Declining levels of sales by online travel agents through traditional GDS channels are making virtual payment platforms more critical, according to Ixaris, a leading player in the field.
A survey conducted by Ixaris, the results of which were published in February, found 27.3% of 50 travel industry respondents now see 31%-40% of bookings processed outside of the GDSs.
The Travel Industry Payments Barometer also found that for another 27.3% of the respondents this equated to 11%-20% of their revenue, and for 18.2% it represented 41%-50%.
Overall, a fifth of businesses see more than 50% of their revenue generated outside of the GDSs.
Speaking to Travolution at the Travel Distribution Summit in London this week, Ixaris commercial director Andrea McGeachin said many OTAs find the GDSs too inflexible.
“For instance, if I was going to Dubrovnik and I’m interested in this fantastic tour and an online travel agent wants to offer that as an added benefit using a virtual card programme it can pay the supplier.
“The OTA can use the virtual card as an electronic link. It’s giving an ability to widen the net of product offerings.
“One of our clients it Ecotours – it’s quite a niche offering but they can punch way above their weight in terms of getting the best prices and getting solutions to users through our virtual card programme.”
As well as accessing product not available on the GDSs, virtual payment systems also allow firms to avoid credit card charges by creating a ‘card’ for each transaction that the supplier does not levy charges on.
But McGeachin said this was just one part of the advantages of using a virtual payment platform including reconciliation of payments.
“In the report we talk about 60% of businesses not expecting to use GDSs for booking at all.
“That’s dangerous and not the right way to go because GDSs have an awful lot of good things to offer, but they are like huge oil tankers turning round in the ocean. They are not keeping up.”
Virtual pre-paid cards can be used by corporate travel managers to better manage the travel spend of their employees and negate the need for expenses systems, McGeachin said.
And she said with money to be made in the processing of payments, travel firms that generate payments should be extracting some of that value from the system.
OTAs can also improve their cash flows by using the virtual payment platform to reserve rooms without having to commit a large sum of money upfront.
“The OTA does not have to put a great whack of money in to reserve a holiday or whole host or rooms; they can use the virtual card to instantly buy it.
“An OTA puts money into us on a daily basis and withdraws it as they require and so we are improving their cashflow and their processes.
“Travel agents and OTAs have embraced the fact that they need to deal with the consumer’s increasing expectations and demands, but their back-office systems are holding them back.”
McGeachin said although consumer groups and the government are challenging credit and debit card charges, someone has to make money for the system to work.
“The key thing is can we optimise it for travel agents to have use of a payment platform that is efficient rather than a burden, takes away issues and they can make money from.”
The dream, added McGeachin, would be for a GDS to integrate its system. “I believe the GDSs could make one simple move here. Unfortunately they are not keeping up. They are dinosaurs.”