How Direct Billing is Leading Innovation in the Hotel Industry

Many media reports have speculated that business travel as we have known it is ‘a thing of the past’ – but some hotel chains are using this period of realignment as an opportunity to innovate.  

The way corporate customers pay for hotel rooms is proving to be an area where hotel chains can differentiate from the competition, increase Average Occupancy Rate (AOR), enhance Revenue Per Available Room (RevPAR) and build loyalty with corporate guests.  

Innovation isn’t just for hotel guests 

Many recent innovations in the hotel industry have focused on the guest experience.  
 
Forbes reported that InterContinental Hotels is enabling guests to access personalised services using AI and voice control technology. Marriott is even experimenting with rooms with ‘smart shower doors’. These enable guests to jot down their ideas while in the shower and email the image to themselves for future reference.  

Now is the perfect time for hotels to innovate to attract more corporate customers. In this case, it’s the Procurement and Accounts departments that hotels must impress by making a seamless billing and invoicing process a reality.  

Direct billing for competitive advantage and increased RevPAR

Direct billing enables hotels to issue invoices so corporate customers can pay for accommodation just as they would for any other business expense – by invoice on terms. This makes securing blocks of rooms more attractive and contributes to a higher RevPar.

A use case for direct billing for hotels 

Let’s take a look at how direct billing works for a company employing contractors. In this example, let’s use a construction company that needs to send people to job sites that require overnight stays.  

In the case of contractors, the company may ask them to put hotel charges on a personal card. This can cause problems if the contractor either does not have a credit card or insufficient credit available.  

The employees and contractors will need to submit their card receipts for their stay. The company dedicates resources within its Finance team to validate and manually reconcile the paperwork.  

The issues faced by the construction company, and their employees who wait to be reimbursed, are common to many industry sectors. 

How direct billing works in the hotel sector 

To attract corporate clients, such as the construction company, the hotel chain can select an outsourced supplier to implement a direct billing solution. This enables the hotel chain to offer its corporate clients a pay on terms solution that comes with a line of credit.  

The corporate clients’ eligibility for credit is instantly assessed by the supplier who underwrites the line of credit for successful applicants. This reduces the risk for the hotel chain, and from that point onwards, the invoices issued are paid by the supplier rather than those staying on the property.

Competitive advantage through payment choice  

By implementing a direct billing solution, the hotel chain creates benefits for itself, the construction company, and its workers. 

Direct billing can create a competitive advantage for hotel chains. The ability to offer payment on terms can make the hotel chain easier to do business as the digital checkout removes the friction for both the corporate traveler and the A/R department by integrating the digital billing and payments process.  

That is likely to mean higher levels of repeat business, long-term loyalty and profitability. Because the hotel is paid by the supplier rather than its clients, once the line of credit is in place, gone is the need for resources to chase unpaid invoices. 

Ultimately, the hotel can better serve its corporate clients by embracing digital transformation and integrating digital billing and payments.

For corporate clients, such as the construction company, the benefits are based on efficiency and reduced costs.  
 
Firstly, the client can negotiate discounts based on volumes with the hotel chain, which creates a benefit for both parties. The client’s need to issue corporate travel cards to employees is eliminated along with the complexities of contractors either not having personal cards or insufficient credit available.  

All expenses for all travelers are consolidated within a single invoice, drastically reducing the internal resources required to manage Finance processes. The client can access folios in real-time so they can monitor where their travellers are staying as well as individual spending data. 

When the client’s workers are ready to check out, there is no need for a card. They are free from the administrative burden of tracking, reconciliation and reporting their business expenses and the inconvenience of waiting for payment. 

Who offers direct billing? 

There has traditionally been a wide gap between the consumer experience of payments and that afforded to B2B buyers.  

The huge success of direct billing programs globally has exposed an opportunity for B2B providers to differentiate themselves with more efficient direct billing options. Contact TreviPay to learn how to ignite your digital transformation efforts through risk-free automation to give hotels the ability to focus on maximizing AOR and RevPAR.

Corporate customers prefer to purchase on terms and spend more, more frequently when they have a dedicated financial relationship and credit line with a business.