New research from eNett International, a provider of dedicated B2B travel payment solutions, has found that European travel companies trying to keep up with the growing consumer demand for exotic holidays are being impacted by additional costs as they manage more currencies and multiple exchange rates.
The research, carried out by market research firm Phocuswright, revealed that the number of European travel companies accepting payments in more than 10 different currencies has doubled from 6% to 12% in the past three years. Moreover, there is a core group of travel agencies going even further to meet the needs of adventurous tourists, with 6% now grappling with over 50 different currencies.
This shift is driven by growing consumer demand to visit travel destinations further afield, with MasterCard’s Global Destination Cities Index finding that, of the top 20 city destinations across the globe, Osaka, Tokyo, Seoul, Bangkok and Dubai were the fastest growing in 2015/2016. Overall, the latest Index found that cities in Asia-Pacific are increasingly becoming the ‘go-to’ destinations, followed by those in the Middle East & Africa and Latin America.
While this presents opportunities for travel companies to do business in new markets, it also means additional foreign exchange and cross-border fees as well as increased administration costs. eNett’s analysis shows that European travel companies relying solely on their bank for international payments could be paying up to 3% more compared to alternative options3 – a cost which could significantly erode margins.
eNett CEO and MD, Anthony Hynes, said: “Some travel agencies find the cost of international payments outweigh the benefits of offering such diverse content but the trend for exotic holidays can’t be ignored. Instead, travel companies should be looking to alternative solutions which better match modern consumer trends. This includes offering local funding and settlement which significantly reduces costs, through to real-time conversion that allows agents to lock-in rates at the time of booking to protect from negative FX fluctuations. Taking the simple step to re-examine cross-border payment strategies will allow agencies to satisfy customer demand while keeping costs low.”