When holiday spirit shows its first signs, hospitality businesses revel in the bookings boom, as thousands of people rush to spend their vacations somewhere nice. And yet, most of the players in the hospitality sector fail to take full advantage of the busy season due to the inefficiencies in their core payment and operational systems.
A Little Bit of Numbers to Understand the Value Of Holidays
Last year, we saw the travel industry maintaining its strong resurgence after a few-year slump caused by the Covid interruptions.
Hotels Enjoy Higher Occupancy During Holidays
Overall, the global hotel occupancy during the Christmas and New Year season 2024-2025 rose by 4% from 2023 levels. Meanwhile, some of the destinations witnessed double-digit bookings surge (like Lihue in Hawaii with its 13% increase or Cebu, a waterfront city in the Philippines, with an even more impressive 20% increase in hotel stays).
Warm weather climates are especially popular during the cold holiday season. However, numerous tourists seek so-called ‘white Christmas’ vibes as well, often discovering them in colder or temperate climates of many European destinations.
In 2024, international guests spent over 854 million nights in short-term rental accommodation in the EU, with November facing more than a 20% increase in short-term stays. As the European continent offers a mix of warm and traditional winter destinations, its peak/holiday demand for hotel stays rose by about 28% last year.
What About Holiday Finances?
Furthermore, STR’s latest global “bubble chart” update from February 2024 shows that things were looking up financially speaking across most hotel markets. About three-quarters of markets (74%) saw revenue per available room (RevPAR) increase compared with the same period in 2023. The growth wasn’t driven by just one factor either: 64% of markets had higher occupancy, while 70% managed to raise room rates year over year.
Among countries with large hotel inventories (50,000+ rooms) and solid reporting, Singapore, France, Switzerland, the UAE, and Saudi Arabia came out on top for RevPAR. Switzerland benefited from the start of ski season, while Middle Eastern destinations enjoyed peak demand thanks to their cooler, more comfortable winter weather.
Thailand didn’t make the RevPAR top five, but it still stood out. Boosted by Lunar New Year travel, hotel occupancy hit 79.5%. That was the country’s highest level since the pandemic and the second-highest occupancy rate among the 48 countries included in the report.
If Not For Payment Inefficiencies These Gains Could Be Far Greater
If not for payment inefficiencies, these seasonal gains could be significantly higher, as many hotels still lose revenue at the very moment demand peaks.
During the holiday rush, guests are often booking under time pressure, comparing multiple destinations, room types, and prices across platforms, which makes the payment experience a decisive factor. Slow-loading checkout pages, limited payment method options, unexpected currency conversions, or unclear taxes and fees can quickly push potential guests to abandon their booking and choose another hotel or even another destination altogether.
International travelers are especially sensitive to friction: a missing local payment method, a declined cross-border card transaction, or mandatory prepayment without familiar digital wallets can break trust instantly. In peak season, even small delays matter. When a payment takes too long to process or requires repeated authentication steps, guests may assume availability is gone and move on.
Operational inefficiencies behind the scenes also play a role: manual reconciliation, delayed settlements, and fragmented systems can prevent hotels from confirming bookings in real time, increasing the risk of overbooking or failed reservations. Meanwhile, rigid cancellation and refund processes can deter guests who want flexibility during uncertain travel periods, particularly around holidays.
Add to that dynamic pricing pressures, where rate changes are not always synced smoothly with payment systems, and hotels may end up displaying outdated prices or charging inconsistently — another trust-breaker. For small and independent hotels, pairing payment optimization with dynamic pricing software built for limited teams, transparent automation, AI forecasting, and PMS/CRS integrations keeps rates synced with checkout flows, prevents orphan gaps, and avoids inconsistent charges during surges, turning more peak-season shoppers into confirmed guests.
In a season when occupancy is high and ADRs are rising, these payment gaps quietly cap revenue, reduce conversion rates, and send high-intent guests elsewhere. Ultimately, while hotels focus heavily on marketing, distribution, and pricing during peak periods, the inability to offer fast, transparent, and locally relevant payment experiences means many never fully capitalize on the holiday demand they worked so hard to attract.
Why Hospitality Industry Direly Needs Payment Optimization
Travel payments at hotels are a real pain point for many guests. A study highlighted by Amadeus found that as many as 40% of travellers faced challenges paying at hotels. About a third of hotel guests couldn’t use their preferred payment method, often due to outdated payment systems or limited options like digital wallets at the property itself.
Meanwhile, among those trying to make a payment at the time of booking, around 37% of guests say they would ditch a booking if they can’t pay the way they want. Among UAE visitors, for example, this share surges twofold, up to 63%.
Can you imagine that? Losing more than half of your potential guests just because you don’t offer a suitable payment method. Why does that happen to many hotels globally? And why do most hotel transactions (roughly 80%) still require human intervention and paperwork, heavily relying on manual, property-level processes? Comments Rocco Pizzarello, Hospitality Payments Strategist at CellPoint Digital.
“Today the biggest challenge with payments isn’t system inefficiency, it’s an inertia mindset. Most hoteliers aren’t willing to take on the burden of change and are sticking with legacy payment systems like on-property PMS or POS, because they perceive it as the path of least resistance. Additionally, hotels rely on their local PSP/banking relationships that make the processing of hotel payments for direct bookings costly and inefficient, due to cross-border fees and limited payment options for any international guests. Reliance on these systems limits a hotel’s capability to offer a localized payment solution based on where the guest is coming from or to limit cross-border fees. OTAs have already embraced centralized payments. They process payments through a more sophisticated payment platform that is well integrated into their booking engine, whereas the hotel’s booking experience is not user-friendly. OTAs can bundle offers, offer payments from where the guest originated (i.e., local APMS) all with a much more user-friendly experience.
I believe that the structure of the hotel landscape, ie. Franchise/ownership/brand, all struggle with the same issue. Small hotels lack scale and costs of payment and tech innovation, and larger hotels and chains have a different set of issues including lack of payment expertise and a reliance on legacy processes. Ultimately, the issues are industry-wide due to a reliance on legacy systems and legacy processes for payments.”
The bright side is that today many hotel groups are taking a fresh look at how payments work across their entire portfolios. Instead of managing transactions at the individual property level, they’re shifting toward centralized, brand-level payment systems. This allows payments to be routed more intelligently, helping cut cross-border costs, boost approval rates, and offer guests familiar local payment options directly during booking. It’s a model that retail and airline e-commerce adopted years ago, and hospitality is only now beginning to follow suit.
Mr Pizzarello further elaborates on why hospitality sector payment optimization levels are so behind airlines’ performance, considering the fact that both business segments were disrupted equally during the Covid crisis.
I believe the impediment beyond that is threefold:
- An airline, while not considered a leading edge or first adopter of technology in payments, is one merchant and can address payment issues from the perspective of being one merchant. Hotels have a more complicated owner-to-franchise structure; properties are managed by a third party and not necessarily by the brand. That allows the third party to maintain legacy processes and legacy payment systems that are often quite siloed and difficult to modernize.
- Hotels additionally look at their ecommerce solution as booking platforms only. In the current legacy process, hotels want a guest to book, but they pass the payment off to the property. For example, as a zero-dollar authorization is then the responsibility of the local properties PMS to collect payment.
- With some exceptions, customer reservation systems (CRSs) have not fully recognized that they are the best platform to provide the hotel industry with the keys to modernizing hotel payments. Up until now, the CRS has deferred payments to the PMS, though there are signs this is starting to change.
How Can Hospitality Businesses Optimize Their Payments
To fully capture the holiday-season revenue they work so hard to attract, hotels need to optimize payments across the guest journey. There are several practical levers they can pull:
- Adopting payment orchestration allows transactions to be routed intelligently through multiple processors, increasing authorization rates and reducing declines.
- Offering local payment methods at the point of booking ensures international guests can pay comfortably without friction.
- Streamlining checkout flows, eliminating unnecessary steps, clarifying taxes and fees, and supporting one-click or wallet-based payments, reduces cart abandonment.
- Centralizing payments at the brand or portfolio level cuts cross-border fees and accelerates settlement, freeing staff from manual reconciliations.
- Implementing dynamic currency conversion and real-time fraud checks provides transparency and security, encouraging guests to complete their bookings confidently.
Together, these strategies help hotels turn potential payment bottlenecks into smooth, revenue-generating experiences, allowing them to take full advantage of peak holiday demand.
