FTT Embedded Finance


Embedded Finance

Fintech for Travel – Embedded for a Rebound? 

The  travel and tourism industries were among the hardest hit from lockdowns and restrictions introduced by governments around the world to reduce the spread of COVID. According to statistics from the Office for National Statistics, in Q2 2020 overseas residents spent 97% less than in Q2 2019 on their visits to the UK, highlighting the stark collapse in consumer demand. 

Yet, with vaccine programmes across the Western world rapidly progressing, alongside the implementation of quarantine-free travel corridors, there are strong signs that the travel industry is set for a recovery. Embedded fintech solutions could also play a key role in enabling companies to capitalise on this resurgence. 

A boost for hotels

One of the major barriers to embracing embedded fintech solutions in the hotel industry is the legacy IT infrastructure. With occupancy rates at hotels now climbing, operators would benefit from upgrading these dated systems to SaaS-based software in preparation for a return to a more typical travel environment. 

While a number of international hotel chains have modernised their IT base, many independent hotels owners and local chains lack the capabilities to benefit from embedded fintech. Payment systems are a prime example of this disparity, with it being typical for foreign hotel room purchases to cost hotels brand a lot in processing fees.  

International third-party online travel agencies (OTA) can charge large amounts of the booking cost with some Chinese-based OTAs charging up to 20%. A further card processing fee is also payable, increasing fees. Implementing cloud-based payments systems opens up the ability to improve how revenues are managed, increase convenient for customers and potentially bring down fees. 

Unlocking embedded fintech

By investing in contactless payment systems, new avenues for providing financial services capabilities to hotels through embedded finance are possible. Once these enhancements have been made, the true value of embedded fintech can be unlocked. For example, payment firm XanderPay offer hotel operators tools to process consumer payments directly to hotel properties, as well as saving on cross-border transfers.  

Incorporating innovative embedded fintech solutions allows for a wealth of tools to become available to travel firms looking to find inefficiencies in their processes and eliminate them. Automating mundane payment processes and gaining data-driven insights from these figures is possible when partnering with fintechs. Now more than ever, offering a personalised value proposition to customers is vital, with haphazard price targeting causing travel firms to miss out on valuable bookings. 

The journey from legacy systems to up-to-date IT operations is far from seamless and won’t happen overnight. But this transition will pay dividends in the long-term as both fees for accepting payments will be reduced and revenues can be increased through new partnerships. Perhaps most importantly, these innovations will allow hotel brands more time to focus on customer experience and keeping clients happy. 


Written by Finbarr Toesland, Editorial Contributor, VC Innovations

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