3 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
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3 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
Whitepaper
3 Ways Digital Transformation Of Supplier
Payments Can Drive Growth Online
Explore existing and emerging opportunities for travel companies
to win online customers.
Spending on international travel across Europe continued to grow in 2017, bolstered by strong consumer confidence and
improving economic factors. For the first half of 2017 the World Tourism Organisation (UNWTO) reported year-on-year (YoY)
growth in international tourism expenditure across key European markets, including Germany (3%), UK (8%), France (11%),
Italy (5%) and Spain (17%).1
This growth is positive for travel companies; however those focused on winning customers online are faced with the challenge
of increased competition with suppliers. This is coupled with less room for growth as the European online travel market reaches
maturity - a tipping point is expected to have been reached in 2017 where over half of all gross bookings are made online.2
To win customers online, travel companies need to be ready and equipped to take advantage of opportunities that emerge.
Digital transformation of core business processes will ensure travel companies have the agility to react to market movements and
invest in the technological developments needed elsewhere.
This whitepaper will explore existing and emerging opportunities for travel companies to win customers online; as well
as explaining how digital transformation of supplier payment processes can equip businesses to react to opportunities
that emerge.
© 2018 WEX Inc. 13 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
Growth Opportunities FIGURE 1
For Travel Companies Projected Growth In Mobile Booking Volumes
Mobile European Mobile Gross Bookings Change Year-On-Year
Mobile is a key area of opportunity for travel 2016 €27 billion 22.73%
companies. While online accounts for half 2017 €33 billion 22.22%
of European travel bookings, the market is
2018 €39 billion 18.18%
relatively mature and growth rates no longer
reach double digit figures for most European 2019 €45 billion 15.38%
countries. Mobile however is still witnessing 2020 €52 billion 15.56%
strong double digit growth (see Figure 1) 2021 €59 billion 13.46%
and by 2021 is forecast to account for 1/3 of
Source: Phocuswright, European Online Travel Overview Thirteenth Edition
all online bookings.2
The level of mobile penetration in differs United Kingdom Germany Scandinavia
by country, typically depending on
smartphone adoption overall as well as £8.2 billion €6.3 billion €1.9 billion
the maturity of online travel booking. The
UK travellers will spend £8.2 billion German travellers will spend Scandinavian travellers will spend
UK and Germany are leading the way,
via mobile devices in 2017 €6.3 billion via mobile devices in 2017 €1.9 billion via mobile devices in 2017
along with Scandinavia:
(28% of online bookings)3 (25% of online bookings)4 (21% of online bookings)5
Mobile penetration also differs by category of travel product—simple purchases like flights and hotels are more frequently made via
mobile devices as travel companies streamline customer experiences on mobile apps and websites. Use of mobile devices
is going beyond bookings with roughly half of European smartphone users comfortable to use their phones for holiday planning.2
Travel companies who invest in making sure their mobile offering is user friendly and offers a frictionless experience, from search to
purchase, will have the best chance of winning a share of the predicted mobile growth.
Key trends to watch include:
Integration of artificial intelligence (AI) – AI is increasingly employed to
customise the way customers access travel inventory. A starting point is the use of “We as consumers increasingly reach for a
chatbots to let travellers find relevant products using natural language to text mobile device in order to interact with a
with a virtual travel agent rather than visiting websites to research options. brand, service or person. Travel was at the
forefront in terms of digital disruption, with
Development of one-stop travel platforms – Deloitte suggests that to
OTAs really changing the market and consumer
achieve scale, online travel companies must go from offering one or two products
expectations. The whole industry now needs to
to visualising their brand as a platform offering many products in one place. This
understand that the customer is now in charge
not only opens up new revenue streams but will give travel companies greater
of that change. Mobile technology impacts
visibility into the customer travel journey, as well as preferences and behaviours.
every part of the travel experience. Booking,
Deloitte points to Priceline’s acquisition of OpenTable as an example of how
en-route, in-resort; wherever our traveller goes,
travel companies are developing a more holistic offering.6
we have to be able to service their expectations
Move from reactive to proactive tools – Skift predicts a revolution in mobile with a digital proposition.”
where devices will go to being used for problem solving to proactively anticipating
Andrew McClelland,
the needs in advance of the traveller even knowing. This trend is particularly
Head of Industry Insight
important for travel companies offering services to business travellers as this is
well suited to their needs which are highly structured and predictable, yet call for
flexibility for last minute changes.7
Digitalisation of supplier payment processes not only frees up business resources to focus efforts on developing mobile
technologies, digital payments can be integrated into new ways of working with suppliers that enhance your mobile offering.
© 2018 WEX Inc. 23 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
Accommodation, Packages and Tours & Activities
While in Europe the airline segment is relatively well represented online (51% of bookings are predicted have been made online
in 20172), online penetration for the hotel and tour operator segments is much lower.
The hotel segment offers a particular opportunity for travel companies to achieve growth online. Phocuswright predicts that
online penetration for European hotel bookings will reach 37% in 2017, growing to 43% by 2021.2 The European hotel market
is fragmented – it is comprised of a relatively large proportion of non-chain properties – this fragmentation allows online travel
companies to take the lead in winning online bookings (see Figure 2). This dominance will continue, however as smaller hotel
chains and even individual properties look to win direct bookings, travel companies will be challenged.
FIGURE 2
Forecast Hotel Online Bookings What Is Digital
Total Hotel Online Bookings % Booked Via An OTA
Transformation?
Digital transformation is a buzzword in business
2017 €37.1 billion 69% right now – simply put it is the application of digital
2021 €48.1 billion 65% technology within a business.
Source: Phocuswright, European Online Travel Overview Thirteenth Edition The need for digital transformation in travel has never
been greater; the biggest driving factor is consumer
Much like the hotel segment, online penetration in the tour behaviour with travel purchased online than ever. Skift
operator sector is relatively low (30% forecast for 2017).2 As the suggest worldwide digital travel sales will reach $162
way tour operators do business varies, online penetration rates billion in 2017.13
differ vastly between countries within Europe (see Figure 3). Low
online penetration makes this an area of opportunity for travel
Many leading travel industry players already have
companies who are able to successfully aggregate inventory
digital-first operations (for example, Expedia). The agility
from suppliers while observing local market circumstances.
digital gives these players is driving forward the industry
and forcing companies to develop technical knowhow
FIGURE 3 to keep up with rising consumer expectations in all areas
of their experience with travel companies.
Forecast Online Penetration (%)
2017 2021 Digital transformation often concentrates on the
customer – using technology to provide highly
Scandinavia 68% 72% personalised experiences, automating via customer
experience tools that aggregate data and automate
UK 56% 60% marketing, and embracing new technologies to serve
customers via new channels (for example, chatbots).
France 30% 32%
Germany 21% 26% Successful travel companies will also look to achieve
digital transformation within non-customer facing areas
Italy 9% 15% of their businesses. For example, finance departments
can take advantage of technologies such as virtual
Spain 8% 10% payments to automate less skilled and repetitive tasks
to free up resources for more skilled tasks.
Sources: Phocuswright, Scandinavian/UK/French/German/Italian/Spanish Online Travel
Overview Thirteen Editions
Looking more generally at the tours and activities segment, there is further opportunity for travel companies to win bookings
online. Increasingly travellers expect the ability to book online in advance, as well as last minute; this is driving suppliers to adopt
technology to allow for online distribution which presents an opportunity for travel companies. 71% of suppliers expect the online
reseller channel to grow; major travel players (such as Expedia, TripAdvisor, Booking.com and Ctrip) have recognised this opportunity
and now offer bookable tours and activities.8
Digital transformation of supplier payment processes enables travel companies to take advantage of growth opportunities
in these segments with quick and easy integration into distribution systems, as well as reliable payments to keep suppliers
happy.
© 2018 WEX Inc. 33 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
Destinations
Digitalisation of Travel
The past few years have seen significant shifts in the
destinations that European travellers are visiting, travel
companies who can quickly adapt their offering to suit
Over the past 25 years the global travel industry has undergone a dramatic
changing preferences have the opportunity to grow digital transformation, we’ve put together a timeline of the major
business online. developments that have shaped the industry:
Egypt, Turkey and Tunisia have all be significantly hit by
terrorist and political events in recent years: 1990s
1994 TRAVELWEB.COM LAUNCHED
First comprehensive online
catalogue of global hotels 1995 INTERNET TRAVEL
NETWORK LAUNCHED
First online sale of an
Tunisia
airline ticket
Turkey
Egypt
-45% -30% -25% 1996 EXPEDIA LAUNCHED
Major OTA
International International International 1998 GOOGLE FOUNDED
Transforms internet search
arrivals dropped arrivals dropped arrivals dropped
by -45% in 2016 by -30% in 2016 by -25% in 2015 LASTMINUTE.COM AND
PRICELINE LAUNCHED
(compared to
2015)9
(compared to
2015)10
(compared to
2014)11
2000s Major OTAs
While all three countries are expected to see a recovery 2000 WEX DEVELOPS FIRST
VIRTUAL PAYMENTS
in visitor numbers for 2017 (although not to previous SOLUTION
levels), this demonstrates how external events can TRIPADVISOR LAUNCHED 2004 KAYAK LAUNCHED
Metasearch site offering
Major peer-to-peer review airfares from multiple sites in
dramatically impact individual destinations forcing platform 1 search
travel companies to quickly switch inventory. FACEBOOK LAUNCHED
While the impact of major events cannot be predicted, 2005 PRICELINE ACQUIRES
BOOKING .COM
Major social media platform
One of the most profitable
search data can be indicative of how destination
preferences may change in the future. Looking at
acquisitions in the travel
space
2007 IPHONE LAUNCHED
Bringing web to the masses
package holiday search data from Google’s EMEA
Travel Dashboard for five of the major European 2008 AIRBNB LAUNCHED
Sharing economy leader
country travel markets, there are some key changes
AMERICAN AIRLINES
which can be observed in where travellers may visit. OFFERS WIFI ON
SELECTED ROUTES
The most popular destinations for outbound travel Travellers (slowly) become
from France, Germany, Italy, Spain and the UK differ
able to go online even
when travelling 2010s
(see Figure 4) but Spain, Italy and the UK feature in
the top 5 destinations for each market. 2011 HOTELTONIGHT
LAUNCHED
Leader in moblie first approach
FIGURE 4 2012 WEX ENTERS UK MARKET with app allowing last minute
hotel bookings
Top 5 Outbound Tourism 2014 TRIPADVISOR ACQUIRES
VIATOR AND LA
Destinations By Market FORCHETTE
Expanding into tours
& activities and dinner
reservations
France BOOKING.COM ACQUIRES
Top 5 Destinations 2016 Visits % Change vs 2015 2016 EXPEDIA, KAYAK,
SKYSCANNER AND
OPEN TABLE
Diversifying into dinner
OTHER TRAVEL
Spain 4,100,000 -4.90% COMPANIES LAUNCH
reservations
CHATBOTS WEX EXPANDS INTO
Italy 3,000,000 -4.60% EUROPE
New ways to research and
UK 1,800,000 9.50% book travel
Belgium 1,500,000 -12.10% 2017 WEX PROCESSES $27
BILLION IN VIRTUAL
PAYMENTS
Portugal 1,400,000 12.40%
Source: République Française Ministére De L’Économie Et Des Finances, FUTURE
Études Économiques
© 2018 WEX Inc. 43 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
Germany Italy
Top 5 Destinations 2016 Visits % Change vs 2015 Top 5 Destinations 2016 Visits % Change vs 2015
Spain 13,669,000 10.21% France 5,435,373 -3.54%
UK 6,941,000 4.00% Spain 2,645,942 6.64%
Italy 6,558,000 6.60% Germany 2,424,535 12.67%
Turkey 6,438,000 -16.60% Austria 2,020,287 38.39%
USA 5,349,000 2.75% UK 1,745,887 17.70%
Source: Statistisches Bundesamt (Destatis), 111,9 Millionen Flugpassagiere im Jahr 2016 Source: OECD
– neuer Rekordwert
UK Spain
Top 5 Destinations 2016 Visits % Change vs 2015 Top 5 Destinations 2016 Visits % Change vs 2015
Spain 14,676,000 13.00% France 2,146,534 16.92%
France 8,542,000 -3.47% Portugal 1,650,105 -1.18%
Italy 4,089,000 15.74% Italy 1,450,755 14.88%
Ireland 3,721,000 6.19% UK 1,299,357 9.37%
US 3,597,000 2.68% Germany 804,012 -9.77%
Source: Office For National Statistics, Travel trends: 2016 Source: OECD
Spain saw strong increases in
visitors from Germany, Italy
Visits from Germany set to grow by 5%, down from 10.21% YoY growth in 2016
and the UK in 2016; looking at
average YoY changes in search
Visits from Italy set to grow by 2%, down from 6.64% YoY growth in 2016
volumes from these markets
for Q4 2016 to Q3 2017 it
Visits from the UK set to decrease by -2%, down from 13% YoY growth in 2016
looks like growth will slow in
2017/2018.
Skift points to factors, such as the growing anti-tourism movement, terror attacks in Barcelona and Cambrils and political uncertainty
in Catalonia, as possible causes of declining growth.7
Italy saw positive increases in Visits from Spain set to decline by -2%, down from 9.37% growth in 2016
visitors from Germany, Spain
Visits from the UK set to decline by -5%, down from 15.74% growth in 2016
and the UK in 2016, but based
on search data this growth Visits from Germany set to grow by 2%, down from 10.21% growth in 2016
may tail off in 2017/2018.
Conversely, visits from France set to grow by 7%, up from a -4.6% decrease in 2016
The cause for slowing growth in visitors from these markets to Italy may be due to travellers returning to destinations that are now
recovering following terrorist events in 2015/2016.
© 2018 WEX Inc. 53 Ways Digital Transformation Of Supplier Payments Can Drive Growth Online
The UK saw YoY
increases in visitors Visits from France set to grow by 1%, down from 9.5% growth in 2016
from France, Germany, Visits from Italy set to grow by 2%, down from 17.7% growth in 2016
Italy and Spain in
2016, this growth Visits from Germany set to decline by -2%, down from 4% growth in 2016
looks set to slow in
Conversely, visits from Spain look set to increase by 13%, following 9.37% growth in 2016
2017/2018.
This mixed picture seems to suggest that visits to the UK will grow overall possibly because the country offers good value for money;
however terrorist events and uncertainty following the Brexit referendum may deter some travellers.
Travellers are returning to the likes of Egypt (Italian searches increased by 85%) and Tunisia
(featured in Q2 and Q3 2017 searches from France with an average increase of 53%)
International travel is
by no means falling, Greece saw strong YoY increases in searches from all markets (France 13%, Germany 51%,
rather traveller Italy 18%, Spain 27% and UK 13%)
attention is moving
Morocco looks set to see more visitors from Spain (28% growth in searches, compared to
towards alternative 5.25% growth in visitors in 2016 vs 2015) and France (21% growth in searches)
destinations:
Cyprus (7% increase in searches from the UK), France (61% growth in searches from Germany)
and the Maldives (19% growth in searches from Italy) are destinations to watch
Search data also suggests that travel to the US from these European markets may fall in 2017/2018 with volumes falling across all
markets (France -5%, Germany -6%, Italy -2%, Spain -2% and UK -9%). This could be due to political uncertainty combined with the
falling value of GBP for British travellers.
Digital transformation of supplier payment processes allows travel companies to quickly pay suppliers in new destinations in
a cost efficient manner, therefore shifting inventory to adapt to market circumstances and changes in traveller preferences.
3 Ways Digital Transformation of Payment Processes Help Travel Companies
to Get Ahead Online
In order to take advantage of opportunities to achieve growth online, travel companies need to take a 360° look at how business
processes can be streamlined using digital technologies. This should include looking at how technology is employed to pay suppliers.
Using virtual payments technology to pay suppliers places travel companies in a better position to take advantage of opportunities
for growth as they arise.
1. Free up resource and gain enhanced insights
Travel companies are spending a great deal of time and money managing payment processes. 1 in 4 European travel agencies
are tracking payments manually and businesses with over €10 million in annual sales typically have 4+ staff spending 16 hours
a week managing payments.12
Virtual payments make the supplier payment process painless. Single-use virtual card numbers (VCNs) allow for easy tracking
of each payment to a specific invoice and facilitate automated reconciliation. This eliminates manual processes and reduces
resource required to manage payments – allowing for investment back into the business. Plus, capture of meaningful data
with every payment allows for access to improved reporting.
© 2018 WEX Inc. 63 Ways Digital Transformation Of Supplier Payments Drive Growth Online
2. Flexible integration with existing systems realises benefits quickly
Many travel companies pay suppliers in a number of different ways depending on the type of travel booked or the system the
booking is made through. For example, hotel bookings may be made via a bedbank, whereas a global distribution system
(GDS) may be used for airline bookings.
Virtual payments offer flexible API deployment that can be tailored to existing systems and processes allowing for automated
hotel and airline payments. Integrations with GDSs, as well as major leisure travel search and reservation systems, allow travel
companies to benefit from virtual payments fast, as well as to start paying new suppliers with ease. The ability to get started
quickly allows travel companies to start benefiting from the efficiencies achieved by using virtual payments.
3. Pay any type of supplier anywhere in the world
With international travel growing and sudden shifts in destination preferences increasingly commonplace, travel companies
need to pay attention to how payments are made to new international suppliers to ensure speed of getting started and to
avoid incurring unnecessary cost.
Global acceptance of virtual payments through the Mastercard and Visa networks support dynamic contracting so travel
companies can work with new suppliers in new and existing destinations quickly and without hassle. Virtual payments also
allow for suppliers to be paid in their preferred local currency with over 150 currencies to choose from. This avoids exchange
rate mark ups and cross-currency fees for both the buyer and the supplier. In addition, exchange rate fluctuation risk can be
eliminated by paying suppliers in their local currency and settling with WEX in the same currency for 15 major currencies.
SOURCES
UNWTO, European Union Short-Term Tourism Trends - Volume 1 - 2017-4
1
Phocuswright, Tours & Activities Come of Age: Global Travel Activities 2014-2020
8
Phocuswright, European Online Travel Overview Thirteenth Edition
2
Statista.com, Number of Tourist Arrivals Egypt By Month
9
Phocuswright, UK Online Travel Overview Thirteenth Edition
3 10
Republic of Turkey Ministry of Culture and Tourism,
Number of Arriving-Departing Visitors, Foreigners and Citizens
Phocuswright, German Online Travel Overview Thirteenth Edition
4
11
Republic of Tunisia Ministry of Tourism and Handicrafts, Tourism in figures
Phocuswright, Scandinavian Online Travel Overview Thirteenth Edition
5
12
Phocuswright, Payments Unsettled: Travel’s Complex European Payment Landscape
Deloitte, 2017 Travel And Hospitality Industry Outlook
6
13
Skift, The 2018 Digital Transformation Report
Skift, Travel Megatrends 2018
7
About WEX
WEX is a leading provider of corporate payment solutions to travel companies across the globe. For over 15 years we have helped our customers
gain a competitive edge and stay ahead of the market - we processed $27 billion in payments in 2017 alone.
Our virtual payments solution allows you to:
• Pay suppliers fast and accurately while optimising cash flow and even earning money on payments made
• Simplify payment processes and get valuable time back with automated reconciliation and enhanced data for reporting
• Save on international payments and avoid exposure to exchange rate fluctuations
• Prevent payment fraud and misuse with single-use virtual card numbers and customisable controls
Get In Touch:
For more information about how WEX can work for you, please get in touch
Web: www.wexvirtualpayments.com | Tel: +44 (0) 203 553 5835 | Email: sales@wexeurope.com
© 2018 WEX Inc. 7You can also read
