Post-pandemic wanderlust creates runway for travel fintechs

As tens of millions of consumers plan post-pandemic getaways, issuers of travel cards anticipate a surge in transaction volume — as do the fintechs that provide alternative financing and payments tech for the travel sector.

Many of these trips aren't short vacations. Airbnb last month reported a spike in demand for long-term stays of at least 28 days, attributing the trend to the pandemic’s shift to remote work policies encouraging nomadic lifestyles. Whatever payment method travelers choose at the moment of booking could benefit from months of ongoing use.

That trend is creating a tailwind for a set of fintechs that are digitizing hospitality management and payments systems for small hotels, motels and unconventional travel accommodations like tents and yurts.

Guesty is one of several new hotel management and payment software providers. The service enables individuals and investors to accept rental payments for apartments, homes and spaces for “glamping” or high-end camping. The firm, launched in 2013, recently reached $110 million in venture capital funding and purchased two other property management software startups, MyVR and Your Porter to expand its reach.

In a recent blog post, Guesty — which has offices in Los Angeles, Tel Aviv and London — said its summer short-term rental reservation volume is 32% higher than in 2019.

Cloudbeds, based in San Diego, has spent the last nine years developing a cloud-based hospitality management platform for independent hotel operators. This month it introduced a fully integrated payments and accounting capability that accepts and manages all types of funds for hotels in North America, Europe and the U.K.

Guests manage their reservations, check-in and payment through a payment terminal or a portal embedded in each hotel’s website, with Cloudbeds handling card verification, transaction reconciliation and any disputes.

“Our target is independent hotels running their properties on old proprietary systems who want to move to a digital platform,” said Richard Castle, Cloudbeds’ president and chief operating officer.

Cloudbeds has long worked with a variety of payment processors including Elavon, Stripe and Authorize.net, but during the pandemic Cloudbeds also began to process payments directly for some of its clients whose income fell when travel tapered off.

“Cash flow got very tight for many hotel operators and it became too difficult for them to wait the standard 60 days or so for processors to release merchant revenues, so we began underwriting their merchant receivables,” said Kevin Goddard, director of Cloudbeds' payments program.

Like the visibility Square has into its customers’ merchant services revenue, the insight Cloudbeds has into its hospitality customers’ guest traffic enables the fintech to advance cash to customers on demand.

“We have a broad spectrum of information on our customers’ operations so we can advance them capital as needed, while the larger processors tend to treat them all with the same broad brush,” Goddard said.

Other companies focus on cash-strapped consumers eager to see the world. Uplift, a buy now/pay later fintech specializing in travel, this week announced a partnership with Vegas.com enabling travelers who book packages via the Las Vegas-based website to pay in installments spread over six to 11 months.

WebRezPro also streamlines lodging bookings, operations and payments for inns, bed-and-breakfast operators, home rentals, campgrounds and RV parks. The Calgary, Alberta-based unit of World Web Technologies integrates with various payment gateways including Stripe, Shift4 and Tenerum, serving 1,500 properties in 40 countries.

Castle got the idea for Cloudbeds when he discovered that to reserve a room at a bed-and-breakfast in Brazil — where his wife has family — he would need to transfer funds directly into the proprietor’s bank account.

“It amazed me that there was no way to make a reservation on a website, so I started building a path to do that because I knew the World Cup was coming to Brazil in 2014 and other people would encounter the same problem I did,” Castle said.

After building a hotel search-and-booking engine for U.S. visitors to Brazil, Castle and his partners decided to create a platform for independent lodging companies to manage their entire business, which has continued to grow and now serves hospitality operators in 155 countries.

In some local markets, Cloudbeds partners with banks so hotels can work with their usual merchant acquiring bank.

“We collaborate with banks, processors and other technology companies including Airbnb, because some of our clients market their properties through that channel,” Castle said.

Castle uses an online engine to arrive at customized pricing for each property, based on parameters for boutique hotels up to midsize chains, hostels, vacation rentals, bed-and-breakfast inns and multi-unit apartments.

Customers such the Cabot Lodge in Beverly, Massachusetts, adopted Cloudbeds’ platform during the pandemic to provide a completely contactless experience from online reservations and check-in to payment and check-out, with customers receiving an email with a keyless entry code they can download to their smartphone.

Cloudbeds is seeing strong growth this year and if current trends continue the company expects to expand in the near future to Australia, New Zealand and Brazil.

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