new report Global Payments Company Air War Rex Skift Research found that 66% of travel companies worldwide are experiencing declining profit margins due to outdated payment systems.
The survey found that 90% of these companies plan to prioritize upgrading their payments and financial operations systems over the next 12 months.
The report is based on a survey of 473 travel industry executives across seven global markets in April 2024, and highlights that 70% of travel companies find cross-border payments increasingly challenging due to the diversification of new payment methods.
Revenues from cross-border payments are growing, but the ever-increasing variety of payment methods across different markets is making transactions more complex for many businesses.
Survey participants also provided insight into financial challenges facing the travel industry, such as the complexities of handling different local payment methods and managing foreign exchange fees.
They said they were making decisions about payment processes and financial operations for travel companies across the travel industry, including online travel booking, travel operators, tours and activities and destination management.
The survey results provide a unique perspective on the financial challenges and opportunities companies face as they grow and operate globally.
This shift has made travel companies’ financial operations more complex, with 88% of executives noticing changes in payment preferences since the COVID-19 pandemic.
Local payment methods and peer-to-peer systems are also rapidly gaining popularity, especially in Asia.
Additionally, 75% of travel companies report that more than a quarter of their revenue comes from cross-border payments, and 88% frequently make payments in foreign currencies to overseas suppliers and vendors.
However, 67% of executives believe fluctuating exchange rates make cross-border payments more complicated.
Managing payments for multiple suppliers and vendors in different countries, and reconciling booking, payment, fee and refund data using existing payments and financial infrastructure, is a key challenge for over 50% of executives.
The study highlights the need for travel companies to upgrade their payment systems to improve efficiency and profitability.
Nearly two-thirds of travel finance executives believe that outdated systems are directly impacting their profit margins, with many reporting a profit decrease of at least 2%.
Jack Chan
Jack Chan, co-founder and CEO of Airwallex, said:
“As the global travel boom continues, travel companies are increasingly relying on fast, seamless cross-border payments to exceed customer expectations at every touchpoint. But our latest research shows that slow and outdated payment processes are increasing the cost of international money transfers, which are eating into profits that are modest at the best of times.”
Modernizing financial operations with an integrated, scalable payments solution is crucial in reducing the costs and friction involved in managing cross-border transactions. For smaller players, this could be what levels the playing field, enabling them to compete with larger, more established counterparts.”
Rafat Ali
“Skift is a game changer,” said Rafaat Ali, CEO and founder of Skift.
“Our survey of travel industry executives around the world revealed new, unique and even surprising insights into why integrated payment and financial systems are critical to meeting the expectations of today’s travelers.
With international tourism on an unprecedented rise, this report aims to provide travel companies with a framework to expand their knowledge base and build more efficient, effective and profitable businesses through modernized payment and financial operations systems.”
