Agreement on online transactions, but hotels question methods and query use of credit cards
Travel Management Companies (TMCs) have called for a credit card GDS payment environment in a bid to avoid having to pre-finance clients’ hotel stays.
In the current market, the majority of stays are sold through consolidators, which issue clients with prepaid vouchers, pay the hotel and then bill the TMC.
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Alshamel International director of marketing Tim Waddell said this model “perpetuates the pre-financing of client travel” as clients can take months to pay the TMC.
“Plus, TMCs are not earning any direct hotel commissions or are in a position to negotiate best rates with suppliers on behalf of themselves or their clients,” he asserted.
“Consolidators terms of credit are often much tighter than most TMCs’ own and they act in a similar way to [IATA’S] Billing and Settlement Plan in many respects — cutting TMCs off if credit lines are overdue, leaving them unable to service clients’ hotel needs.”
Waddell added that booking hotels via GDS was quicker for agents and didn’t hold any liability for the TMC. Under this system the client uses a credit card to secure the room at the time of booking and the payment is made directly to the hotel on arrival. The TMC only has to follow up with the hotel in order to receive the commissions earned.
“In a credit card environment the GDS can be used more easily for hotel bookings and payment management solutions are able to track the hotel spend. The bottom line is there are no credit line/cash flow issues between supplier and TMC,” Waddell concluded.
According to director of marketing and communications for Radisson Blu Hotel Dubai Deira Creek Stephanie AbouJaoude, the move towards a “virtual world” has provided “more overall effective systems and procedures”.
“Perhaps something similar to certain online systems that a few online American giants use for their booking and reservations systems through virtual credit cards is the way to go for the overall travel industry’s payment method structure,” she suggested.
“This would both benefit hotels as well as the agents as it is accurate, tracked and saves a lot of time and communication follow-ups as well.”
Dubai Marriott Hotels market sales manager – leisure and MICE, Maria Baxa, agreed that booking online would “help the hotel and TMC with easy tracking”.
However, she argued an online virtual credit card was “too risky”, suggesting the use of a “code number or reference number instead”.
“The voucher system works for both hotels and TMCs and benefits both equally,” Baxa added.
“From a hotel’s perspective, because it is pre-paid, it helps in building the hotel base for a certain period of time. Likewise, it also works well for TMCs because they are buying in bulk, they get reasonable rates, it guarantees availability and clients can book anytime.”
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