Travel businesses are no strangers to complexity. From online travel agencies (OTAs) and tour operators to hotels and bed banks, the sector runs on high volumes of bookings, tight margins and even tighter turnaround times. But beneath the surface of every booking and payment lies a hidden cost: the inefficiencies of manual, outdated systems.

The good news? These hidden costs aren’t inevitable. With embedded, automated payment solutions, travel businesses can streamline their operations, improve cash flow and strengthen partner relationships. Here’s how.

What’s covered in this blog:

• Where costs hide in travel payments
• Real-world impact on hotel and OTA finance teams
• Why legacy infrastructure can’t keep up
• How automation simplifies the complex
• What travel businesses gain from embedded payments

Where costs hide in travel payments

While travel payments may look straightforward, they’re anything but. Behind each booking lies a tangle of transfers, conversions and reconciliation steps that add cost and complexity. Manual reconciliation takes time. Delayed settlements hit cash flow. Poor FX processes can erode margins. Suppliers want to be paid in a local payment method. And fraud and chargebacks quietly drain your bottom line.

Real-world impact on hotel and OTA finance teams

All this complexity costs money. Take reconciliation, for example. A delayed $500 payment can cost a hotel $3.70 in lost working capital for just 30 days. Multiply that by thousands of bookings each month and the cost escalates quickly.

And it doesn’t stop there. Mismatched or missing payment references mean your finance team spends hours chasing details, correcting records and dealing with frustrated suppliers.

Manual processes create:

• Higher admin overheads
• Slower month-end reporting
• Increased error rates

These hidden costs stack up quickly and chip away at your margins.

Why legacy infrastructure can’t keep up

Many travel businesses still rely on outdated systems that weren’t built for modern demands. File uploads, fragmented acquiring relationships and limited data visibility create delays and errors. And with no automation in place, every step becomes a detour.

Modulr research has found that while nearly half (45%) of OTAs and other travel sellers have allocated at least 1% of their total budget to improving payment capabilities, 91% do not see clear growth opportunities through current payment processing methods. In other words, the travel industry doesn’t know how to address its problem with payments.

How automation simplifies the complex

In our survey of 551 travel sector payments leaders, Modulr identified how distinct, apparently isolated inefficiencies in the travel sector’s payments approach actually represented a single strategic-level opportunity to make rapid advances in efficiency, security, and business intelligence.

The ambition to change is there – nearly all businesses surveyed (96%) believed their payment processing could be more efficient, with 70% stating it could be by “much more.”

So what might that look like?

Automation can provide smarter, embedded payments infrastructure that cuts through complexity.

Remarkably, in the heavily digitised world of online travel buying, 64% of OTAs still execute supplier payments in bulk, rather than automatically at the time of booking (with only 17% taking the opportunity to do so already). Delays like this are totally unnecessary, increase operational complexity and could see potential inventory access issues emerge as payments wait to be processed.

By definition, automation reduces manual work. That means gaining freedom from a range of associated delays, costs and inefficiencies around rationalisation and reconciliation – not to mention the avoidance of human error as data – from one system to another.

At the same time, by bringing in new payment methods or retaining oversight for more of the entire payment process, from customer to supplier, it’s possible to reveal powerful insights into buyer preferences or history and immediately feed that data into commercial strategies. That’s where handling payments data provides tangible value, rather than simply labour cost.

What travel businesses gain from embedded payments

Automated, embedded payments could include a wide range of solutions, integrations and approaches, such as:

• Virtual accounts for each supplier or partner
• Real-time payment notifications via webhooks
• Multi-currency support and integrated FX
• A single API for all your payment flows

The approach taken to reduce travel payments’ hidden costs depends on just how you might want to protect your margins and how advanced your payment approach already is.

The focus may be to improve cash flow and treasury accuracy through more direct control of payments and faster payment methods, or to build stronger supplier relationships through reliable settlements and fewer errors and faster resolution of issues. Or, the finance team may have been tasked with building a scalable payment system ready for peak seasons or expansion into new markets.

Your next step

Hidden costs shouldn’t be a fact of life in travel. With Modulr, they don’t have to be.

Speak to our team to learn how embedded, automated payments can power better travel operations.

Read the full research paper to find out more.