Over the next decade, the travel industry will experience an unprecedented rise in cross-border movement. In order to take advantage of this industry boom, travel companies need to take bold action in going after new opportunities, while also ensuring they effectively manage challenges such as operational efficiency, reputational risk and data integrity.

For small- to mid-sized travel companies, modernizing payment and financial operating systems is well and truly becoming a top priority. As agencies move to free themselves from financial and operational burdens while also scaling rapidly and making choices that future-proof their businesses, the leaders of the travel industry are choosing to adopt Airwallex as their end-to-end payment and financial solution.

In April 2024, Skift (the travel industry’s largest industry intelligence platform) in collaboration with Airwallex surveyed 473 travel executives across seven global markets — the United States, Australia, Singapore, the United Kingdom, China, Hong Kong SAR, and Israel. The data revealed fascinating insights into the industry’s expansion challenges and how the Airwallex platform is helping the world’s travel leaders to not only navigate these problems, but thrive and grow throughout them.

The top five challenges online travel agencies face with their financial operations

With the expansion of global travel, the challenges travel companies are facing is that they already have some of the most complex payment systems in the world; and these systems are truly being put to the test by the positive shifts in the market.

For instance, according to the Skift and Airwallex survey, more than two-thirds of travel finance executives reported that outdated or complicated payment systems are having a direct impact on their organizational efficiency and profit margins.

The report’s research revealed the top five challenges that online travel agencies are facing. 

1. The global nature of the travel industry

The nature of the travel industry is inherently global, with travel agencies facing a variety of challenges specific to their domain. 

In addition, cross-border transactions put travel companies at higher risk for fraud than other industries. With travelers needing to provide their personal information when making bookings, the travel industry’s systems are commonly the victims of malware and hacks. With this in mind, 52 percent of executives rated handling fraud detection as one of the most challenging issues they face with their existing payment systems and financial operations.

2. Difficulties with payout efficiencies

Travel businesses must consider the issue of managing their supplier and vendor payouts efficiently to facilitate successful ongoing business relationships. As their portfolios expand globally, developing reliable and high-functioning local supplier networks is a common challenge. 

According to the Skift and Airwallex survey, 88 percent of travel executives frequently make supplier or vendor payments in foreign currencies. While bank transfers offer a familiar and secure way to handle paying vendors in foreign currencies, nearly 60 percent of executives said that lengthy processing times and fluctuating exchange rates were among their top three challenges with bank transfers. The risk of encountering these challenges only increases the more frequently businesses have to pay suppliers and vendors.

3. Intense competition and squeezed margins

Although the global travel market’s expansion will be a welcome boost for small- and medium-sized businesses, those lacking strategic growth plans will be at a natural disadvantage and will likely flounder amongst a saturated market and fierce competition. 

Based on the Airwallex X Skift research, nearly two-thirds of executives (66 percent) said that challenges with their existing payment systems are hurting their profit margins. Multi-currency payments and settlements, payment fraud, and other inefficiencies in financial operations can add up to significant margin erosion.

4. Multi-currency reconciliation

The survey also found that 70 percent of executives agreed they lose “significant” amounts of time reconciling financial information across countries and markets. Reliance on banking rails and manual, time-consuming internal processes causes payment delays and strains relationships between businesses and their suppliers, vendors, and customers. Companies must seek solutions that reliably simplify and automate their reconciliation processes in order to streamline their financial operations and free up internal resources to focus on creating impactful strategies for growth. 

Future-focused: An end-to-end finance solution to address travel agency challenges

According to the Skift x Airwallex survey, the vast majority of travel executives (90 percent, in fact) reported that “upgrading their payment systems and/or financial operations technology will be a top priority for our company over the next 12 months”. 

The report also stated that online travel agencies often deal with at least four to six different payment vendors throughout their fund flow lifecycles. With this level of complexity, relying on fractured or inefficient financial systems to manage these processes can lead to extensive payment delays and strained relationships. 

To address these challenges, as well as those listed earlier in this article, travel agencies should consider adopting an end-to-end financial operations solution like Airwallex so that they can spend less time dealing with frustrating disparate systems, and more time focusing on what matters; future-focused growth.

With Airwallex, travel agencies can:

• Use Borderless Cards to easily pay suppliers and vendors, which allow travel agencies to foster good relationships with their supplier network, expedite reconciliation, expand globally, and ultimately increase their revenues.

• Open multi-currency Global Accounts that make it simple to accept and payout funds easily and cost-effectively in over 60 countries and 23 different currencies, while always ensuring regulatory requirements are met.

• Smoothly integrate with popular accounting systems to easily sync data and reduce manual reconciliation, as well as automating and enhancing key processes and improving accuracy levels for reporting and compliance purposes.

• Increase profit margins by managing foreign exchange exposure and costs with market-leading FX rates that can save businesses up to 80% on their FX fees, and utilize built-in FX hedging solutions.

• Future-proof their fintech stacks to accelerate growth and open up new revenue opportunities, such as building and launching branded financial products to travellers and suppliers.

• Receive support for their expansion into adjacent business models (such as corporate travel) via additional offerings such as spend management tools. 

• Seamlessly collect payments in 180+ countries with major schemes like Visa, Mastercard and American Express, as well as via 160+ local payment methods.

To find out more about how unified payment and financial platforms like Airwallex can unlock borderless economic opportunities for global travel businesses, read the Airwallex x Skift report for an interview with Shannon Scott, Senior Vice President and Head of Product at Airwallex. 

Embracing the new wave of end-to-end business-critical infrastructure 

As travel businesses make moves to take advantage of the travel boom, modern payment and financial operations infrastructure is business-critical for staying competitive in an increasingly digital and borderless travel industry. 

By partnering with Airwallex and utilizing our unified, end-to-end financial solution platform, travel companies can achieve greater operational efficiency, enhance their customer experiences, and drive growth in the global market. 

To learn more, read the full Airwallex x Skift ‘2024 State of Payments in the Travel Industry’ report or visit the Airwallex website to see how we can support your travel business’s leap into the new operational age.