist.
"If one wants to pay a hotel centrally, one can do it
now with any card, whether it's an individual card or a purchasing card or a
meetings card," Hillman said. "What this would do for UATP, it might
give them additional scope in terms of the use of UATP, but it still doesn't
catch up to the other guys with respect to the merchant networks they all
have—whether that's Visa or MasterCard or American Express."
Still, at least one company has expressed its interest in
expanding its usage of UATP for hotels, as Walmart said it would embrace
further merchant acceptance, noting that using UATP for hotels has shifted its
invoicing process from a paper-based system to an automated one.
"Prior to the automation, we were just manually paying
invoices that came from the hotel," Walmart senior manager of corporate
travel Mary Sharp said. "We would get the invoice and ensure its accuracy,
and it was very time-consuming to do that. This was far more sustainable for
us." Sharp said the process with La Quinta and UATP "provides a
secure loop for us from reservation to payment."
Noting the centralized UATP hotel payment could replace
instances of direct billing and invoicing, Kaiser said, "Even in a direct
invoice situation between a company and a hotel, it's better for everyone to
move onto a card platform. I thought adding a merchant fee would kill the
economics, but the economics of invoicing and getting paid in 30 days or 60
days and reconciling all that paper is very expensive. It's like cash. People
think cash is cheap. Cash is not cheap."
Meanwhile, other central hotel billing options have emerged
in the corporate market. Carlson Wagonlit Travel U.K. last month became the
first travel management company to offer clients a hotel bill-back facility,
becoming the first agency to use Travelport subsidiary ENett International's
automated invoice feeds from hotels. The new system automates hotel bill-back,
which in the past required hotels to send paper invoices to the corporate
traveler's TMC that then presented a monthly bill to the corporate client.
"The bill-back system is more prevalent in the United
Kingdom than in the United States, where everybody pays by card," said CWT
U.K. director of industry affairs Nigel Turner. "In the U.K., not all
organizations, especially government departments, want to give their employees
cards for paying hotels."
While Turner noted central lodge cards are an option for
corporations looking for such centralized hotel payment, "The key thing
with lodge card is you often can't get the itemization," he said,
referring to hotel folio-type data, which remains elusive from many hotels. "Even
hotels within a single hotel group can't always do that because of different
systems. It's a lot more complex to get consistent itemized data from hotels
than from airlines."
This report appeared in the Oct. 11, 2010, edition of Business Travel
News.