ҹɫֱ²¥

Transcript

Introduction
 
Hi, everyone. Welcome back to Matt talks. This week, I wanted to dig into a topic that I don't often go very deep on, but I think it's really interesting and really important. And, it's really one of the things that made ҹɫֱ²¥ a standout company that's been scaling faster than most companies globally in our space, and it's around payments.
 
We find that payments was one of those really big friction points in hotels because if you think every time you go to a reception desk, there's always, can I have your credit card? If it's a booking engine and you wanna make a booking, there's a credit card payment. If it's a checkout, it's a a payment. And we really thought differently about payments the way we've embedded it.

Chapter
The Uber effect on payments in hospitality
 
So if you think about what Uber did to the taxi industry where, you know, now you just walk out of a car and you don't even think about payments and it's all handled seamlessly, we've done that in the hospitality space. But I didn't want you to have to listen to me the entire time talking. So I invited Susanne, who's our general manager for fintech at ҹɫֱ²¥. Susanne, welcome.
 
Do you wanna just give a short introduction to who you are, what's your background, and and what excites you about payments?
 
Absolutely. Hi, everybody. It's thank you, Matt, for having me on that talks. I'm Susanne Sandler. I'm the GM of fintech, and I oversee our FinTech business.
 
I have a deep background in both travel and in FinTech, working for twenty plus years in various, technology companies and doing working on various payment solutions. And so I'm incredibly excited to have joined ҹɫֱ²¥ about a year and a half ago to help build out our fintech solutions. I think what excites me about payments and about fintech more generally, Matt, is is what you started talking about. Payments is not just about processing payments, and it's actually a facilitator to improve the overall operations of a hotel and their commerce.
 
And so when we think about and we talk about our payment solution as it is today, it's something that actually makes the guest experience better. It's something that helps improve the hotel's revenue. It's something that helps them run more efficiently and cut costs, and it's something that we use to actually help them improve their cash flow. So I get excited about payments and I get excited about fintech, and offering it to hotels because I know what it can do when it's deeply embedded in our product and how it just makes the hotel have a much better, more successful operation.

Chapter
Embedded vs. integrated payments
 
And and then you said a word there that I wanna hone in on, which is embedded. You didn't say integrated. What what what would you say is the major difference between embedded and integrated? Because it's a it's a real narrative, shift that has to happen.
 
Yeah. Absolutely. So, for embedded, it's it means that the the payment solution is is is deeply I'm gonna use embedded again to explain embedded but it's deeply a part of the entire solution that we're offering. Right? And so if a if a guest for example goes ahead and they, they come to our hotel and they check-in, we tokenize that card and then that information, then gets saved on the guest profile and then the guests throughout their journey and their stay they don't need to offer their card again and all of that information is available throughout the guest profile. And there's various automations as well that we're setting up throughout the system to make that, that the processing of that payment, the reconciliation of that payment far easier for the hotel so they're saving time, to make it easier for the receptionist when they're processing the payment in person to actually, do it much quicker and much more seamlessly.
 
So to just overall create that better guest experience and improve the operations from both the front of house and the back of house for that hotel.
 
Yeah. Like and and these are real scenarios in hotels. So when I was the front office supervisor back in the day, you'd have a scenario where, unfortunately, the credit card upon arrival wasn't sufficient to cover the entire stay, and then the guest had left. So then you have an open balance on the bill and you're like, how am I gonna get this money? And I was just emailing guessing, hi, mister Johnson, Please can you Yeah. Send us your credit card credentials unencrypted in an email to us so that we can charge that on our terminal in a a motel transaction with high risk.
 
And that's literally what we're solving. So the moment you've tapped your card on a terminal at a reception desk, we tokenize that card safely in our vaults. We can charge that against our ecommerce account. So if you do leave without paying, we just instantly can charge that card. One, it makes the life of those poor front office supervisors significantly easier, but also to the guests. They don't have to deal with emails and thinking how am I gonna get my credit card security across. So embedded just goes much further than what what we've previously done with an integrated payment terminal that talks to the system.

Chapter
How to deal with no-shows in hotels
 
And it's not just to to I guess to your point, I was just thinking about something. It's not just, let's say the guests, like, left without paying their full balance. It also could be for no shows, for example. Right?
 
Yeah.
 
So we've actually found in our IDC research that we've done that by using our embedded payment solution that hotels actually have a dramatically reduced rate in no shows by over five percent, right? So that's five percent of revenue loss that they would normally be having that they're having our embedded payment solution and having us automatically charge the card when the rate becomes non cancel becomes non cancelable, that that hotel, even if that guest no shows, can still charge that card. And it also just reduces the likelihood of not showing because when you collect the payment in advance, the guest feels more invested in the stay and and feels like they should show up. So, yeah, across the board, having these various automations and and, embedded solutions really do help improve the overall health operations.

Chapter
Introducing multicurrency at ҹɫֱ²¥
 
Yes. And there's so many examples that we can give, but I don't wanna I actually don't wanna focus too much on that. I did a separate med talks around payments that you can go back and and and actually watch as a kind of a a a a background.
 
But we're launching something new that we do need to explain because it is really interesting. And I just came back out of a trip in South Africa where and I remember that as I was landing and I was like, I don't really understand what currency I'm paying in and I was like constantly on chat GBT trying to convert my things to my currency.
 
And the the product we're launching or the feature that we're launching is, it's dynamic currency conversion or multicurrency.
 
Can you explain a little bit maybe in layman terms what this means?
 
Absolutely. Absolutely. So, yeah, so we're launching our multicurrency solution, which is a dynamic, dynamic currency conversion solution. And quite simply, what it does is it allows a hotel's guest when they're traveling internationally, so going cross border, to have the option to either pay in their own home currency. So in your case for South Africa, that would be, in Europe, you could pay in euros or to to continue and pay in in in South Africans local currency. So it gives that guest that option to do either one. Yeah.
 
Nice. Yeah. So and and I would have loved that because then instantly as I pay, I don't have to go into my own phone to try and convert this currency that I don't understand into Right. My own currency.
 
And that's really what what it means to give options. And I think this is very much about what we're doing in travel through the technology change. We just provide more options, like, through our products. Like, if you don't wanna check-in at a reception, that's great.
 
We've got online check-in. We've got a kiosk check-in. And, again, this is one of those things where we're just creating optionality for guests to make the choice of what they want to do.
 
So when we talk about this dynamic currency conversion or multicurrency, where will it show up across our products?
 
So we're offering it, we're starting by offering it both online. So in our on our booking engine and through payment requests and then also for in person payments at the hotel through ҹɫֱ²¥ terminals as well. So you'll be able to do it both.
 
You'll be able to offer to guests before they stay on the booking engine and then also during their stay as well.
 
And which currencies would we support?
 
We'll support we'll we'll support pretty much, most currencies.
 
You could basically, well well, yeah, I think almost any currency will be able to process If I go into the booking engine and I change the currency to my own currency so that as I as I make a booking for my room, I instantly will switch to the currency that I'm looking to understand the rates in.
 
That's then the currency that I'll get charged in. Right?
 
Yeah. That's right. So yeah. And we'll we'll work we'll actually work to automatically recognize what, like, what your local currency is and then offer that to you.
 
But as I as it's always an option, just to be clear. Right? So we're never going to you always get that option because some guests might wanna pay in the their local currency, their home currency, and some may wanna pay in the currency of the the the hotel. But, yes, you we'll we'll try to detect that for you if it's in the case of the booking engine and then give you the option of how you'd like to pay.

Chapter
Making international payments
 
And actually, what we found Like, what are we trying to solve through this?
 
So what are some of the biggest challenges that guests experience as they want to pay for their international hotel stays?
 
Yeah. I I would say it's very much about, like, clarity and transparency for these guests. So to what you just talked about in for South Africa, that's the experience we hear over and over again for guests, which is they get offered to pay in this international currency that they don't know and you don't know how to attribute value to that currency, right? So if I said this room is two hundred euro that'd be very clear to you what that costs but Yeah.
 
If I said this room to you if you were going to Japan is forty thousand yen that would that could sound like a really lot of money but that's also that's about two hundred fifty euro, right? But it's very hard when you hear these like strange numbers that you're not used to to process and to to kind of process it and understand it. So we really want to create that clarity for the guest so they know exactly what they're paying.
 
In addition the other problem that happens is if if a guest chooses not to use our multi currency solution and pay in their home currency, but instead what what you had talked about, when you were traveling in South Africa.
 
What happens instead is they don't know actually what the markup they are paying is, right? So there still has to be an FX like conversion because you are changing currencies. But instead of, us helping do it with the what instead what's happening is the issuing bank that give that guest that provides that guest credit card, they're the ones that are doing it. And there's no transparency in terms of what the markup is, or what fees they're charging.
 
And the guest has to wait multiple days to check their statement and they check their statement, and then they find out. And then even when they check their statement, sometimes there's multiple fees and there's hidden fees, and so they actually can't even really understand what they're getting charged. I was talking to Richard recently, our our founder, and he was just he just came back from London. And we were talking about this solution, and he went and he checked the statement.
 
And he'd been charged something like five point three percent by Citibank, on his on his transactions, which he was, like, shocked by because that was very high. And he had he had no idea also that that was what they were charging him. So it was just there was no transparency, no clarity for him when he was doing that, and and he would have, like you, really preferred to be able to utilize our solution.
 
Yeah. Yeah. This is the journey that we went on with payments. The first time we came out with payments, we, we offered pricing that was really showing all of the details underlying it.
 
It was like it's excluding interchange because we're gonna give you the detail on what you're paying for a card from, you know, this supplier in this country where where the guest is from. And we've really gone on this education journey of transparency of these fees to customers, and this is just the next iteration of that thing. We want the guests to know upfront what they're going to pay and not find out several days later once they get home and get slapped with this crazy fee. I often, you know, I use Amex often on my trips.
 
And then I get sometimes when I'm traveling the Nordics, there's a lot of currencies going on there. And it's just like, beware, you just made a payment and it didn't look like a really friendly exchange rate. I'm like, great. That's too late now because I've made the payments already on my card.
 
And it's almost saying, you're about to make a payment. This is the fees that you're going to pay. Do you wanna wanna continue with this? And I think it's just the knowledge upfront rather than just being hit with this big fee afterward.
 
Exactly.
 
So what if a guest doesn't want to pay with multi currency? What what what does that mean?
 
Yeah. It's it's really simple. They always have the option. Right? So so they whether it's online on the booking engine or on our terminals, they're always given the option and they they can choose.
 
So it's it's completely their choice. It's completely in their control, just like what you talked about. Transparency.
 
Giving them an option, giving them an additional alternative that should help them have more clarity and transparency, but also totally their choice what they wanna do.
 
Great. So the guest gets more transparency and choice upfront. Exactly. What's the benefit for the hotel? Why would the hotel want to do this?

Chapter
Benefits of multicurrency for hotels
 
Yeah. Sure. Well, first and foremost, right, our hotels, care about the guest experience. Right? So creating that for we wanna always be creating that better guest experience for, for those guests.
 
So by doing this, they are, improving that guest experience. But on top of that, as an extra added benefit, the hotel's actually gonna make more revenue. So I'll explain how that works. If the guest chooses to utilize our our multicurrency solution and chooses to then pay in their home currency, the the hotel is able to participate in that FX markup.
 
And so they get, a piece of that. And just to be clear, I don't want that to sound like we're then charging the guests extra fees or or something like that. Right? Because as I just talked about with you, if they were if the guest was to choose not to use, our multicurrency solution and paying their home currency, instead what would happen, it would be that issuing bank that we talked about that issued the card.
 
They'd be charging that FX markup, and they'd be making the money. So what we love about this solution is this is us being able to have a way to actually give the hotel a little bit of extra revenue as well and not have all of that revenue go to that issue in bag. But, but there's actually more. Right?
 
Because, to what we were talking about earlier with that transparency and that clarity, we've seen an industry research that we've, we've looked and done as we've been building this product that especially for online bookings that when a guest can pay in their local currency that that it it it increases the conversion of the booking. Right? So we saw, a recent study somewhere of, like, upwards of ten percent increase in conversion for merchants who are able to offer local currency options for their guests. And it's exactly just what we talked about.
 
I know what I'm paying. It's really clear. If I were to see forty thousand yen or however many ZAR in South Africa, I'd get really confused. You were going to ChatGBT asking, right, that affects conversion.
 
So so you wanna make that conversion as best as possible and by offering in the local currency and creating it as transparently as possible, you do that.
 
Nice. I love that. Yeah. And and and if hotels, who are watching this are like, great. Can I have it? Like, what what do hotels need to do to to switch this on or to set it up?
 
Yeah. There's not much that they have to do, which is also really great. So this is going to be rolled out with news payments.
 
So in in q two, starting in the next month or two, we'll be rolling it out on a rolling basis to, many of our hotels in Europe. And then later on in the year, we'll be rolling it out to, US, Canada, and Australia as well. Yeah.
 
Great. Yeah. So, in the very early days of ҹɫֱ²¥, we would very quickly roll out products and, you know, we would build a feature, I would test it, and then we would just ram it out to the world and see what happens with it. We definitely are much more mature in the way we build products today.
 
We have entire departments that are doing testing, and verification of the code, and then we go through beta programs. Yeah. So I know that we're in beta already for quite some time. Yeah.
 
So what's been some of the feedback of our beta customers that have been testing this?
 
Yeah. It's been really it's been really great to do the to do the beta and to to get the feedback of the customers. We've definitely taken some of that feedback and incorporated it in to improve the offering even more and make it even more easy to use and transparent. But but generally speaking, we've been just overwhelmed by the positivity from the beta and our customers. We have customers saying things like it's a no brainer.
 
We have customers saying a lot of the points that I was highlighting to earlier, how it's really increased guest satisfaction, and and guest trust because it because it's much more clear to the guests and they feel much they feel like they trust the hotel more and the hotel is really happy that they can also make some incremental revenue, right? For some hotels, especially if you think about ones that have a lot of international guests, or in places where, you know, yeah, where there's just a lot of, like, currency conversion happening for for their guests, this is a very this can be a very substantial benefit to them.
 
And even, for for hotels that have less international transactions, it's still a really nice offset to all the fees that they have and so hotels are just incredibly excited and they're basically saying like, why didn't you release this sooner? You know, when can I have it? Like, they're just really ecstatic. So I I really can't wait until we release it this quarter and and get our hotels to using it and and just overall enhance as we always try to the hotel's operations and and are he helpful to help hotels, like, be better businesses as we continue to do.

Chapter
Revenue strategies for hotels
 
So so just to to round it up. So one of the things I've been talking about has been about driving revenues in hotels and Yeah. There's one thing which is just increasing the room rates every single year by whatever the inflation is. So in Europe, we had a two point Sure.
 
Inflation last year. So why don't we just increase the rates? But at some point, you reach a barrier, especially as the hotel product deteriorates. And we have to get more creative in driving more revenue.
 
So I talked about driving more room rates, but, you know, doing that smart with a revenue management system, looking at upsells and and things. But this is another way to help hoteliers to drive, like, marginally a little bit of revenue. And it's just making sure that we ensure every pocket where there's opportunity, we help.
 
On the one side, we're embedding this deeply in in all of the different products. We're providing option ads to the customers. Conversion goes up, and the hotels make some money on it. So it's a really like, I was so encouraged by the beta as we've now got it live in over a hundred hotels. And the the experience that they've been having and the conversations that we've been having with these hotels have been so encouraging that I'm I I'm like, Susan, why are we not running out faster? And she's like, extensively.
 
But it's it's genuinely such a good product that is loved by both customers and, or customers being our customers being hotels and their customers being the guests. So it feels like a like a win win. Did I miss anything on that short summary?
 
No. You did it. You did an incredible job. Yeah. It really is a win win, and and we we will roll it out shortly, Matt.
 
It's, like you were like you were highlighting. We just really wanna make sure that it's successful for our hotels and that it goes really well and it's very transparent and it it offers everything that we want. So, no, you've got it. It's a win for the guests.
 
It's a win for the hotels. It's something, just that we're so excited to offer, and, I can't wait for our hotels to see it and to to get more feedback.
 
Love it. Thank you so much for for joining me to talk about that. But I wanna end on one last question. I always like to say a circle.
 
Okay. I deeply love hotels, and I talk about those publicly in all my experiences. But what's been a hotel experience that you still think about today that was so special because of something that they did?
 
Yeah. Sure.
 
So I, as you know, I previously worked at, at Booking, at Booking.com. And, and actually ҹɫֱ²¥ is also based in Amsterdam, but I traveled very, very regularly, to Amsterdam. And I I I started staying very regularly, at a hotel and I would travel kind of excessive hours and as it is with business travel and whatnot. And the hotel started to, kind of get to know me, and recognize me.
 
And they were they were good about CRM and recognizing my stays and stuff. And so they started doing these little things for me even though I was having, you know, these, like, very difficult long stays or, you know, business travel. One time they put flowers in my room and welcomed me back. Another time, they put, little, like, little treats in my room, etcetera.
 
They always when I would come in, they would kind of recognize you by name, and they would be helpful to me and everything with that. So it was it was kind of really just those, like, little touches that they they recognize, me as a guest and did these little things that probably didn't cost them that much money or overall, but made such a big incremental difference for me in terms of my stay and and my happiness and my satisfaction and and really encouraged me to wanna keep coming back. So I still think about those, like, little experiences because it made my business trip just so much more pleasurable and enjoyable, even if you're, you know, going back and forth and exhausted and everything.
 
So so I I remember those days very memorable.
 
And that's like, you really hit on a point that I've been very passionate about this week. And I did a short demo video of of how do we help hotels recognize a recurring customer because Yeah. A recurring customer is the most valuable customer, because you don't have to pay lots of money to attract them into your hotel.
 
And how do we recognize them? And we added this great feature on the timeline where you see a recurring with a number in it. So if it test two, that means that Susanne has been with you twice before. So you instantly welcome them back.
 
And the AI notes help them to curate saying, you know, Susanne loves fruits or put a fruit basket in the room. And it's it's we're trying to really make sure that the the humans we have at the reception desk, they don't take payments manually by hand. We do that all for you. And the fun part is actually engaging with Susanne saying, hey.
 
You're back for the third time. What are you looking to do in the city? We've already taken care of all your needs. And I think that's where the shift comes from.
 
Payments are not a fun part of check-in. Nobody wants to give a credit card to anyone. Let us take care of that bit, and then you focus on hospitality and and really trying to create these really special experiences for those guests that are either first time or or returning back to retail. So that was a really nice segue.

Chapter
Future outlook
 
Yeah. Yeah. Absolutely. When payments like, when payments work well, you don't notice they're there. Right?
 
Like, that's the it's it's the same thing as the Uber example you gave in the beginning. Right? But when payments do not work well, you very much notice it. Right?
 
And they happen at the worst points. It happens usually at the beginning of the stay, right when you're checking in, or at the end of the stay, right, when you're like and those are the two most memorable points of the stay and I mean we've all experienced it right when there's like difficulty and they're either like processing the card or there's some issue with the payment or something's not working or you're trying to rush off to get your flight or and I mean so so payments working well is so critical to that guest experience.
 
So absolutely.
 
Like like I literally that experience I just had in South Africa.
 
I was checking out of a hotel, not a ҹɫֱ²¥ hotel.
 
And they had overcharged my card, and he was trying to refund it. And then instead of pressing minus amount to refund, he pressed plus. So he charged me twice the amount that then the amount said that ballooned to a level where it was no longer working. He needed to override the terminal.
 
And he needed I was like, can I just give you my Apple Pay and you do it there? And he's like, no. No. I need the physical card.
 
And I don't use physical cards. So it became this thing as I was rushing to the airport. I was like, okay. Just is there another way to do this?
 
Because I have a taxi waiting in front of the door.
 
Exactly.
 
And it's a real, real pain. That is not the greatest last impression of a hotel.
 
So Yeah. And that's what you remember now about your stay. Right?
 
Yeah.
 
Like like, as opposed to maybe all the other great things that happened. Absolutely. Yeah. Absolutely.
 
Thank you. I've really enjoyed this conversation. Thank you so much for giving us this back of house, look into multicurrency.
 
It's coming out in the next few months. Watch this space.
 
It'll be very seamless.
 
Yeah. In April it it starts launching in April and May for a lot of Europe. So so look out everybody. It's coming in the next couple of weeks.
 
Nice. Thank you.
 
All right. Thank you.