‘Pay later’ feature paying off for travel portals

Online travel aggregators (OTAs) have taken a leaf out of traditional hospitality industry to offer flexi-booking options to consumers, wherein they can book a hotel in advance, but pay later during check-in.

The move seems to be paying off with companies such as Cleartrip, MakeMyTrip, Goibibo, Find My Stay and OYO Rooms witnessing about 20-25 per cent of the transactions coming through this facility.

“We are already seeing 15-20 per cent booking through this feature, even though it is not available with all our hotel partners,” Rohit Khetrapal, co-founder, Find My Stay, told BusinessLine, adding that the company is working with several hotels in Tier II and III towns to get more traction from these areas.

It plans to enter at least 8-9 small towns in the next three months.

No matter how fast technology is evolving when it comes to making payments, a majority of the Indian population is still not comfortable sharing their card details online — one of the reasons why several OTAs have turned to the flexi-booking option.

According to experts, ‘pay later’ is the traditional mode of payment that still dominates hotel-bookings in most parts of the country, where people do not use any kind of online platform and directly call the hotel, instead. Besides, the sense of distrust among people with regard to paying in advance is growing as the reviews and photographs in websites often do not match the standards of a particular hotel. This in turn is forcing OTAs to go back to offering the traditional and conventional mode. This also can be compared with the Cash on Delivery (CoD) feature among e-commerce players.

India’s largest OTA in terms of transactions, MakeMyTrip, launched the feature a few weeks ago, and has been spending heavily on marketing it. However, Cleartrip was the first to have launched the option last year.

Subramanya Sharma, Cleartrip’s Chief Marketing Officer, gave the two major reasons for launching the feature. One, last-minute bookings are very high on mobilephones (50 per cent) and mobile payments are still not very secure and fast. Two, there is a lot of uncertainty while booking hotels as the standardisation is still missing in the Indian market. For Cleartrip, about 25 per cent of the bookings comes through this option.

According to Parikshit Choudhury, Senior Vice-President - Lodging Partner Services, Goibibo —which launched a similar feature called ‘Reserve at Rs.0’, — online hotel bookings are still under-penetrated at below-15 per cent; an option to pay later helps hotels improve their occupancy rates.

“Over the past two quarters, my team has been working across 156 cities and towns to evangelise this feature to hotels. We now have 35,000 hotels participating in ‘Reserve at Rs.0’,” he added.

However, cancellation rates turn to be high with this feature, impacting the revenues of the OTAs. To prevent this, companies are tightening back-end processes to ensure no defaults.

“We have the tech to get customers to confirm much before the cancellation policy kicks in, and in some cases, we also take the credit card details from the consumer to ensure that the hotel gets its due,” Sharma of Cleartrip said.

Khetrapal said Find My Stay sends automated reminders to consumers prior to the booking dates, and the booking is cancelled if they don’t confirm it at least a day before. Similar follow-up happens from the hotel’s side as well. OTAs are also working on systems wherein they can take in the credit/debit card details of the consumer and charge a nominal amount in case of no-show.

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